How to counter the unethical practices in Pharma marketing?

The pharmaceutical sector is a multi‐billion market. For instance, the revenues in the US pharmaceutical market amounted to $. billion in (BPI: German Pharmaceutical Industry Association,). In the public mind, pharmaceutical products have often been seen as a culprit of rising healthcare cost. In, pharmaceutical products factually accounted for. per cent of total expenditures within Germany's statutory health insurance scheme (BPI: German Pharmaceutical Industry Association,). However, pharmaceutical companies can also be considered as a main force behind innovation in healthcare markets.

Just as the majority of others businesses pharmaceutical companies generally strive for excellent product or service quality and reasonable prices as the prerequisites for financial success. Recently, the moral dimension of corporate behavior has gained importance, a trend reflected in the emergence of such management concepts as corporate social responsibility and corporate citizenship (e.g. Küskü and Zarkada‐Fraser,). Moreover, as consumer sovereignty grows (Smith,), instances of unethical corporate conduct result in harsher consumer reactions, with consumer boycotts representing the most severe consumer resistance (Herrmann,). The effects of consumer boycotts can be so far reaching that they affect a firm's bottom line. For instance, during the Brent Spar boycott almost per cent of the German population boycotted Shell (Greenpeace,). Powerful opposition from consumers induced Shell to reverse its decision to dump the Brent Spar oil platform in deep Atlantic waters (Jordan,). Reactions to the BP oil spill also engaged thousands of consumers (e.g. Facebook group “Boycott BP” has more than, followers) and the consumer boycott caused company CEO Tony Hayward to resign (MacMillan,). In another example, per cent of German consumers continue to boycott Schlecker because of the drugstore chain's labor exploitation (Grassroots Germany,). Several econometric studies have also shown that consumer boycotts may have a negative effect on boycotted firms' stock price (e.g. Davidson et al.,).

Against this background, the current study investigates how instances of unethical corporate conduct impact boycott motivation. Unethical corporate conduct is part of the moral domain and has significant societal consequences. Environmental pollution (as in the BP oil‐spill), the exploitation of labor (as in Nike's abuse of child labor1), and human rights abuses by authoritarian regimes (as in the Pepsico/Burma controversy2) are examples of unethical corporate conduct. More recently, certain drug safety issues (as in Merck's Vioxx recall3) as well as marketing and advertising tactics in promoting prescription drugs have been considered as unethical business practices of pharmaceutical companies. Hence, consumer boycotts can likewise be expected to impact the bottom line of pharmaceutical companies.

Against this background, the current study focuses on the pharmaceutical industry's animal experimentation practices. Even though animal experimentation is an established practice in R&D and is legally mandated, the practice frequently attracts protests from animal rights activists, who consider the practice unethical. But as long as pharmaceutical companies follow legal regulations and protocols (standards of good clinical practice) it is questionable whether animal experimentation constitutes an unethical business practice. On the other hand, animal experimentation is controversial and makes some people uncomfortable. Thus, the question whether animal experimentation constitutes unethical corporate conduct is not easy to answer. We can initially rely on normative ethical theories from the domain of moral philosophy, including deontology and teleology. However, in a consumer research context, it is up to each citizen to judge whether pharmaceutical companies' animal experimentation practices are morally right or wrong. Hence, the current study focuses on consumer perceptions of pharmaceutical companies' alleged unethical conduct.

Many consumers regularly use over‐the‐counter drugs. The worldwide revenues for over‐the‐counter drugs of the pharmaceutical industry amounted to $.1 billion in (Pharmaceutical Technology Europe,). In, pharmaceutical companies sold over‐the‐counter drugs worth more than €6.1 billion in Germany. Compared to, sales and revenue have moderately decreased. In sum, the over‐the‐counter market represents about per cent of the total market for pharmaceuticals in Germany (BPI: German Pharmaceutical Industry Association,). About per cent of the over‐the‐counter drugs' revenue is generated in pharmacies (BPI,). About per cent of the German population is insured under a statutory health insurance (Pütz and Hagist,). There is no reimbursement of expenses for the majority of over‐the‐counter drugs in Germany's statutory health insurance since. The rest of the German population signed private insurance contracts (Schreyögg and Grabka,). These private health insurance plans reimburse a bigger part of the expenses for over‐the‐counter drugs. All in all, most of the German citiziens must thus pay the full costs for over‐the‐counter drugs.

Due to the importance of over‐the‐counter drugs for pharmaceutical companies, animal rights activists may impose significant economic pressure on pharmaceutical companies by calling for boycotts of over‐the‐counter drugs. Since these drugs are often used to treat mild illnesses such as colds and headaches, it is relatively easy for consumers to refrain from buying them and the individual costs of boycotting (Klein et al.,) are quite low. In contrast, it is more difficult to boycott prescription drugs because they may be necessary to treat serious illnesses. Hence, boycott activists typically call on consumers to forgo over‐the‐counter drugs (for further information on over‐the‐counter drugs see DeLorne et al.,)4. In keeping with this reasoning, the current study is limited to boycotts of over‐the‐counter drugs.

The academic literature on consumer boycotts has grown significantly in recent years (e.g. Hunter et al.,; Yuksel and Mryteza,; and Farah and Newman,) as the moral dimension of corporate behavior has attracted more researchers. But boycotts of pharmaceutical companies have not received sufficient attention, which is surprising because the pharmaceutical sector is considered one of the most crisis‐prone industries (Priporas and Vangelinos,), as current boycott campaigns demonstrate. For example, Novartis International AG has been criticized because the firm applied for patent protection in India for a drug called Glivec to treat chronic myeloid leukemia. Boycott activists claim that this would preclude leukemia patients in India from the access to generic drugs5. Wyeth Pharmaceuticals6 has come under activist attack because it produces estrogen drugs from the urine of pregnant mares in a way the protectors regard as cruel.

Prior empirical research reveals that, in particular, instrumental considerations (Sen et al.,), the cost‐benefit ratio of boycotting (Klein et al.,), consumer animosity and ethnocentrism (Ettenson and Klein,), solicitude and trust (Hoffmann and Müller,), and attitudinal constructs (Farah and Newman,) represent major antecedents of boycott motivation. According to an exploratory study by Kozinets and Handelman (), anger constitutes a trigger for boycott participation. According to Belch and Belch's () research, corporate image may be important for boycott motivation as well. A literature review reveals no conclusive empirical research analyzing how anger and corporate image impact boycotting behavior. There is little research, too, on the effects of perceived ethicality of criticized corporate conduct on boycott motivation. This is surprising since previous research shows that perceived unethical corporate behavior may influence consumer attitude (Folkes and Kamins,) or willingness to pay (Creyer and Ross,).

This study fills the research gap by addressing three questions: First, does anger provide a basis for boycott motivation? Second, does perceived immorality of unethical corporate conduct as well as corporate image affect boycott inclination? Third, do these constructs interact? In sum, this is the first paper delineating and validating a conceptual model which comprises anger, corporate image, and ethical evaluation as antecedents of boycotting behavior. In addition, this is the first empirical study on consumer boycotts of pharmaceutical companies.

In the next section, we develop a model of boycotting behavior. Subsequently, we present the results of an empirical study which validates our model, and discuss these findings. In the concluding section, we provide a summary and discussion of the study's managerial implications and avenues for further research as well as limitations.

Boycotts are a means for consumers to express their displeasure over misconduct by businesses, governments or other organizations. Consumer boycotts represent efforts by activist groups to hobble companies that act in an unethical manner by persuading consumers to not buy products from the offenders (Friedman,). Sen et al. () as well as John and Klein ()look at consumer boycotts from the perspective of the social dilemma theory, a sub‐area of rational choice theory. According toWeber et al. (, p.) social dilemmas represent phenomena of collective behavior where “(a) at any given decision point, individuals receive higher payoffs for making selfish choices than they do for making cooperative choices regardless of the choices made by those with who they interact and (b) everyone involved receives lower payoffs if everyone makes selfish choices than if everyone makes cooperative choices.” This is because the results of a successful boycott resemble public goods7 and individuals thus have an incentive to free‐ride (i.e. continue to buy products from the boycotted company) on the efforts of others (people refraining from the consumption of boycotted products). Individual rationality consequently results in collective irrationality (Kollock,) and social cooperation, in the form of boycott success, is endangered.

Based on psychological and consumer behavior theory, this study examines anger caused by unethical corporate conduct, perceived immorality of unethical corporate conduct and boycotted companies' corporate image. Figure1 describes the proposed relationships. Consumer anger, a negative emotional reaction to unethical corporate behavior, can be classified as a type of moral emotion. Moral emotions are complex constructs linked to concerns for well‐being (Meyer and Baker,), including one's own well‐being and that of other persons or society as a whole. Moral emotions such as consumer anger tend to elicit pro‐social action (Haidt,) and therefore should attenuate free‐riding incentives. Considering social dilemma theory, research regards boycotting as a pro‐social behavior (e.g. Klein et al.,), and boycotting thus qualifies as a consequence of consumer anger. Anger may trigger communication among consumers, and boycott supporters often try to convince others to join the boycott. Thus, boycott communication that resembles negative word‐of‐mouth and complaining behavior may help to accelerate joint action and may be critical for success. Boycott communication allows consumers to vent their anger (Nyer,) and functions as a strategy for consumers to take revenge on businesses (Wetzer et al.,). Hence, we offer hypothesis H1:

H1. The willingness to boycott is greater when there is a high level of anger caused by unethical corporate conduct. As consumers' level of anger increases due to unethical corporate behavior, they become more willing to.

The perceived immorality of corporate conduct results from a cognitive evaluation process during which consumers compare their perceptions of alleged unethical corporate behavior (e.g. animal experientation) with their ethical values and norms (e.g. Spicer et al., on the relevance of ethical norms for behavior). Lessons learned from early childhood about right and wrong establish the basis of these ethical norms and values (Reidenbach and Robin,). Moreover, and in line with Reidenbach and Robin's ()definition, perceived immorality of corporate behavior is the consumers' perception of justice and fairness of firm behavior. Helson's () adaption level theory and the disconfirmation paradigm (e.g. Anderson and Sullivan,) suggest that the more consumer perception of corporate behavior deviates from their ethical norms the stronger the perception of immorality. Perceptions of immorality may motivate people to participate in consumer boycotts. This assumption's theoretical foundation can be found in Darley and Pittman's () research on the psychology of retributive justice. They argue that the primary response to inflict harm intentionally on others is an urge to punish. Perceptions of immorality may motivate people to engage in punitive action (Pagano and Huo,), including boycotting. It then follows, as hypothesis H2 states, that:

H2. Boycott intention is greater when the perceived immorality of unethical corporate conduct is high.

The corporate image concept reflects perceptions of companies, corporate groups or even whole industries. Corporate image reflects multiple attributes (e.g. social responsibility image) in the minds of different stakeholders (Pope et al.,). According toDemetriou et al. (, p.), a positive corporate image is “the foundation for corporate success, which can be an incentive for the sale of products, recruitment of the best employees and attraction of investors, and can act as a competitive advantage.” But if the company fails to maintain a positive corporate image, it may not achieve its business objectives (Furman,). In line with Furman (), we suggest that when consumers buy products from companies with poor images (e.g. due to unethical behavior), they may experience cognitive dissonance (Festinger,), defined as a “psychologically uncomfortable state or imbalance that is produced when various cognitions about a thing are not consistent” (Bawa and Kansal,, p.). If purchasers feel guilty about buying a product, they may experience cognitive dissonance. The stronger the feeling of cognitive dissonance the higher the motivation to engage in dissonance‐reducing behavior, according to Festinger (). The current study considers the corporate image of the pharmaceutical industry as a whole. Boycott participation, which represents a purchase sacrifice (John and Klein,), is a strategy to reduce cognitive dissonance. Hence, hypothesis H3:

H3. Boycott intention is greater when corporate image of the boycotted industry is more negative.

We assume that anger caused by unethical corporate conduct results in a boost of contrast effects (Sherif et al.,). According to the disconfirmation model of consumer satisfaction, consumers analyze their consumption experiences in terms of internalized reference standards (Anderson and Sullivan,). Contrast effects may result when consumption experiences (quality perceptions) differ strongly from internalized reference standards and may cause higher or lower satisfaction responses (Babin et al.,). In line with Ottati and Isbel's () research, we assume that affective and cognitive constructs may interact, leading to an intensification of contrast effects. More precisely, we hypothesize that stronger anger reactions by consumers boost the influence of perceived immorality on boycott intentions since people who experience stronger anger exaggerate how much corporate conduct deviates from ethical norms. Thus, hypothesis H4:

H4. Anger moderates the causal relationship between perceived immorality and boycott intention: The positive and direct effect of perceived immorality on boycotting intention is greater (lower) when the level of anger is greater (or less).

According to Klein and Dawar (), a positive corporate image may serve as an insurance policy against the adverse effects of business crises. They suggest that a positive corporate image may have a halo effect that spills over onto consumer behavior, including the decision‐making process and attenuated boycott motivation. We thus hypothesize that a positive corporate image may alleviate the detrimental effects of anger and perceived immorality on boycott intention. Therefore, hypotheses H5a and H5b