JOURNAL O F CONSIJMER PSYCHOLOGY, 8(3),243-259

Copyright O 1999, Lawrence Erlbaum Associates, Inc.

Effects of Information About Firms'

Ethical and Unethical Actions on
Consumers' Attitudes
Valerie S. Folkes and Michael A. Kamins
Marshall School of Business
University of Southern California

Three experiments examined the manner in which consumers are influenced by in-
formation about firms' ethical behaviors and product attribute information when
forming attitudes toward the firm. Confirming principles drawn from evaluations of
individuals, results showed that a superior product attribute enhances attitudes to-
ward ethically behaving firms more than toward unethically behaving firms. Fur-
thermore, consumers' attitudes toward superior products differed depending on the
type of ethical behavior enacted by the firm-whether refraining from unethical be-
havior or acting prosocially. However, when a product attribute was inferior, firms'
ethics had less impact.

The inherent value of adhering to society's moral standards is a sufficient reason for
managers to make ethical decisions. In addition, managers are sometimes encour-
aged to behave in an ethical manner because information about a firm's ethical be-
haviors is thought to influence product sales and consumers' image of the company
(Mascarenhas, 1995). Despite these potentially important consequences, little em-
pirical research has compared the effect of firms' ethical and unethical actions on
consumers' perceptions of the firms. When studies do examine the impact of infor-
mation about firms' ethics, consumers' evaluations can often be explained in terms
of self interest (e.g., consumers want firms to behave responsibly toward them and
their community) or social pressure (e.g., conformity pressures may lead consumers
to boycott unethical firms;e.g.,Brown& Dacin, 1997; Miller & Sturdivant, 1977).

Requests for reprints should be sent to Valerie S. Folkes, Department of Marketing, Marshall
School of Business, University of Southern California, Los Angeles, CA 90089-1421. E-mail:
vfolkes@sba.usc.edu
244 FOLKES AND KAMlNS

We conducted three experiments that examine the impact of information about

firms' ethical behaviors, but in a context in which social pressure and self interest
are minimized. Furthermore, our focus is on the way consumers differentially
evaluate information about firms' ethical and unethical behaviors in comparison to
information about a product attribute. Hence, we compared effects of information
about the ethical behavior of the firm with the kind of brand specific information
more typically used by consumers to evaluate products.
The conceptual basis for our research derives from the literature in social psy-
chology on integration biases in impression formation and, in particular, on the
diagnosticity of information (e.g., Reeder & Brewer, 1979; Skowronski &
Carlston, 1987a). Previous research suggests that people have a "negativity bias"
in evaluating individuals' moral behaviors in that they weigh negative behaviors
more heavily than positive behaviors. The research presented here shows that this
negativity bias applies also to evaluations of organizations. Furthermore, it identi-
fies a bias for evaluating organizations that perform certain kinds of ethical acts
more positively than organizations that perform other kinds of ethical acts.

BIASES IN THE USE OF INFORMATION

Research investigating consumers' attitudes toward firms suggests that they are
multidimensional, reflecting ethical standards of evaluation as well as product per-
formance standards. For example, Brown and Dacin (1997) found that corporate
evaluation is a function of both a perception of a company's contributions to the
community and its performance in the marketplace. However, the precise way in
which information about firms' actions in the ethical domain and information about
the performance of the products they make is integrated has not been systematically
investigated. Although it seems obvious that consumers hold more positive atti-
tudes toward ethically behaving companies than unethically behaving companies
and toward companies that make products possessing superior attributes than those
with inferior attributes, this information may be combined in complex ways de-
pending on its diagnosticity.

Negativity Biases in Moral Evaluations

An indication of potential complexities in the way firms' ethical information influ-

ences consumers' evaluations comes from the literature examining how informa-
tion about individuals' ethical behaviors influences others' evaluations-that re-
search has revealed a negativity bias (for a review, see Skowronski & Carlston,
1987a). Rather than merely having opposite effects on evaluation, information
about ethical and unethical actions has an asymmetrical influence on attitudes, such
 FIRMS' ETHICS 245

that vices detract from attitudes more than virtues enhance them (Reeder & Brewer,
1979; Skowronski & Carlston, 1987a). The standard explanation for this bias is that
immoral actions (e.g., dishonesty) are more diagnostic of negative traits than moral
actions (e.g., honesty) are of positive traits. Performing in an immoral way provides
a more unambiguous inference of character than does performing morally. For ex-
ample, compare a person who acts immorally by stealing money with the person
who acts morally by returning money when the cashier gives back too much
change. The former can be more easily categorized as dishonest than the latter can
be categorized as honest.
Skowronski and Carlston (1987a) persuasively argued on logical and empirical
grounds that diagnosticity differs because of people's beliefs about the usefulness
of types of behaviors as information cues: "People generally expect more inconsis-
tency from those perceived as possessing negative traits than from those perceived
as possessing positive traits" (Skowronski & Carlston, 1987a, p. 137). Immoral
acts are diagnostic of bad character because even bad people do not consistently
perform immoral actions. For example, a few thefts permit the categorization of a
person as a thief, even though the thief does not steal all the time. Sometimes the
thief will refrain from stealing. In contrast, moral acts are not as diagnostic of good
character because bad people sometimes act morally due to conformity pressures
and ingratiation attempts (Skowronski & Carlston, 1987b). Hence, when a person
performs an unethical action, the observer can infer that the individual is a bad per-
son more confidently than the observer can infer that a person who performs an
ethical action is a good person.
Asymmetry in the interpretation of moral actions should apply also to a con-
sumer's perception of a corporation. The social psychology literature indicates
that, like individuals, organized and coherent groups of people are perceived as
having dispositional qualities or characteristics (for a review, see Hamilton &
Sherman, 1996). For example, organizations can be perceived as " g o o d and
"bad" just as individuals are. Organizational theorists seem to acknowledge that
firms have such qualities in the concern about corporate image (e.g., Riordan,
Gatewood, & Barnes, 1997). Consumers' attitudes toward firms are likely to in-
corporate notions of whether firms are good or bad.
Information that a firm has acted in an unethical way should provide stronger
evidence of the firm's characteristics than does information that a firm has acted
in an ethical way, consistent with research examining impressions of individu-
als. For example, a firm that behaves unethically by employing child labor pro-
vides stronger evidence that the firm is an unethical firm compared to the
evidence provided about the nature of a firm that behaves ethically by avoiding
child labor. People make attributions for firms' behaviors (for a review, see
Folkes, 1988) and may believe that companies, like individuals, sometimes act
ethically for extrinsic rather than intrinsic motives. For example, a firm may
avoid employing child labor to gain favor with consumers rather than for the
246 FOLKES AND KAMlNS

sake of adhering to ethical principles. Accordingly, a firm's transgressions

should have a greater impact on consumers' attitudes toward the firm than its
virtuous behaviors. Experiment 1 examines this issue.

Differences in Types of Ethical Actions

Asymmetric effects of vice and virtue arise from differential usefulness of the in-
formation, according to category diagnosticity theory (Skowronski & Carlston,
1987a). Ethical behavior (e.g., honesty) is not uniquely associated with good char-
acter but can be explained in other ways. Yet, the possibility of differential
diagnosticity across types of ethical behaviors has not been explored. It may be that
one kind of ethical behavior-prosocial behavior-is more diagnostic than avoid-
ing vice. Prosocial behaviors generally entail altruistic actions that benefit others
but are not obligatory by moral standards, as when a firm seeks out and helpsdisad-
vantaged groups.
Prosocial acts seem more uniquely associated with good character inferences
than virtuous behaviors that involve refraining from vice and so are more diagnostic
than refraining from vice. Whereas many ethical behaviors are obligatory, prosocial
behaviors are not. Many people believe that individuals have a responsibility not to
do harm (e.g., not to employ child labor) but do not believe that others have aright to
be helped (e.g., to provide employment for victims of disasters; Spranca, Minsk, &
Baron, 1991). For example, helping is not legally mandatory in that rarely is it re-
quired by Good Samaritan laws. Less obligation to help suggests more variability in
the extent to which a person acts prosocially and more confident attribution to aper-
son's dispositional qualities than to other factors when the person does help (i.e., at-
tribution to intrinsic motives rather than to extrinsic motives).
Furthermore, society provides standards of behavior that permit people to act in
morally justifiable ways while not helping others. For example, the reciprocity
norm requires people to give and return favors in equal amounts. In contradiction
to the reciprocity norm, prosocial behavior involves giving without any return.
Both behaviors are morally justifiable. Similarly, people believe that a fair and just
rule for dividing resources is to give rewards commensurate with their inputs.
Nevertheless, those who allocate rewards at times diverge from this principle,
overcompensating disadvantaged others in the name of fairness (e.g., Levanthal,
1976). Hence, good people need not always behave prosocially.
Variability in the extent to which prosocial behavior occurs may enhance its
diagnosticity. Less evidence about prosocial behaviors may provide more confi-
dence that a person is a good person than evidence of refraining from an immoral ac-
tion. For example, a person need not consistently help on every occasion to be
considered a helpful person, just as a person need not consistently act dishonestly to
be considered a dishonest person. This analysis suggests that when a firm's virtuous
 FIRMS' ETHICS 247

action involves prosocial behavior, consumers should have more positive attitudes
toward the firm than when a firm's virtuous action pertains to refraining from vice.
The research presented here takes a novel approach of comparing consumer
evaluations of a company engaging in a prosocial act with a company that chooses
not to engage in unethical behavior when both acts are perceived as similarly ethi-
cal. Differential inferences about a firm's character and the resulting positive atti-
tude should hold true even when the actions are perceived as equally worthy or
ethical. The act of avoiding immoral behavior and the act of behaving prosocially
may be perceived as equally ethical, but the actor (the firm) will elicit different at-
titudes from consumers. Having considered how various ethical actions may influ-
ence attitudes, we now turn to an examination of how a different type of
information-product attribute information-influences attitudes.

Product Attribute Valence

As noted previously, evaluations of firms should be multidimensional (e.g., Brown

& Dacin, 1997). Firms are considered good and bad not only on the basis of their be-
haviors in the ethical domain but also from the ways their products perform. Com-
panies manufacturing products that perform well should elicit more positive atti-
tudes than those manufacturing poorly performing products.
The asymmetry predicted in attitudes toward firms when consumers are given in-
formation about behaviors in the ethical domain should also hold true for informa-
tion about product attribute performance. Previous research supports the notion that
negative information about product attributes influences consumers' attitudes to-
ward brands more than does positive information about product attributes (Herr,
Kardes, & Kim, 199 1). Just as transgressions afford clearer categorization of firms
than dovirtuous actions, negative product attributes imply classification of products
as low quality more clearly than positive attributes imply classification of products
as high quality. Herr et al. maintained that negative attributes are associated primar-
ily with low-quality products, whereas positive attributes are associated with low-,
medium-, and high-quality products. Presumably, consumers' attitudes toward
firms will also be more negative when thosefirms make products with inferior attrib-
utes compared to when they make products with superior attributes. Companies
whose products possess inferior attributes may be more easily categorized as bad
companies compared to companies whose products possess superior attributes.

Ethics and Product Attribute Information Interact

The differential diagnosticity of information suggests that ethics and product attrib-
ute information will interact in their effects on consumers' attitudes toward firms.
248 FOLKES A N D KAMINS

Negatively valenced information about firms may influence consumers' attitudes

more than positively valenced information, and, among positively valenced ethical
information, firms' prosocial actions may elicit more positive attitudes than re-
fraining from vice. Skowronski and Carlston (1987b) maintained that "when an ac-
tor is described by multiple cues, categorization should be determined primarily by
those cues that lead to the most confident categorizations, that is by the more diag-
nostic cues" (p. 689). Hence, the impact on consumers' attitudes of various types of
information can be detected by providing consumers with ethical and unethical be-
haviors and with product attribute information.
One possibility is that negatively valenced information, whether in regard to
unethical behavior or product attributes, influences consumers' attitudes to a
greater degree than positively valenced information, even when it involves
prosocial behavior. Consider the pattern of results that will be observed if negative
information (whether about firm ethics or product attributes) is more influential
than positive information. A company will elicit similarly negative attitudes either
when it acts unethically or when its brand possesses an inferior attribute. Only
when the firm acts ethically and its brand possesses a superior attribute are evalua-
tions more positive, particularly when a company acts prosocially.
Another possibility is that information about hiring practices influences atti-
tudes toward firms more than product attribute information. Although attribute
performance suggests how to classify the product (Herr et al., 1991), such informa-
tion may be much less diagnostic of a firm's underlying characteristics. Firms may
have reasons for offering low-quality products that do not suggest bad character
(e.g., a low-quality product is designed to serve a segments' need for a low-priced
product). If so, consumers' attitudes should differ depending on firm ethics regard-
less of product attribute i~~feriority.
A third possibility is that information cues vary as to their impact on attitudes
across valence and ethics. Skowronski and Carlston's (1987a) approach to
diagnosticity suggests that this sort of variability is possible. For example, nega-
tively valenced information is more diagnostic than positively valenced informa-
tion for judging individuals' actions in the moral domain but less diagnostic in the
achievement domain. Similarly, information about unethical behavior may be
more diagnostic than information about an inferior product attribute, but informa-
tion about an inferior product attribute may be more diagnostic than information
about prosocial behavior.
In sum, we hypothesized that ethical behavior and product attribute information
interact in their effects on attitudes toward the firm. However, the precise nature of
that interaction is an empirical issue. We conducted three experiments to investi-
gate these effects. Experiment 1 examined both ethical and unethical acts, as well
as product attribute information. Experiments 2 and 3 examined two types of ethi-
cal acts when a product attribute was superior.
 FIRMS' ETHICS 249

EXPERIMENT 1

Experiment 1 investigated how information about the superiority or inferiority of a

product attribute influences attitudes when companies behave ethically or unethi-
cally. A second major issue examined in Experiment 1 was whether refraining from
transgression and prosocial behavior information differentially influences atti-
tudes. We examined these effects when the firm's action lacked a direct impact on
the consumer (to rule out self-interest as a cause), when the unethical action was le-
gal in thecountry in which it was performed (to rule out conformity with legal codes
as a cause), and when there was no overt social pressure to condemn the action. The
experiment manipulated information about firms' labor practices in other countries
(e.g., employing child labor). Hence, consistent with the direction of consumer re-
search advocated by Goldberg (1995), Shimp (1994), and others, the experiments
presented in this article address important theoretical questions while also shedding
light on a compelling and current social issue.

Method

Participants were 172 undergraduate students taking business courses at a West

Coast university. They were given aquestionnaire with instructions to imagine that a
friend had just told them about a brand of telephone, followed by one of six scenarios
describing the telephone's performance on an important attribute (superior vs. infe-
rior) and the ethics of the company's employment practices (unethical behavior,
avoids unethical behavior, or prosocial behavior). For example, in the superior prod-
uct attribute, unethical behavior condition, the scenario asked participants to

Suppose a friend just told you about a brand of telephone that provides a
clearer sound and less static than the other brands. Your friend has read that
the telephone manufacturer makes it a point to manufacture its telephone
components in countries where it can hire children under 12 years of age to
work eight-hour days.

A telephone was selected as the stimulus object because it is a product farnil-

iar and important to these participants. Furthermore, it offers a convincing test of
the impact of corporate ethics on consumers' brand attitudes because it is a type
of product that can be used and appreciated without much thought about the
character and actions of the firm that creates it. Hence, an effect of firm ethics
evident for a durable good presents a higher hurdle for the effect to emerge than
an effect found for products in which the character of the firm is more salient
(e.g., as with many services).
 The manipulations. For the product attribute manipulation, one important
attribute, sound performance, was described as either superior or inferior to that of
other brands. Half the participants were told that the telephone "provides a clearer
sound and less static than the other brands," and the other half were told that the
telephone "provides a less distinct sound and more static than the other brands."
The firm's ethical behavior was manipulated by holding constant the particular
type of behavior (hiring practices) but varying the type of person hired by the com-
pany. The hiring practices were all portrayed as intentional policies and as occur-
ring outside the United States. Hiring one type of employee indicated unethical
action (hiring children; n = 60). Hiring the other two types of employees indicated
ethical actions (hiring adults while specifically refraining from hiring children and
hiring victims of natural disasters). Hiring children was selected as a type of uneth-
ical behavior because it is perceived as unethical in the United States but is com-
mon in many countries. Over 250 million children between the ages of 4 and 14
years old are employed as child laborers in developing companies (UNICEF,
1997). Their labor yields many different goods for U.S. consumers (e.g., apparel,
Oriental rugs, athletic equipment). Furthermore, overseas child labor is common
in the manufacture of some products sold in the United States. For example, 80%
of soccer balls sold in the United States were made by child labor in Pakistan
(United States Department of Labor, 1997).
When the company was ethical by refraining from unethical behavior, it also
manufactured its telephone components in countries where children under 12
years of age could be hired to work 8-hr days, but the scenario stated that it refused
to hire these children (n = 56). When the company acted prosocially, it created jobs
by building "manufacturing plants for its telephone components in countries
where a natural disaster, such as a flood, has left many people jobless" (n = 56).
The three hiring practices were pretested to ensure that they were perceived as
plausible and that hiring children was perceived as unethical, whereas the other
two hiring practices were perceived as similarly ethical.

Dependent measure. Participants indicated their reactions to a given sce-

nario on 9-point rating scales.' Three items examined attitude toward the company:
"How negative or positive would your attitude be toward the company (very nega-

The first three items on the questionnaire measured brand amtudes: "How negative or positive
would your attitude be toward the brand?" (very negative, very positive), "How would you feel about
that brand if you happened to own it?"(very negative, verypositive), and "If you needed to purchase a
telephone, would you consider the brand your friend told you about?' (definitely would not, definitely
would). The three items were combined into a single brand attitude index (coefficient cr = .87). The re-
sults for this measure are similar to those for firm attitude. The main difference is that firm ethics ac-
counts for more variance in the firm attitude ratings, but attribute information accounts for more vari-
ance in the brand attitude ratings.
 FIRMS' ETHICS 251

tive, very positive), "Do you think the company that manufactures that brand of
telephone is a bad or good company?'(very bad, very good), and "Would you be
likely to purchase other products made by that same company?'(definitely not, def-
initely would). They were combined as a firm attitude index (coefficient a = .90).

Manipulation checks. Manipulation checks also using 9-point rating scales

confirmed that participants perceived sound quality levels to be different and that
they perceived the firms' actions to vary on ethics. Participants' ratings of the prod-
uct's sound quality confirmed that products described in the scenario as having su-
perior sound were perceived as having higher quality sound than when the sound
was described as inferior (M = 6.46 vs. 3.33, n = 84 vs. 86, anchored by rnuch worse
than others and much better than others). A 2 x 3 analysis of variance (ANOVA)
showedonly an attribute performance main effect, F(l,166) = 1 3 7 . 2 4 ,< ~ ,001. Be-
fore participants rated the sound quality they were asked to rate the overall quality
of the brand, anchored by much worse than others and rnlcch better than others. A 2
x 3 ANOVA reveals only a sound main effect on participants' perceptions of over-
all quality, F(1, 166) = 130.82, p < .001. Not surprisingly, products with superior
sound were perceived as being of high overall quality compared to those with worse
sound (M = 6.06 vs. 3.02, n = 84 vs. 86).
To confirm that the employee hiring practices were indeed perceived as unethi-
cal and ethical actions, participants were asked, "How ethically right or wrong is it
for a company to" engage in the hiring practice described in the scenario, anchored
by definitely wrong and definitely right. ANOVAs revealed a significant ethics
main effect, F(2, 166) = 67.96, p < .001. As expected, the two virtuous behavior
conditions were considered more correct than the vice condition (M = 6.92 vs.
3.13), t(169) = 1 1 . 3 3 , <
~ .001. As intended, ratings of the two ethical conditions
were not significantly different. Refraining from vice and acting prosocially were
perceived as similarly ethical behaviors (M = 6.73 vs. 7.11). If the prosocial action
had been perceived as more extreme on the ethical dimension, then extremity
could account for different attitudes (extreme behaviors are more diagnostic than
moderate behaviors; Skowronski & Carlston, 1987b).

Product attribute information only conditions. As a means of comparing

the effect of providing the ethics information, two conditions were included that
manipulated only product attribute information. Twenty-eight participants were
given questionnaires stating that either the telephone provides better or provides
worse sound than others (n = 15 and 13, respectively). The participants were asked
the same questions about attitudes and product quality. At the end of the question-
naire were two items asking about company ethics (although the participants had
received no ethics information in the questionnaire). One question described the
prosocial hiring practice, and the other described the unethical hiring practice. As
expected, a within-subjects comparison of the 28 participants indicated that a
prosocial policy of hiring victims was considered more ethically correct than a
policy of hiring children (M = 6.7 1 vs. 3.14), t(26) = 5.80, p < .001. The means
were similar to those found for participants in the main experiment (M = 7.11
and 3.13, respectively).
The lack of effect of ethics on product quality is supported by a comparison of
the participants who received the ethics information and product attribute informa-
tion with the 28 participants who received only product attribute information. Only
the sound quality manipulation influenced overall perceived quality. A 2 (better
performance, worse performance) x 2 (ethics information, no ethics information)
ANOVA reveals only a product attribute (sound information) main effect, F(1,
194) = 83.49, p < .001. Giving participants information in the ethics scenarios did
not influence perceptions of product quality differently compared to when this in-
formation was withheld. This means that even though children made the products
in one condition, adults made the product in another condition, and adult victims
made the products in the third condition, the type of employee did not influence
product quality inferences.

Results

The attitude measure was analyzed using an ANOVA in a 2 (superior attribute, in-
ferior attribute) x 3 (unethical behavior, refrain from unethical behavior, prosocial
behavior) between-subjects design. There were attribute information and ethics in-
formation main effects that were qualified by an Attribute x Ethics interaction, F(l,
166)=20.88,p<.OOl;F(2, 166)=31.96,p<.001;andF(2,166)=6.15,p<.005,
respectively. The nature of the interaction is revealed by contrasts comparing
means of individual conditions. Figure 1 suggests that unethical behavior is suffi-
cient to elicit a negative attitude toward the firm. A contrast reveals that firms em-
ploying child labor received similarly negative evaluations regardless of product
attribute level (M = 2.93 vs. 3.30).
Nevertheless, an inferior product attribute does not elicit similarly negative
attitudes regardless of firm ethics. When a product attribute is inferior, firms that
transgress receive more negative evaluations than firms that refrain from that
same transgression as well as more negative evaluations than firms that act
prosocially (M = 2.93 vs. 4.83 vs. 4.20, respectively), F ( l , 166) = 16.01, p <
,001, and F(1, 166) = 7.38, p < .01, respectively. Although an inferior product
attribute is insufficient to elicit similar attitudes across both unethical and ethical
behaviors, it is sufficient to elicit similar attitudes toward the two ethical behav-
iors (see Figure 1). A contrast reveals no difference between companies that re-
frain from unethical behavior and those that act prosocially when the attribute is
inferior (M = 4.83 vs. 4.20).
 FIRMS' ETHICS 253

Une!hicaI M(ns Children) €mi& (Refdm from HMng Childrm) ElMoel (Hirea Vlc~rrrr)
Hiring Practice

FIGURE 1 Effects of company ethics and amibute superiority on attitudes toward the company

Differences across all types of firms' hiring practices are evident when the at-
tribute is superior (see Figure 1). Contrasts indicate that when a product attribute is
superior, firms that transgress are evaluated less positively than firms that refrain
from that same transgression as well as firms that behave prosocially (M = 3.30 vs.
5.65 vs. 6.76, respectively), F(1,166) = 25.82, p < .001, and F(1, 166) = 5 7 . 0 4 , ~
<
,001, respectively. Furthermore, firms that refrain from transgressions are evalu-
ated less positively than firms that help, F(1, 166) = 5 . 2 5 , ~< .05.

Discussion

Information about firms' ethical actions and the products they make interact in their
influence on consumers' attitudes toward firms. Consistent with category
diagnosticity theory (Skowronski & Carlston, 1987a), a transgression appears suf-
ficient to elicit negative attitudes. Participants were similarly critical of the firm
that employed child labor regardless of product performance.
Negative information about an important product attribute did not have the
same impact as did a transgression. When the attribute was inferior, consumers
were more critical of the unethical firm than they were of each of the ethically be-
having firms. Hence, product attribute information appears to be a less diagnostic
cue than unethical hiring practices for forming attitudes toward firms.
However, product attribute information appears to be a more diagnostic cue
than prosocial behavior. When the product attribute was inferior, attitudes were
similar toward the firm that refrained from transgression and the firm that acted
prosocially. In short, no simple conclusions can be drawn about the diagnosticity
of information about a firm's manufacturing output compared to a firm's manage-
 rial practices, nor does similarly valenced information linked to either firm ethics
or product attributes appear to be diagnostic to the same extent.
Although less diagnostic than product attribute information, prosocial behavior
apparently was more diagnostic than refraining from vice. Comparing across ethical
behaviors suggests that a superior product attribute leads to even more positive atti-
tudes toward the firm that helps than toward the firm that avoids an unethical action.
Attitudes differed despite the manipulation check, indicating that the acts were eval-
uated as similarly ethical. That finding is consistent with the notion that helping pro-
vides theconsumer with less ambiguous information about thenature of the firm.
A remaining potential methodological concern relates to the different informa-
tion provided in the two ethical conditions. Although both scenarios dealt with hir-
ing practices and adults were employed in both, the scenarios differed in other
ways. The country where the product was made in the helping condition was sub-
ject to floods, and no information was given about the legality of hiring children in
that country. The reverse was true of the information about the country in which
the firm refrained from unethical behavior: No information was given about
floods, but there was information about the legality of child labor. It is unclear how
these differences could account for the results. Country-of-origin effects generally
influence product attribute perceptions (e.g., Erickson, Johansson, & Chao, 1984;
Hong & Wyer, 1989), effects not consistent with those found in Experiment 1.
Nevertheless, replicating Experiment 1 findings when the ethical scenarios both
deal with child labor could lend greater confidence to the conclusions. Experiment
2 addressed this issue.

EXPERIMENT 2

The main purpose of Experiment 2 was to replicate Experiment 1's findings for the
ethical conditions (the unethical behavior condition was not included). In Experi-
ment 2, the refrain from unethical behavior and prosocial behavior scenarios both
involved child labor, so the stimulus materials were more similar. As found in Ex-
periment 1, consumers should have a more positive attitude toward a company that
behaves prosocially than toward a company that refrains from unethical behavior
when a product attribute is superior (the inferior sound attribute condition was not
included). These differences should be observed even though the specific acts of
helping and refraining from immoral conduct are perceived as similarly ethical.

Method

Procedures were identical to Experiment 1, with 52 individuals participating. The

questionnaire posed the same attitude measures (coefficient a = .7 1). Only ethical
behavior information was presented, so that 26 participants read about a firm that
 FIRMS' ETHICS 255

engaged in prosocial behavior and 26 read about a firm refraining from unethical
behavior. The refrain from unethical behavior scenario was similar to Experiment
1, except the unethical behavior involved hiring children from 12 to 15 years of age
to work 6-hr days. Participants in the prosocial behavior condition also read the
same information (i.e., legal to hire 12-15 year olds). The helpful company hired 12
to 15 year olds (and s o did not refrain from unethical behavior). However, during
the 6-hr work day, the children benefitted from the firms' prosocial actions: educat-
ing the children, feeding the children, and giving the children job training.
An attempt was made to rule out potential competing explanations for any dif-
ferential impact of the scenarios on attitudes by controlling for the perceived
intentionality of the action and the prevalence of the action. Intentionally perform-
ing a moral action elicits a more positive attitude than when the moral action is un-
intended (for a review, see Darley & Shultz, 1990). As in Experiment I, to
emphasize that the companies intended their actions, both scenarios stated that the
"company makes it a point to" either refrain from hiring children or hire children.
Another potential influence on attitudes is the perceived prevalence of a behav-
ior. People make more dispositional attributions for an act when few others engage
in it than when most others also engage in the same act (i.e., low vs. high consensus
information; Kelley, 1967). To ensure that the actions were perceived as similarly
prevalent, both scenarios included a sentence stating that few other companies en-
gaged in that hiring practice.

Manipulation check. A separate group of 43 participants (17 in the helping

and 26 in the refrain from unethical cell) read one of the scenarios and then responded
to questions with 9-point rating scales. First, they were asked the same ethical manip-
ulation check as in Experiment 1. As intended, participants perceived the two actions
as similarly virtuous (M = 7.50 for the refrain from unethical behavior condition and
M = 7.12 for the prosocial condition). The means do not differ significantly.
Additional questions confirmed that other aspects of the scenarios did not differ
in ways that may provide alternative explanations of the results. Participants were
asked to rate on a 9-point rating scale ranging from 1 (not a t all) to 9 (very) whether
the "company's hiring practice is intentional" and "how common d o you think it is
for a company" to engage in the hiring practice. As expected, participants per-
ceived both the refrain from unethical behavior and the helping behavior as simi-
larly intentional actions by the companies (M = 7.69 and 7.29, respectively) and as
similarly uncommon (M = 3.81 and 3.59, respectively).

Results and Discussion

The results replicate those of Experiment 1. The company that helped elicited more
positive attitudes compared to the company that refrained from vice (M = 7.10 vs.
< .05. These differences occurred even though the pretest indi-
6.29), t(50) = 2 . 2 2 , ~
256 FOLKES AND KAMINS

cated that the actions being evaluated were perceived as similarly ethical, similarly
common, and similarly intentional.

EXPERIMENT 3

Experiment 3 examined the diagnosticity of the two types of ethical behaviors by in-
vestigating attributions for firms' ethical actions. As noted previously, diagnostic acts
should afford greater confidence that the firm is intrinsically motivated to act ethically
rather than is extrinsically motivated to do so (cf. Skowronski & Carlston, 1987a).
Specifically, consumers should be more likely to infer that afirm is intrinsically moti-
vated to act prosocially compared to a firm that refrains from transgression.

Method

The same scenarios as in Experiment 2 were presented to 42 students (20 in the re-
frain condition and 22 in the helping condition). Participants were asked to explain
the firm's behavior in an open-ended question. Two coders identified reasons that
reflected intrinsic motivations for the hiring and employment practice (e.g., "it is
good to help those children to support their family," "the company has strong moral
standards and a code of ethics"), as opposed to extrinsic motivations (e.g., "it makes
them look good," "because of the cheap labor"). The coders agreed on 95% of the
classifications and resolved the disagreements through discussion.
Participants also answered questions on 9-point rating scales. An alternative
explanation for differences between the helping and the refrain from transgression
condition is that helping is perceived as a more extreme behavior in terms of social
responsibility. Extreme actions are more diagnostic than are moderate behaviors
(Skowronski & Carlston, 1987b). T o examine this possibility, participants were
asked to rate on a 9-point rating scale ranging from 1 (not a t all) to 9 (extremely) as
to "how socially responsible is the company's hiring and employment practice."
As expected, both conditions were perceived as similarly socially responsible (M
= 6.42 for refraining companies vs. M = 7.18 for prosocial companies). Differ-
ences also may be due to a perception of an extreme sacrifice on the part of the
helping firm. To examine this possibility, participants were asked to rate on a
9-point rating scale ranging from 1 (none a t all) to 9 (extremely high) "How much
of a sacrifice does the company's hiring practice involve for the company?'As ex-
pected, there was not a significant difference between conditions (M= 5.25 for re-
fraining companies vs. M = 4.5 for prosocial companies).

Results and Discussion

Consistent with greater diagnosticity for prosocial actions than for refraining from
transgression, more participants gave intrinsic reasons to explain the company's
 FIRMS' ETHICS 257

actions when it helped children than when it refused to employ children (41% vs.
lo%, respectively), t(40) = 2.27, p < .025, one-tailed test).

GENERAL DISCUSSION

Experiments 1 through 3 shed needed light on an underresearched area-that of

consumers' perceptions of firms' ethical and unethical behaviors. Although con-
sumer researchers focus on product performance as the standard by which consum-
ers evaluate brands, other types of information also influence consumers' attitudes.
The research presented recognizes the multidimensional nature of product judg-
ments. The firm's moral standards, as evidenced by the means by which a product is
produced, influence consumers' attitudes. That effect is observed even when the
action lacks a direct impact on the consumer (involves hiring practices), when the
unethical action is legal in the country in which it is performed, when there is no
overt social pressure (as in boycotts), and when the firm's ethical or unethical be-
havior does not influence product quality judgments.

Asymmetries in the Way Information Is Used

The results support predictions about negativity biases in moral judgments of firms
based on research examining impressions of individuals. However, even previous
research on evaluations of individuals has not distinguished among the
diagnosticity of ethical behaviors. Our research does make this distinction and
finds that despite being regarded as similarly ethical actions, attitudes differed to-
ward the firm that acted prosocially and the firm that refrained from vice when a
product attribute is superior. The greater impact on consumers' attitudes toward
firms for prosocial actions is consistent with diagnosticity theory's notion that dif-
ferent cues have different diagnostic implications, even though Skowronski and
Carlston (1987a) did not make this specific prediction.
The results also support the notion of asymmetries in consumers' use of nega-
tive and positive product attribute information, as has been suggested by Herr et al.
(1991). In regard to product evaluations, virtuous behavior is not a substitute for
product quality, nor does superior product quality compensate for unethical behav-
ior in influencing attitudes toward firms.
An alternative explanation for the results is that the "inaction" implied by the
firms that refrained from transgressing condition accounts for its reduced
diagnosticity. According to the omission bias, people are held more responsible
for actions than inactions (Spranca et al., 1991). For example, a person that recom-
mends that a victim eat bad food is condemned more than a person that observes a
victim eating bad food without giving warning of its dire consequences.
The omission bias seems unlikely to account for differences between the refrain
from transgression and helping conditions for several reasons. First, the refrain
from transgression scenario does not completely meet the criterion for inaction.
The firm that hires adults rather than children engages in a hiring choice and so
does not seem entirely inactive. In addition, past research shows that omission bi-
ases are eliminated when outcomes are positive and are minimized when harm do-
ers are in authority roles (Haidt & Baron, 1996; Spranca et al., 1991). Thus, they
seem unlikely to emerge when firms engage in ethical behaviors. Nevertheless, ad-
ditional research is needed to explore the underlying bases and the range of the
phenomena we have sought to document.

Implications

Incentives for firms to engage in ethical behaviors are often phrased in terms
of corporate image and consumer purchase intentions (e.g., unethical behav-
iors will induce consumer boycotts). Our research provides empirical evidence
about the conditions under which such concerns are justified. Hence, the re-
search presented identifies another tool that firms can effectively use to en-
hance not only the perceptions of their products but also that of themselves.
However, consumers who believe that the firm is engaging in ethical behavior
merely for extrinsic motives may not view the firm as favorably as when at-
tributed to intrinsic motives.
The findings have important implications for both the firm and the product it
manufactures. When consumers are aware of a firm's ethical breach, an emphasis
on the firm's quality product does little to enhance attitudes toward the firm or its
brands. However, when the firm adheres to moral standards in even a remote com-
munity, a quality reputation enhances both attitudes toward the firm and its prod-
uct. Prosocial activities particularly enhance consumer attitudes.
In a market in which products share the same attributes and most firms refrain
from immoral conduct, a firm may be able to differentiate itself from competitors
by its prosocial behavior, thereby enhancing consumers' attitudes toward its prod-
ucts. Prosocial behavior in connection with a single brand may benefit the firm's
other brands due to the positive attitude toward the firm. Conversely, unethical be-
havior in connection with a single brand may harm the firm's other brands due to
the negative attitude toward the firm. These more generalized impacts suggest the
importance of a firm with a large product line monitoring all of its operations for
ethical conduct, difficult though that may be.

ACKNOWLEDGMENT

We appreciate the help of Lars Perner in conducting the data analysis.

 FIRMS' ETHICS 259

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