The Effects of Unethical Conduct

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The effects of unethical conductof pharmaceutical companies on

consumer behaviorEmpirical evidence from Germany

Jorg LindenmeierWHL Graduate School of Business and Economics, Lahr, Germany, and

Dieter K. Tscheulin and Florian DrevsDepartment of Business Administration, University of Freiburg, Freiberg,

Germany

AbstractPurpose This study aims to investigate how unethical corporate behavior of pharmaceuticalcompanies affects consumer behavior of German consumers, especially boycotts of over-the-counterdrugs.

Design/methodology/approach Borrowing from psychological theory as well as consumerbehavior theory, the study develops a conceptual model that considers affective and cognitivedeterminants of boycotting behavior. Within the scope of the German pharmaceutical sector, theresearchers conducted a survey to validate the research hypotheses using moderated regressionanalysis.

Findings Individuals inclination to join boycotts and engage in boycott communication resultsfrom anger about animal testing, perceived immorality of pharmaceutical companies corporatebehavior and negative corporate image of pharmaceutical companies. An empirical analysis revealssignificant moderation effects.

Research limitations/implications This research focuses on the pharmaceutical sector and theboycott of over-the-counter drugs.

Practical implications The study results may help pharmaceutical companies developcommunication responses to accusations of unethical corporate behavior.

Originality/value The paper offers new insights on the effects of unethical corporate behavior onconsumers, which may be useful to the crisis-prone pharmaceutical sector.

KeywordsAnimal experimentation, Boycotting behaviour, Unethical corporate behaviour,Corporate image, Pharmaceuticals industry, Germany, Consumer behaviour

Paper typeResearch paper

IntroductionThe pharmaceutical sector is a multi-billion market. For instance, the revenues in theUS pharmaceutical market amounted to $310.75 billion in 2010 (BPI: GermanPharmaceutical Industry Association, 2011). In the public mind, pharmaceuticalproducts have often been seen as a culprit of rising healthcare cost. In 2009,pharmaceutical products factually accounted for 17.30 per cent of total expenditureswithin Germanys statutory health insurance scheme (BPI: German PharmaceuticalIndustry Association, 2011). However, pharmaceutical companies can also beconsidered as a main force behind innovation in healthcare markets.

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Just as the majority of others businesses pharmaceutical companies generally strivefor excellent product or service quality and reasonable prices as the prerequisites forfinancial success. Recently, the moral dimension of corporate behavior has gainedimportance, a trend reflected in the emergence of such management concepts as

corporate social responsibility and corporate citizenship (e.g. Kusku andZarkada-Fraser, 2004). Moreover, as consumer sovereignty grows (Smith, 1987),instances of unethical corporate conduct result in harsher consumer reactions, withconsumer boycotts representing the most severe consumer resistance (Herrmann,1993). The effects of consumer boycotts can be so far reaching that they affect a firmsbottom line. For instance, during the Brent Spar boycott almost 75 per cent of theGerman population boycotted Shell (Greenpeace, 2003). Powerful opposition fromconsumers induced Shell to reverse its decision to dump the Brent Spar oil platform indeep Atlantic waters (Jordan, 1998). Reactions to the BP oil spill also engagedthousands of consumers (e.g. Facebook group Boycott BP has more than 800,000followers) and the consumer boycott caused company CEO Tony Hayward to resign

(MacMillan, 2010). In another example, 52 per cent of German consumers continue toboycott Schlecker because of the drugstore chains labor exploitation (GrassrootsGermany, 2009). Several econometric studies have also shown that consumer boycottsmay have a negative effect on boycotted firms stock price (e.g. Davidsonet al., 1995).

Against this background, the current study investigates how instances of unethicalcorporate conduct impact boycott motivation. Unethical corporate conduct is part ofthe moral domain and has significant societal consequences. Environmental pollution(as in the BP oil-spill), the exploitation of labor (as in Nikes abuse of child labor[1]), andhuman rights abuses by authoritarian regimes (as in the Pepsico/Burmacontroversy[2]) are examples of unethical corporate conduct. More recently, certaindrug safety issues (as in Mercks Vioxx recall[3]) as well as marketing and advertisingtactics in promoting prescription drugs have been considered as unethical business

practices of pharmaceutical companies. Hence, consumer boycotts can likewise beexpected to impact the bottom line of pharmaceutical companies.

Against this background, the current study focuses on the pharmaceuticalindustrys animal experimentation practices. Even though animal experimentation isan established practice in R&D and is legally mandated, the practice frequentlyattracts protests from animal rights activists, who consider the practice unethical. Butas long as pharmaceutical companies follow legal regulations and protocols (standardsof good clinical practice) it is questionable whether animal experimentation constitutesan unethical business practice. On the other hand, animal experimentation iscontroversial and makes some people uncomfortable. Thus, the question whetheranimal experimentation constitutes unethical corporate conduct is not easy to answer.We can initially rely on normative ethical theories from the domain of moralphilosophy, including deontology and teleology. However, in a consumer researchcontext, it is up to each citizen to judge whether pharmaceutical companies animalexperimentation practices are morally right or wrong. Hence, the current study focuseson consumer perceptions of pharmaceutical companies alleged unethical conduct.

Many consumers regularly use over-the-counter drugs. The worldwide revenues forover-the-counter drugs of the pharmaceutical industry amounted to $72.1 billion in2009 (Pharmaceutical Technology Europe, 2010). In 2010, pharmaceutical companiessold over-the-counter drugs worth more than e6.1 billion in Germany. Compared to

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2009, sales and revenue have moderately decreased. In sum, the over-the-countermarket represents about 20 per cent of the total market for pharmaceuticals inGermany (BPI: German Pharmaceutical Industry Association, 2011). About 80 per centof the over-the-counter drugs revenue is generated in pharmacies (BPI, 2011). About 90

per cent of the German population is insured under a statutory health insurance (Putzand Hagist, 2006). There is no reimbursement of expenses for the majority ofover-the-counter drugs in Germanys statutory health insurance since 2004. The rest ofthe German population signed private insurance contracts (Schreyogg and Grabka,2010). These private health insurance plans reimburse a bigger part of the expenses forover-the-counter drugs. All in all, most of the German citiziens must thus pay the fullcosts 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 pharmaceuticalcompanies by calling for boycotts of over-the-counter drugs. Since these drugs areoften 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 (Kleinet al., 2004) are quite low. In contrast, it is more difficult to boycott prescription drugsbecause they may be necessary to treat serious illnesses. Hence, boycott activiststypically call on consumers to forgo over-the-counter drugs (for further information onover-the-counter drugs see DeLorne et al., 2010)[4]. In keeping with this reasoning, thecurrent study is limited to boycotts of over-the-counter drugs.

The academic literature on consumer boycotts has grown significantly in recentyears (e.g. Hunter et al., 2008; Yuksel and Mryteza, 2009; and Farah and Newman, 2010)as the moral dimension of corporate behavior has attracted more researchers. Butboycotts of pharmaceutical companies have not received sufficient attention, which issurprising because the pharmaceutical sector is considered one of the most crisis-proneindustries (Priporas and Vangelinos, 2008), as current boycott campaigns demonstrate.For example, Novartis International AG has been criticized because the firm appliedfor 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 theaccess to generic drugs[5]. Wyeth Pharmaceuticals[6] has come under activist attackbecause it produces estrogen drugs from the urine of pregnant mares in a way theprotectors regard as cruel.

Prior empirical research reveals that, in particular, instrumental considerations (Senet al., 2001), the cost-benefit ratio of boycotting (Kleinet al., 2004), consumer animosityand ethnocentrism (Ettenson and Klein, 2005), solicitude and trust (Hoffmann andMuller, 2008), and attitudinal constructs (Farah and Newman, 2010) represent majorantecedents of boycott motivation. According to an exploratory study by Kozinets and

Handelman (1998), anger constitutes a trigger for boycott participation. According toBelch and Belchs (1987) research, corporate image may be important for boycottmotivation as well. A literature review reveals no conclusive empirical researchanalyzing how anger and corporate image impact boycotting behavior. There is littleresearch, too, on the effects of perceived ethicality of criticized corporate conduct onboycott motivation. This is surprising since previous research shows that perceivedunethical corporate behavior may influence consumer attitude (Folkes and Kamins,1999) or willingness to pay (Creyer and Ross, 1996).

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This study fills the research gap by addressing three questions: First, does angerprovide a basis for boycott motivation? Second, does perceived immorality of unethicalcorporate conduct as well as corporate image affect boycott inclination? Third, do theseconstructs interact? In sum, this is the first paper delineating and validating a

conceptual model which comprises anger, corporate image, and ethical evaluation asantecedents of boycotting behavior. In addition, this is the first empirical study onconsumer boycotts of pharmaceutical companies.

In the next section, we develop a model of boycotting behavior. Subsequently, wepresent the results of an empirical study which validates our model, and discuss thesefindings. In the concluding section, we provide a summary and discussion of the studysmanagerial implications and avenues for further research as well as limitations.

Conceptual considerationsBoycotts are a means for consumers to express their displeasure over misconduct bybusinesses, governments or other organizations. Consumer boycotts represent efforts

by activist groups to hobble companies that act in an unethical manner by persuadingconsumers to not buy products from the offenders (Friedman, 1985). Senet al.(2001) aswell as John and Klein (2003) look at consumer boycotts from the perspective of thesocial dilemma theory, a sub-area of rational choice theory. According to Weberet al.(2004, p. 281) social dilemmas represent phenomena of collective behavior where (a) atany given decision point, individuals receive higher payoffs for making selfish choicesthan they do for making cooperative choices regardless of the choices made by thosewith who they interact and (b) everyone involved receives lower payoffs if everyonemakes selfish choices than if everyone makes cooperative choices. This is because theresults of a successful boycott resemble public goods[7] and individuals thus have anincentive to free-ride (i.e. continue to buy products from the boycotted company) on theefforts of others (people refraining from the consumption of boycotted products).

Individual rationality consequently results in collective irrationality (Kollock, 1998)and social cooperation, in the form of boycott success, is endangered.

Based on psychological and consumer behavior theory, this study examines angercaused by unethical corporate conduct, perceived immorality of unethical corporateconduct and boycotted companies corporate image. Figure 1 describes the proposed

Figure

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relationships. Consumer anger, a negative emotional reaction to unethical corporatebehavior, can be classified as a type of moral emotion. Moral emotions are complexconstructs linked to concerns for well-being (Meyer and Baker, 2010), including onesown 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, 2003) and therefore shouldattenuate free-riding incentives. Considering social dilemma theory, research regardsboycotting as a pro-social behavior (e.g. Klein et al., 2004), and boycotting thusqualifies as a consequence of consumer anger. Anger may trigger communicationamong consumers, and boycott supporters often try to convince others to join theboycott. Thus, boycott communication that resembles negative word-of-mouth andcomplaining behavior may help to accelerate joint action and may be critical forsuccess. Boycott communication allows consumers to vent their anger (Nyer, 2000) andfunctions as a strategy for consumers to take revenge on businesses (Wetzer et al.,2007). Hence, we offer hypothesisH1:

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 increasesdue to unethical corporate behavior, they become more willing to.

The perceived immorality of corporate conduct results from a cognitive evaluationprocess during which consumers compare their perceptions of alleged unethicalcorporate behavior (e.g. animal experientation) with their ethical values and norms(e.g. Spiceret al., 2004 on the relevance of ethical norms for behavior). Lessons learnedfrom early childhood about right and wrong establish the basis of these ethical normsand values (Reidenbach and Robin, 1990). Moreover, and in line with Reidenbach andRobins (1990) definition, perceived immorality of corporate behavior is the consumersperception of justice and fairness of firm behavior. Helsons (1964) adaption leveltheory and the disconfirmation paradigm (e.g. Anderson and Sullivan, 1993) suggest

that the more consumer perception of corporate behavior deviates from their ethicalnorms the stronger the perception of immorality. Perceptions of immorality maymotivate people to participate in consumer boycotts. This assumptions theoreticalfoundation can be found in Darley and Pittmans (2003) research on the psychology ofretributive justice. They argue that the primary response to inflict harm intentionallyon others is an urge to punish. Perceptions of immorality may motivate people toengage in punitive action (Pagano and Huo, 2007), including boycotting. It thenfollows, as hypothesis H2states, that:

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

The corporate image concept reflects perceptions of companies, corporate groups oreven whole industries. Corporate image reflects multiple attributes (e.g. socialresponsibility image) in the minds of different stakeholders (Pope et al., 2004).According to Demetriou et al. (2010, p. 269), a positive corporate image is thefoundation 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 acompetitive advantage. But if the company fails to maintain a positive corporateimage, it may not achieve its business objectives (Furman, 2010). In line with Furman(2010), we suggest that when consumers buy products from companies with poor

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images (e.g. due to unethical behavior), they may experience cognitive dissonance(Festinger, 1957), defined as a psychologically uncomfortable state or imbalance thatis produced when various cognitions about a thing are not consistent (Bawa andKansal, 2008, p. 31). If purchasers feel guilty about buying a product, they may

experience cognitive dissonance. The stronger the feeling of cognitive dissonance thehigher the motivation to engage in dissonance-reducing behavior, according toFestinger (1957). The current study considers the corporate image of thepharmaceutical industry as a whole. Boycott participation, which represents apurchase sacrifice ( John and Klein, 2003), is a strategy to reduce cognitive dissonance.Hence, hypothesisH3:

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

We assume that anger caused by unethical corporate conduct results in a boost ofcontrast effects (Sherif et al., 1961). According to the disconfirmation model of

consumer satisfaction, consumers analyze their consumption experiences in terms ofinternalized reference standards (Anderson and Sullivan, 1993). Contrast effects mayresult when consumption experiences (quality perceptions) differ strongly frominternalized reference standards and may cause higher or lower satisfaction responses(Babin et al., 1994). In line with Ottati and Isbels (1996) research, we assume thataffective and cognitive constructs may interact, leading to an intensification of contrasteffects. More precisely, we hypothesize that stronger anger reactions by consumersboost the influence of perceived immorality on boycott intentions since people whoexperience stronger anger exaggerate how much corporate conduct deviates fromethical norms. Thus, hypothesis H4:

H4. Anger moderates the causal relationship between perceived immorality andboycott intention: The positive and direct effect of perceived immorality onboycotting intention is greater (lower) when the level of anger is greater (orless).

According to Klein and Dawar (2004), a positive corporate image may serve as aninsurance policy against the adverse effects of business crises. They suggest that apositive corporate image may have a halo effect that spills over onto consumerbehavior, including the decision-making process and attenuated boycott motivation.We thus hypothesize that a positive corporate image may alleviate the detrimentaleffects of anger and perceived immorality on boycott intention. Therefore, hypothesesH5aand H5b are:

H5a. Corporate image moderates the causal relationship between anger andboycott intention: The positive and direct effect of anger on boycottingintention is greater (lower) when the corporate image is negative (positive).

H5b. Corporate image moderates the causal relationship between perceivedimmorality and boycott intention: The positive and direct effect of perceivedimmorality on boycotting intention is greater (lower) when the corporateimage is negative (positive).

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According to Senet al.(2001), several types of counterarguments or costs of boycottingmay dilute individual boycott motivation. For instance, free-riding incentives or thesmall-agent problem, linked to social dilemma theory, represent indirect costs ofboycotting. The inconveniences associated with constrained consumption are direct

costs of boycotting (Klein et al., 2004). When the preference for boycotted products orbrands is high or the number of suitable substitutes is low, these inconveniences aremore pronounced (Sen et al., 2001). Within a health-related context, perceivedvulnerability to disease (Ho, 1998) may be counted among the direct costs of boycottparticipation. The more vulnerable to diseases people perceive themselves the higherwill be their preference for certain pharmaceuticals. Therefore, hypothesis H6is:

H6. Counterarguments have a negative and direct effect on boycotting intention.

MethodThis studys factual research object involves boycott campaigns of animal rights

activists who aim to stop pharmaceutical companies animal testing practices. Theauthors chose this issue because 56.5 percent of EU citizens deem animal experimentsunacceptable, even when their purpose is to develop new medicines and treatments fordiseases (European Commission, 2006). Thus, we can assume that many people regardpharmaceutical companies animal testing practices as instances of unethical corporateconduct.

The survey that provides the data for this study took place in Spring 2010. Studentresearch assistants distributed questionnaires in person to the sample, which theauthors define as the German population between 18 and 65 years of age. Using quotasampling, the student assistants conducted interviews with people who fit the quotacriteria for gender and age. The interviews were conducted in person, which yielded arepresentative sample of German-speaking 214 interviewees whose characteristics

appear in Table I. Respondents average age is 42.3 years, the average age of theGerman population. A total of 18 respondents are vegetarians (Vegetarier.net, n.d.) and90 respondents frequently use homeopathic drugs (Allensbach Institute for PublicOpinion Research, 2009), percentages that correlate closely with those in the overallGerman population. Thus, the sampling procedure apparently resulted in a sample ofgood quality.

At the outset of the interview the participants read preliminary information onpharmaceutical industrys animal experimentation practices and campaigns againstthem, including statements that refraining from buying over-the-counter drugs such as

Gender

Age Men Women Total(years) n (%) n (%) n (%)

18-29 20 20 40 18.730-39 23 26 49 22.940-49 28 28 56 26.250-59 23 26 49 22.960-65 10 10 20 9.3Total 104 48.6 110 51.4 214 100.0

Table I.Sample characteristics

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nasal sprays or painkiller, is a means to support activists mission. According to amarket research report (Institut fur Demoskophie Allensbach, 2011), 48.1 (34.2 per cent)of the German population did use over-the-counter painkillers (cold medicines) in 2010.The revenue with over-the-counter cold medicines (painkillers) summed up to e1.1

(e0.4) in 2010. To be clearer, the product categories considered in the current studyrepresent the best-selling over-the-counter products in Germany.

Thereafter, the interviewees responded to questions related to the constructsdepicted in Figure 1. The perceived immorality measure uses the four items of themoral equity dimension of Reidenbach and Robins (1990) multidimensional ethicsscale (Animal testing is unfair., Animal testing is unjust., Animal testing ismorally wrong., and Animal testing is not acceptable to my friends and family.).Anger is measured along a three-item scale (I feel angry!, I feel irritated!, and I feelhostile!). To measure the pharmaceutical industrys image we used Riordan et al.s(1997) scale (Generally I think the pharmaceutical industry has a good reputation inthe community., [. . .] has a good reputation in the industry., ]. . .] is activelyinvolved in the community. ,[. . .] a good overall image., [. . .] is known as a goodplace to work., and [

. . .] has a good reputation among its customers.). To assess the

effect of arguments against boycott participation, expected need of medication is asingle item measure (How likely is it that you will need over-the-counter medicine(e.g. nasal spray or painkiller) within the course of the next weeks?). According to thestatistics in Table II, these scales show reasonable reliability and validity. To addressthe question of boycott intention and boycott communication the questionnaireincludes three item measures (I am talking about the boycott of the pharmaceuticalindustry with my friends and acquaintances./I am boycotting over-the-counter drugs.;I am tempted to boycott over-the-counter drugs/tell others about the boycott, but Idont know if I will.; and I am not boycotting over-the-counter drugs. I am not talkingabout the boycott of the pharmaceutical industry with my friends and acquaintances.)

based on a scale developed by Klein et al. (2004). Finally, the respondents answeredquestions on their socio-demographic characteristics.

Study resultsThis study uses moderated regression analysis to test the relationships proposed.Table III shows the results of two moderated regression models. As Aiken and West

Mean SDCronbachs

alpha (1) (2) (3) (4) (5)

Anger about animal testing 2.84 1.08 0.81 0.73 b

Animal testings perceived immorality 4.62 1.12 0.95 0.30 0.85Pharmaceutical industrys corporateimage

3.75 1.77 0.89 0.05 0.03 0.54

Counter-argumentsa 2.41 1.12 0.01 0.03 0.00 Boycott intention 3.40 1.12 0.90 0.26 0.49 0.14 0.01 0.89Boycott communication 3.75 1.14 0.89 0.30 0.48 0.05 0.05 0.84

Notes: aCronbachs alpha and average variance extracted cannot be calculated for single-itemmeasures. bNumbers in italics represent average variance extracted

TableDescriptive statist

average variaextracted, Cronba

alpha, and squainterconst

correlati

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suggest (1991), we mean-center the four independent variables. To assess the proposedmoderating effects, we create interaction terms by multiplying the mean-centeredvariables. Since all dependents are mean-centered variables or the results ofmean-centered variables multiplication, the value of the regression constant

corresponds to the dependent variables average value. Table III shows that thevariance inflation factors reflect low multicollinearity. In addition, adjusted R-squaredof 0.36 and 0.53 indicates moderate-to-good overall model fit.

H1 posits a positive and direct effect of anger about animal testing practices onindividuals intention to boycott the pharmaceutical industry. Examining angersregression coefficients, the authors find support for this hypothesis. Hence, angerappears to be an affective basis of boycott intention. The regression results indicatethat perceived immorality of animal testing has a significant effect on intention to joina boycott against the pharmaceutical industry as well as to engage in boycottcommunication, in line with hypothesisH2, which suggests that boycotting representsa means to restore fairness and equity. Interestingly and (not) consistent with H3,

pharmaceutical industrys corporate image has (no) significant effect on the intentionto join a boycott of over-the-counter drugs (engage in boycott communication). Sincecognitive dissonance results from individuals purchase decisions these findings are

Intention to jointhe boycott againstthe pharmaceutical

industry

Intention to engagein boycott

communicationUnstandardized

coefficientsUnstandardized

coefficients VIF

Constant 3.69 * * * 3.24 * * *

Anger about animal testing ! Behavioralintent (H1) 0.24* *

0.32* * *

1.45

Animal testings perceived immorality !Behavioral intent (H2)

0.58 * * * 0.57 * * * 1.56

Pharmaceutical industrys corporate image (2)! Behavioral intent (H3)

0.23 * * 0.07ns 1.07

Animal testings perceived immorality Anger about animal testing ! Behavioralintent (H4)

0.04ns 0.13 * * * 1.15

Pharmaceutical industrys corporate image (2) Anger about animal testing ! Behavioralintent (H5a)

20.13ns 20.12ns 1.32

Pharmaceutical industrys image (2) Animal testings perceived immorality !

Behavioral intent (H5b)

20.06ns 0.11 * * 1.32

Counterargument (Expected need formedication) ! Behavioral intent (H6)

0.02ns 0.08ns 1.05

Adj.R-squared 0.36

Adj.R-squared 0.53

F(6,206) 20.71 * * * F(6,206) 40.19 * * *

Notes: *p, 0.10, * *p , 0.05, * * *p, 0.01. Analysis considers corporate image reversely coded. Allindependents are mean-centered variables or the product of mean-centered variables

Table III.Test of hypothesizedrelationships (moderatedregression analysis)

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unsurprising. Put simply, individuals may (not) easily establish a clear link betweentheir prior purchasing decisions and boycotting (communication). Therefore,boycotting (boycott communication) is (not) a strategy to reduce cognitivedissonance. Table III shows that the immorality anger interaction effect is

merely significant with regard to boycott communication intention. Simple-slopeanalysis shows that the regression coefficient of animal testings perceived immoralityis 0.84 (p, 0.01), 1.16 (p, 0.01), and 1.47 (p, 0.01) for low, average, and high levelsof anger about animal testing practices. Thus, this significant interaction effect is inline with hypothesis H4, which suggests that anger causes contrast effects. Inagreement with hypothesisH5b, the image immorality interaction has a significanteffect on the willingness to engage in boycott communication. Simple-slope analysisindicates that the regression coefficient of animal testings perceived immorality is 1.08(p , 0.01), 1.29 (p , 0.01), and 1.50 (p , 0.01) for low, average, and high levels ofpharmaceutical industrys negative corporate image. The more positivepharmaceutical industrys corporate image the less strong is the effect of anger on

boycott communication intention, supporting hypothesis H5b that corporate imageapparently acts as an insurance policy against the adverse effects of boycotts.HypothesisH5aposits an interaction effect of corporate image and anger. Empiricalanalysis contradicts this hypothesis. Apparently, pharmaceutical companies corporateimage has no effects that extend from the cognitive sphere to the domain of emotions.Finally, and in contrast to hypothesisH6, the need for medication has no significanteffect on the two facets of boycott intention, perhaps because the survey measuredinterviewees expectations. The counter arguments may have a more pronounced effectwhen there is a factual need for medication.

Limitations, managerial implications and avenues for future research

This study analyses how pharmaceutical companies unethical behavior causesnegative reactions by German consumers. Empirical analysis assesses the effects ofanger caused by unethical corporate behavior, of perceived immorality of unethicalcorporate behavior and corporate image on German consumers intention to boycottover-the-counter drugs. The results of moderated regression analyses indicate that allthree independent variables affect individual inclination to boycott pharmaceuticalcompanies and to engage in boycott communication. With regard to consumerwillingness to engage in boycott communication, empirical analysis reveals significantmoderation effects.

Any interpretation of this studys results should be tempered by its limitations.First, this study is confined to the boycott of over-the-counter drugs. An incautiousapplication of the current studys results into a general pharmaceutical industrycontext is problematic. This is due to the complexity of pharmaceutical consumption(e.g. physicians as gatekeepers to market of Rx-drugs) as well as to the manifoldness ofend users in the pharmaceutical industry (e.g. patients, pharmacists, or private healthinsurance firms). Second, this study focuses on behavioral intent, which does notnecessarily correlate with actual behavior. Third, the empirical results may bedistorted by the influence of concerns related to social desirability, which may haveprompted respondents to over-report their inclination to boycott the pharmaceuticalindustry.

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The current research suggests managerial implications for pharmaceuticalcompanies. Pharmaceutical companies in general cannot control immediate affectiveresponses to unethical corporate conduct, such as anger caused by animalexperimentation. Rather, attempts to manipulate consumer emotions may even

boomerang. Thus, pharmaceutical companies should refrain from communicationtactics aimed at disarming anger. Nevertheless, the study results provide managers ofpharmaceutical firms with two promising courses of action to dampen the detrimentaleffects of consumer boycotting behavior. First, pharmaceutical companies shouldcontinue to strive for a positive corporate image. Image campaigns that involvemultiple pharmaceutical firms can reduce the negative effects of boycott campaigns[8].Moreover, one can assume that single pharmaceutical companies should independentlystrive for a positive corporate social responsibility image as well. Research shows thatcommunication tactics such as cause-related marketing (e.g. Demetriouet al., 2010) andsponsoring select events (e.g. Gwinner and Eaton, 1999) are effective means ofimage-building. Second, pharmaceutical companies that wish to lessen boycott

intentions must address consumer perceptions of their immorality. But changes inanimal testing practices in response to animal rights activists are not feasible in mostcases because of government regulations such as those of the US Food and DrugAdministration. Therefore, pharmaceutical firms should attempt to influenceconsumer perceptions through communication. Bradford and Garrett (1995) pointout that companies have different types of communicative responses to accusations ofalleged unethical conduct at their disposal (Bradford and Garrett, 1995). While a nocomment response draws negative reactions (Hunter et al., 2008), concessions(Bradford and Garrett, 1995) may be more effective. However, managers ofpharmaceutical firms should keep in mind that concessions may have a negativeeffect on a firms image as a strong boycott opponent. Excuses may be moreappropriate (Hillet al., 2000). But when an activist groups accusations are substantive,

excuses may result in an unfavorable boomerang effect (Bradford and Garrett, 1995).Pharmaceutical companies may also monitor consumer anger with early warningsystems, which should focus on social milieus that recruit activists, such as blogs andsocial networks.

The current studys findings open avenues for further research. First, futureresearch could analyze whether this studys findings are valid in other instances ofunethical corporate conduct as well for prescription drugs. Second, researchers couldfocus on the effects of moral transgression committed by health service providers(e.g. medical malpractice). Third, researchers could modify and enhance the proposedmodel. For example, constructs such as patient compliance could be included whenboycotts of Rx-only drugs are investigated. Fourth, and based on Bradford andGarretts (1995), Hill et al.s (2000) and Hunter et al.s (2008) research on crisiscommunication, future research could analyze in more detail how pharmaceuticalcompanies and health service providers should respond to accusations of unethicalcorporate conduct. Fifth, considering the proposed model, researchers could comparehow pharmaceutical sector overall image versus individual company image affectconsumer boycotting decisions. Sixth, since the current study did not consider any timeeffects, panel analyses should be conducted. By doing this, corporate image and itsdynamic effects on consumer behavior could be tracked and analyzed over the courseof a boycott campaign. Seventh, affective responses other than consumer anger could

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be considered. For instance, animal experimentation might arouse disgust (e.g. Shimpand Stuart, 2004). Finally, future research could investigate whether calls for boycottsinfluence pharmaceutical firms financial performance.

Notes

1. See, e.g. Lockeet al. (2007).

2. See, e.g. Coombs (1998).

3. Vioxx, the painkiller developed and marketed by Merck, had serious side effects such ascardiac infarctions and apoplectic strokes (see, e.g. www.timesonline.co.uk/tol/comment/article5590806.ece (accessed 19 April 2011)). Legal suits charged that the pharmaceuticalcompany was aware of the side effects and tried to conceal unfavorable results of clinicaltrials.

4. For example, environmental activist groups try to push consumer to refrain from theconsumption of over-the-counter drugs such as Alka Seltzer and Canesten to put pressure on

Bayer AG (see, e.g. http://bristol.indymedia.org/article/14150; accessed 12 April 2011).5. See http://novartisboycott.org (accessed 6 October 2010).

6. http://equinevoices.org/wyeth.php (accessed 6 October 2010) and www.islandnet.com/,luree/premarin.html (accessed 11 April 2011).

7. Consumer boycott research typically distinguishes between instrumental and expressiveboycott campaigns. Instrumental boycotts can be considered successful when the boycottedcompany stops the criticized corporate behavior. In contrast, expressive boycotts are deemedsuccessful when public opinion is affected (Friedman, 1991).

8. For instance, the Association of German research-based pharmaceutical companies recentlylaunched a campaign to improve the industrys public image. See, e.g. www.vfa.de/de/presse/pressemitteilungen/pm-036-2005-vfa-informationskampagne-erhaelt-den-politikaward.html (accessed 12 April 2011).

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About the authorsJorg Lindenmeier is an Assistant Professor at the WHL Graduate School of Business andEconomics. He has published in a number of peer-reviewed journals, including Journal of

Business Research, Health Services Management Research, Voluntas: International Journal of

Voluntary and Nonprofit Organizations, and Nonprofit Management & Leadership. JorgLindenmeier is the corresponding author and can be contacted at: [email protected] K. Tscheulin is a Professor of Healthcare Management and Marketing as well as Dean

of the Faculty of Economics and Behavioral Sciences at the University of Freiburg, Germany. Hehas experience as a management consultant, specializing in pricing strategies and product andservice innovation processes. He has written and edited several books and published inpeer-reviewed journals, including Health Services Management Research, European Journal of

Health Economics, Journal for Public and Nonprofit ServicesandJournal of Advertising Research.Florian Drevs is a Postdoctoral Research Fellow in the Department of Marketing and Health

Care Management at the University of Freiburg, Germany. He has experience as a managementconsultant in the healthcare industry. He has published in peer-reviewed journals, including

European Journal of Health Economicsand Journal for Public and Nonprofit Services.

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