Seller beware: Research shows that ethical behavior matters to consumers and economy.

Caveat emptor. That familiar caution, “let the buyer beware,” deals with only half of the buyer-seller equation.

“Consumers and businesses enter into a relationship based on trust,” said John Tsalikis, BMI associate professor of marketing in the College of Business Administration. “If companies break that trust, their businesses—and ultimately, the economy—will suffer.”

John Tsalikis
John Tsalikis

Tsalikis, who has researched business ethics for twenty years, took note of the Enron scandal and decided to measure how people think about the ethical treatment they receive from businesses. Although there are indices of consumer confidence and many company-specific customer satisfaction surveys, no one else was zeroing in on ethics.

“We can’t confuse ethics with satisfaction,” he said. “If a company sells you a faulty part or provides poor service but they make it right, that behavior is not unethical.”

He and Bruce Seaton, associate professor, Department of Marketing, developed a short survey—the Business Ethics Index (BEI)—which has been conducted with 1,000 phone respondents each year since 2004. Data from the fourth survey will be available in late April, 2008. The survey includes four questions in which respondents rank both their personal perceptions of how a business treats them and how media reports of world events, such as the Enron collapse, affect their perceptions of companies. It also includes two open-ended questions that invite participants to describe experiences they consider examples of unethical treatment.

Bruce Seaton
Bruce Seaton

After receiving the data from the next survey, Tsalikis feels there will be enough information to note trends, which he and Seaton will continue to track through future surveys.

Authors take the survey worldwide and publish results yearly.

Using local marketing companies, Tsalikis and Seaton have expanded the BEI to eighteen other countries, encountering a number of interesting challenges as they tailor the survey to country-specific issues.

“In Mexico, the word ethics didn’t translate, so the data collectors used ‘honesty,’” Tsalikis said. “In Russia, it would appear that all businesses behave ethically, but we think that respondents might have been afraid to voice their opinions over the phone.”

Each country has its own hierarchy of behaviors people consider unethical.

“We found that in the United States, by far the biggest complaint had to do with price gouging,” Tsalikis said, “whereas in China, fake products were mentioned most often.”

Tsalikis and Seaton have published their results annually in the Journal of Business Ethics, a leading publication in the management and international business fields.

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