Monthly Archives: May 2008

[Reading] Does being ethical really pay or not?

The Wall Street Journal published an interesting article on May 12 titled “Does Being Ethical Pay?”. It talked about:

Companies spend huge amounts of money to be ‘socially responsible.’ Do consumers reward them for it? And how much?

In the end of the article, the author information are: Mr. Trudel is a doctoral candidate in marketing at the University of Western Ontario’s Ivey School of Business. Dr. Cotte is the George and Mary Turnbull faculty fellow and associate professor of marketing at the Ivey School.

Here are my excepts from the article as their key findings:

In all of our tests, consumers were willing to pay a slight premium for the ethically made goods. But they went much further in the other direction: They would buy unethically made products only at a steep discount.

What’s more, consumer attitudes played a big part in shaping those results. People with high standards for corporate behavior rewarded the ethical companies with bigger premiums and punished the unethical ones with bigger discounts.

Finally, we discovered that companies don’t necessarily need to go all-out with social responsibility to win over consumers. If a company invests in even a small degree of ethical production, buyers will reward it just as much as a company that goes much further in its efforts.

Interesting research result?

Stay tuned.

An even more interesting thing is that an MBA student from the Haas School of Business, University of California, Berkeley responded in the Berkeley MBA Student Blogs by a blog entry titled “Does being ethical really pay?“.

Here are the Berkeley student’s key findings:

In our survey we found that consumers were not rewarding high ethical standards over a control group.

Unlike the study cited in the WSJ we found that in both the immediate questions and the delayed questions, participants actually had a lower willingness to pay when they were informed about the company’s ethical practices and we had to reject our initial hypothesis that ethical standards would increase our participants’ willingness to pay.

So at the end the blog article said:

So does being ethical really, really, really pay? As much as I would like to say “Yes”, all I can say is “Sometimes… Maybe“!

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