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The role of Moral philosophy anh Materialism in Determining consumers'''' ethucal beliefs: An empirical study with Vietnamese consumers

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1 UNIVERSITY OF ECONOMICS HO CHI MINH CITY International School of Business Pham Ngoc Tuong Loan The Role of Moral Philosophy and Materialism in Determining Consumers’ Ethical Beliefs: An Empirical Study with Vietnamese Consumers MASTER OF BUSINESS (Honours) Supervisor: Dr Le Nhat Hanh Ho Chi Minh City- Year 2015 Abstract Consumers are what businesses are fighting for and consumer behaviors impact greatly both macroeconomic and microeconomic issues An integral component of consumer behaviors is consumer ethics Unethical consumer behavior can cause serious damage to business and society It results in significant damage to business profits and market morale (Steenhaut and Kenhove, 2006; Liu et al., 2009) Although consumer ethics in the United States and other industrialized countries have been studied extensively, few have been done in Asian-market settings, especially Vietnam Asia has transformed itself to become a global hub of commerce but at the same time has faced serious consumers’ unethical issues such as software pirating, shoplifting and the rampant supply of counterfeit products Vietnam, an emerging economy in South East Asia, has experienced a high rate of software copyright violations, 81% compared to average 60% in other Asian countries, and over 8,000 cases of counterfeit goods and other intellectual property rights infringement (International Intellectual Property Alliance, 2013; American Chamber of Commerce in Vietnam, 2013) The purpose of this study is to examine the factors that influence Vietnamese consumers’ ethical beliefs Particularly, this study investigates the impact of idealism, relativism, and materialism as personality characteristics on the ethical beliefs of consumers in Vietnam, which consist of attitudes toward actively benefiting from illegal actions, passively benefiting at the expense of the seller, actively benefiting from questionable but legal actions, and no harm, no foul actions This exploratory study of 390 Vietnamese has results in many significant findings First of all, idealism and materialism significantly impacted the attitude towards actively benefiting from illegal actions Second, materialism significantly impacted the attitude towards passively benefiting at the expense of the seller while idealism partially impacted this attitude Third, idealism significantly impacted the attitude towards actively benefiting from questionable but legal actions while materialism partially impacted this attitude Finally, idealism and relativism significantly impacted the attitude towards no harm, no foul actions In this study, literature on consumer ethics, idealism, relativism and materialism as well as the introduction of Vietnam, are presented along with implications and recommendations for academic scholars, practitioners and the like CHAPTER 1: INTRODUCTION 1.1 Research background Research on ethical issues in marketing has drawn the interest of many authors (e.g., Rawwas, Patzer and Klassen, 2005; Liu, Zeng & Su, 2009; Zhao et al., 2013) This is because marketing is where many ethical problems in business arise (Vitell, Singhapakdi & Thomas, 2001) There are a large number of studies that have developed concerning ethics in the marketplace; however, most of them have focused primarily on the companies’ side (Vitell and Paolillo, 2003) Since marketing is the process by which companies and consumers exchange values (Kotler & Armstrong , 2013, p.5), not considering consumers in ethics research can result in an incomplete understanding of marketing (Vitell &Paolillo, 2003).Vitell et al (2001) stated that an improved understanding of why some consumers engage in unethical behavior could be helpful in solving many questionable practices Asia has transformed itself to become a global hub of commerce but at the same time has faced serious consumers’ unethical issues Significant rates of software pirating, shoplifting and the rampant supply of counterfeit products have all recently become big issues especially in Asian market (Lu & Lu, 2010) Unethical consumption behavior, the dark side of consumer behavior so-called by Hirschman (1991) and a form of guerrilla warfare against companies (Tian & Keep, 2002), results in significant damage to business profits and market morale (Steenhaut and Kenhove, 2006; Liu et al., 2009) Particularly, the global loss to software piracy was over $50 billion in 2010, $16.5 million of which were from Asia-Pacific region (Microsoft, 2014) Asia's figure for lost sales was higher than any other region, according to the Business Software Alliance's annual report (2011) Vietnam is one of the emerging economies in Southeastern Asia Its economic growth rate has been among the highest in the world in the past decade, expanding at an average about 7.0 percent per year during the period 2002-2010, before slowing down to 5.9 percent in 2011, and 5.0% in 2012 (US Department of Commerce, 2013) However, with the current rate of 81% of software copyright violations, Vietnam is now a nation with a high violation rate compared to the average level of 60% in other Asian countries (IIPA, 2013) In addition to piracy, counterfeit goods is also a major problem in Vietnam According to American Chamber of Commerce in Vietnam (Amcham Vietnam, 2013), over 8,000 cases of counterfeit goods and other intellectual property rights (IPR) infringement were detected in 2012, representing an increase of 14% over 2011.The government admits that the counterfeit goods is difficult to track down and that fake products are becoming more sophisticated and difficult for government inspectors to identify (The Voice of Vietnam, 2010) Generally, Vietnamese consumers have a low awareness of the harm that counterfeiting and IPR infringement causes to the economy and society A large percentage of Vietnamese consumers have purchased counterfeit goods, mostly due to low price (Amcham Vietnam, 2013) Moreover, sixty-two percent of consumers buy counterfeit goods without being aware that their actions are illegal and unethical according to the recent survey conducted by the Vietnam Standard and Consumer Association (The Voice of Vietnam, 2010) Since there are raising concerns of consumer unethical behavior in Vietnam, it is of great importance to examine the factors that influence Vietnamese consumers’ ethical beliefs Such an understanding can provide further insight into consumers’ ethics in Vietnam This is essential for not only government and local associations to raise awareness and educate the public and consumers but also for companies to minimize the adverse impact of unethical behavior on companies’ operations in Vietnam 1.2 Research gap Vitell, Lumpkin, and Rawwas (1991) emphasizes a gap in the marketing ethics literature concerning the ethical beliefs and attitudes of the final consumers Although the ethical judgment of consumers in the United States and other industrialized countries has received considerable attention (e.g., Rawwas, Swaidan, & Oyman, 2005; Kavak et al., 2009), consumer ethics in Asian-market settings have seldom been explored (Zhao & Xu, 2013) Even though there have been a few scholars who have done research about this issue in Asia, for instance, Lu and Lu (2010) from Indonesia, Wagner-Tsukamot (2009) from Japan and Zhao and Xu (2013) from China, very few focused on this issue in Vietnam Vitell and Muncy (1992) has strongly urged for further research to look into the ethical beliefs of consumers across cultures and nationalities Since Vietnam has integrated into the global economy but yet remained a very new research site, there is an urgent quest to investigate the ethical judgment of consumers in this emerging economy in order to fill in the research gap in consumer ethics across cultures In previous research, personal characteristics that are associated with the consumers’ ethical beliefs and judgments have been paid a lot of attention (Steenhaut & Kenhove, 2006; Swaiden, Vitell, & Rawwas, 2003; Rawwas, 2001) Among those, value consciousness, Machiavellianism, high propensity to take risk, high need for closure, age, and gender have been studied quite often However, Vitell (2003) suggests that ‘‘these as well as other personality variables should be included in subsequent research studies.’’ Thus, in this study, moral philosophy (including idealism and relativism) and materialism are investigated as personality characteristics that can influence the ethical beliefs of consumers in Vietnam Again, since personality characteristics and values are central to ethical decision making and are influenced by cultural variations, this study on consumer behaviors in Vietnam has significantly answered the call for more research in different cultures to explore “many different values” and their impacts on ethical decision making (Cherry & Caldwell, 2013; Swaidan, 2012) Finally, by using instruments that were developed and used widely in Western cultures, this study also added more value to cross cultural research Thus, achieving a better scientific understanding of consumer’s ethical behavior in Vietnam would be of keen interest to academicians and practitioners 1.3 Research objective The overall objective of this study is to examine some factors that are associated with consumers’ ethical beliefs Specifically, it investigates: The relationship between materialism and consumers’ ethical beliefs The relationship between idealism and consumers’ ethical beliefs The relationship between relativism and consumers’ ethical beliefs 1.4 Research scope This study is limited in the investigation of consumers in Ho Chi Minh City, Vietnam It examines the sample of Vietnamese adults who are above eighteen years old in Ho Chi Minh City 1.5 Research contribution In this study, moral philosophy and materialism are investigated as personality characteristics that can influence the ethical beliefs of consumers in Vietnam Therefore, it is believed to have both theoretical and practical contributions At the theoretical level, this research contributes to the previous studies in the literature of consumer ethics study It sheds light on the attitude of ethical consumers in Vietnam, particularly in Ho Chi Minh City, a very new research site Moreover, it provides empirical examination of a U.S.-based research model and instrument on a sample outside of the U.S., which extends the theoretical application to a broader scope as Vitell (2003) recommended additional cross-cultural studies According to Vitell, further research is warranted to examine ethical beliefs with more detail and cultural depth to examine the universality of consumers, or lack thereof, with respect to ethical beliefs At the practical level, this study provides additional understanding into the ethical perceptions of Vietnamese consumers Such an understanding can provide further insight into corporate approaches designed to minimize the adverse impact of unethical behavior (i.e pirating or counterfeiting) on company operations in Vietnam The results of this study can help Vietnamese government and local associations raise awareness and educate the public as well as consumers about unethical consumers’ behavior Ethical consumers’ behavior will positively add more value to the business environment, which can encourage more foreign as well as local investments in Vietnam in the future 1.6 Research structure This study is organized into five chapters Chapter one starts with the research formulation Therefore, background of the research, research gap, objective and contribution are mentioned Chapter two reviews and synthesizes the theories in the literature of four concepts, including materialism, relativism, idealism and consumers’ ethical beliefs Research methodology used to empirically test the research model is also mentioned in Chapter three while Chapter four presents the results of the data analysis The last chapter, Chapter five, discusses the core findings of the study, suggests recommendations and points out some limitations of the research CHAPTER 2: LITERATURE REVIEW The purpose of this chapter is to review concepts of consumer ethics and moral philosophies which include idealism, relativism and materialism It discusses previous research concerning the impacts of moral philosophies on ethical beliefs of consumers In this chapter, literature on consumer ethics, idealism, relativism and materialism is presented In addition, a research model as well as all hypotheses are proposed and discussed accordingly 2.1 Consumer Ethics Ethical concerns in business have been extensively studied since the early 1980s In business, the major role of consumers cannot be denied (Vitell & Muncy, 1992) Although consumer ethics research was conducted before 1990 (i.e., De Paulo, 1986; Moschis & Churchill, 1978; Moschis & Powell, 1986; Wilkes, 1978), the majority of such literature has appeared only since 1990 (Vitell, 2003) Consumer attitudes toward unethical consumer practices have received considerable attention For instance, Vitell addressed this issue with other scholars (e.g., Al-Khatib, Vitell, & Rawwas, 1997; Muncy & Vitell, 1992; Vitell & Muncy, 1992; Vitell et al., 1991; Rallapalli et al., 1994; Rawwas, Vitell, & Al-Khatib, 1994; Rawwas & Singhapakdi,1998; Strutton, Vitell, & Pelton, 1994) In addition, consumer perceptions of unethical consumer behavior have been examined (Fullerton, Kerch, & Dodge, 1996; Muncy & Eastman, 1998; Polonsky et al., 2001; Rawwas, 1996, 2001; Rawwas et al., 1995; Swaidan et al., 2003) Muncy and Vitell (1992) define consumer ethics as “the moral principles and standards that guide behavior of individuals or groups as they obtain, use and dispose of goods and services.” Consumer ethics have also been described as the “rightness as opposed to the wrongness of certain actions on the part of the buyer or potential buyer in consumer situations” (Fullerton et al., 1996) Therefore, consumer ethics refers to the role of ethics in decision-making, including misconduct in the marketplace (e.g shop lifting, failing to declare undercharging, buying counterfeit goods and downloading pirated digital products) There are at least three major comprehensive theoretical models (Ferrell & Gresham, 1985; Hunt & Vitell, 1986, 1993; Trevino, 1986) of the decision making process in 10 situations involving ethical issues in marketing and business, but the Hunt-Vitell model is the only one that can be readily applied to individual consumer behavior (Vitell, 2003) This is accomplished by eliminating the constructs of professional, organizational and industry environments Thus, the Hunt-Vitell model is the most appropriate theoretical model for testing research questions involving consumer ethics The pioneering study of Vitell and Muncy (1992) examined ethical beliefs among consumers across a wide spectrum of the population to investigate consumer ethical judgments and possibly related actors This study developed a consumer ethics scale to determine the extent to which consumers believe that certain questionable behaviors are ‘‘wrong’’ or ‘‘not wrong’’ (i.e., ethical or unethical) Results from 1,900 household heads in the United States led to a four-factor solution: (1) actively benefiting from illegal activities (e.g., changing price labels in a supermarket), (2) passively benefiting (e.g., getting too much change and not saying anything), (3) actively benefiting from deceptive (questionable) practices (e.g., using an expired coupon for merchandise), and (4) no harm/no foul (e.g., copying and using computer software that the consumer did not buy) (Vitell & Muncy, 1992) Specifically, their findings revealed that actions in the first dimension are initiated by consumers, most of whom perceive that these actions are illegal The second dimension involves actions where consumers passively benefit from sellers’ mistake The third dimension is also initiated by the consumers, however these actions are not perceived to be illegal Yet, they are still morally questionable The findings of this study indicated consumers believe that it is more unethical to actively benefit from an illegal activity than to passively benefit Finally, the fourth dimension involves actions that most consumers perceive as not even being unethical at all Most of these actions involve the copying of intellectual property such as software, tapes or movies (Vitell, 2003) 50 values perspective’, Journal of Consumer Research, 29(3), 348–370 Business Software Alliance (2011) Piracy report Retrieved from http://globalstudy.bsa.org/2011/ Central Intelligence Agency.(2014) The world factbook Retrieved from https://www.cia.gov/library/publications/the-world-factbook/fields/2177.html Chang, L C and Arkin, R M (2002) Materialism as an attempt to cope with uncertainty Psychology and Marketing, 19(5), 389–406 Cherry, J and Caldwell, J (2013) Searching for the origins of consumer ethics: Bridging the gap between intuitive values and consumer ethical judgments Marketing Management Journal, 23(2), 117-133 Chowdhury, R M.M.I and Fernando, M (2013) The role of spiritual well-being and materialism in determining consumers’ ethical beliefs: An empirical study with Australian consumers Journal of Business Ethics, 113, 61–79 De Paulo, P J (1986) Ethical perceptions of deceptive bargaining tactics used by salespersons and customers: a double standard, in Joel G Sagert (ed.) 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Evidence from China Journal of Business Ethics, 113(3), 475-488 58 Appendix B: Survey Questionnaire Vietnamese version 59 60 61 Appendix C: Total variance explained in Exploratory Factor Analysis Table C1: Total Variance Explained of Independent Variables 62 Appendix D: Model summary, histogram , Normal Regression & Scatter plot of Dependent Variable Table D1 Model Summaryb Model R R Square 193a 037 Adjusted R Std Error of the Square Estimate 030 Figure D1 Histogram of ABIA 73746 Durbin-Watson 1.998 63 Figure D2 Normal Plot of ABIA Figure D3 Scatter Plot of ABIA 64 Table D2 Coefficients table Collinearity Statistics Model Tolerance VIF AVG_IDEALISM 664 1.506 AVG_RELATIVISM 616 1.623 AVG_MATERIALISM 596 1.677 (Constant)

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