the american marketing association code of edward f o...

The American Marketing Association Code ofEthics: Instructions for Marketers

Edward f O'BoyleLyndon E. Dawson, Jr.

ABSTRACT. This article addresses the two main obstacles —ignorance and conflict — that block the pathway to ethicallyproper conduct, both generally in business and specifically inmarketing. It begins with a brief examination of theories ofthe moral good which emphasizes the Greco-Roman hu-manistic tradition and the Judeo-Christian religious tradi-tion. A professional code of ethics, such as the code of theAmerican Marketing Association, is meanit^ful only ifhuman beings are r^arded as making moral judgments that,objectively speaking, are morally wrong, that is only whenthe code is considered a set of moral absolutes.

Following that, the question of ignorance is dealt withutilizing the American Marketing Association code of ethics.The specific items in that code are related to the threecentral principles of economic justice: equivalence, con-tribudve justice, and distributive justice. In the secondsection, the question of conflict is encountered in thecontext of four other ethical principles — double eflfect,culpability, good end and bad means, self-determination —that are likely to be helpful in dealing with two cases that are

Edward J. O'Boyle is Research Associate and Associate Professor ofEconomics at Louisiana Tech University. His current researchinterests include quality-productivity-ethics, ethics in marketing,and improved pedagogies for teaching ethia. His articles haveheen published in Monthly Labor Review, Review of SocialEconomy, Linacre Quarterly, Louisiana Economy, Inter-national Journal of Social Economics, Marketing Educa-tion Review, and Business Insights.

Lyndon E. Dawson, Jr., is Professor of Marketing at Louisiana TechUniversity and Lecturer at the Poznan School of Management inPoland. He received his Ph.D. in 1967. His current researchinterests focus upon ethical issues in business and the applicationof current marketing theory and practice in Eastern Europe. Hisrecent co-authored works in ethics appear in Joumal of theAcademy of Marketing Science, Business Insights, andMarketing Education Review.

especially instructive because they are limiting cases: thedilemma and the hard case. The role of the hero or cham-pion in conflicts is underscored.

In marketing no less than in any other specialized

area of business, two main obstacles block the path-

way to ethically proper conduce ignorance and

conflict. Ignorance raises the question "What is the

ethically proper path to follow?" Conflict asks

"What price am I wiUing to pay to follow that path?"

These two questions differentiate knowing the moral

good from doing it and demonstrate that ethical

decision-making resides both in the human intellect

and in the human will.

This article addresses ignorance by means of the

American Marketing Association (AMA) code of

ethics which is hnked in turn to three principles of

economic justice. Conflict is examined in terms of

four other ethical principles that are apphed to two

especially instructive (limiting) cases. Our purpose is

to demonstrate that the AMA code of ethics is firmly

anchored in certain moral absolutes that can be

traced to fundamental ideas of justice in the eco-

nomic order.

Moral agency and the historical roots ofethics

Concern about ignorance and confUct as obstacles to

ethically proper conduct can be traced to the two

central historical roots of ethics: the Greco-Roman

humanistic tradition and the Judeo-Christian reli-

gious tradition. Based on reason and the natural law,

the Greco-Roman tradition developed very specific

Joumal of Business Ethics 11:921-932 ,1992 .© 1992 Kluwer Academic Publishers. Printed in the Netherlands.

922 Edwardf. and Lyndon E. Dawson,Jr.

ideas as to what a human being must do in order tolead a morally good life. This tradition, however, didnot embrace the idea of freedom of self-determina-tion. Based on faith and revealed truth, the Judeo-Christian tradition asserted that every human beingis free to choose between good and evil and tothereby determine what his/her life will be and whatit is worth. In Western culture, the history of ethicsis a history of attempts by philosophers to harmonizethese two traditions (Grisez and Shaw, 1974).

In matters of ethical concern, including ethicalissues in marketing, only human beings are capableof making ethical judgments. Strictly speaking, thecompanies that employ them or buy from or sell tothem along with the professional associations towhich they belong, are not moral agents becausethey lack the existential quahties — free will andintellect — required. Even though they are regardedas persons in the eyes of the law, companies andorganizations are not living, breathii^, existentialactualities. In this regard, diey are more properlyregarded as "a manner of speaking."

Even though a legal fiction is not to be taken for ametaphysical fact, companies and associations, as itwere, encounter ethical problems. Since humanbeings may act either individually, and therefore asthe Many, or act collectively, and therefore as theOne, a statement to the efFect that ABC company orXYZ association acted unethically really means thatthe persons acting collectively as ABC company or asXYZ association conducted diemselves unethically.

Literature on professional codes of ethics

Over the years, several articles have appeared in thepages of this journal that examine various profes-sional codes of ethics including real-estate salesagents (Allmon and Grant, 1990), accounting (Clay-pool et al, 1990; Finn et al, 1988; Brooks, 1989;Cohen and Pant, 1991), legal/medical/accounting(Backof and Martin, 1991), and pharmacists (Vitell etal, 1991). None of these articles explores the actualcontent of the code of ethics or attempts to trace theorigins of that content. Frankel (1989) covers thesubject generically but explicitly prescinds from theissue of content and origins.

In addressing the code of ethics for CPAs, BoUom(1988) asserts that group welfare, or the common

good, is the ultimate basis for a professional code ofethics.

All of the rules of professional conduct must flow fromthe principle of group cooperation because cooperationwith the puhlic, the client, and other CPAs will allowCPAs, as a group, to maximize the satisfaction of theirneeds . . . Ethical behavior for a group is simply thatwhich promotes group self-interest

In effect, Bollom turns the "invisible hand" argu-ment' on its head.

The common good, for sure, is an importantethical principle particularly in a crisis such as aplant closing or a life-threatenii^ shortage of somegood or service. We object, however, to reducingethical decision-making to a single over-archingprinciple because it means that, without exception,the individual is duty-bound to subordinate him/herself to the good of the group. Bollom's prescrip-tion always subordinates the social value of thefreedom of the individual to the social value of theone-ness or unity of the group. When the group isdefined to exclude certain individuals, the common-good argument has been used to justify great harmboth here and elsewhere, as in the case of producercollusion to fix prices and special-interest lobbyingto raise tariffs.

The common good, which in rough fashiondefines the obligation of the individual member tohis/her group, requires some limits to prevent suchabuses. Those hmits derive from the two types ofhuman relationships excluded from consideration byBollom: one individual to another (as in the relation-ship between professional and client) and the supe-rior to his/her subordinates (as in the relationshipbetween marketing manager and stafif). The com-mon good may be very helpful in deciding, forexample, how to set up a work schedule for one'semployees, but it does not protea (and may eventhreaten) a professional confidence.

Conway and Houlihan (1982) examined the con-tent of the code of ethics of the National Associationof Realtors. They conclude that there are threeprinciples embodied in the code: service to thepublic, unselfishness, and justice. Their conceptuah-zadon of public service, which they regard as anoverarching ethical principal, seems to parallel Bol-lom's "group welfare." Unselfishness to Conway and

AMA Code of Ethics 923

Houlihan means including in the net benefits thatfiow from a given action the effects on all aflfectedparties and not just the consequences for the agent ofthat action. Conway and Houlihan define justice in away similar to Aquinas' "rendering to another thatwhich is owed" (Dempsey, 1958) which is the defini-tion we employ herein. However, they do not give itthe three-fold specificity that we do.

Ethical theories

Discerning whether a given action is morally rightor morally wrong proceeds from certain theoreticalconsiderations as to what constitutes the moral good.Many diverse theories as to What is the moral good?have emerged since the ancient Greeks first began tosearch for answers. For our purposes herein a briefreview is sufficient for an understanding of thetheoretical origins of codes of ethics and their ulti-mate meaning.

In constructing a framework for the developmentof a theory of ethics for use by marketing decision-makers, Ferrell and Gresham (1985) find the teleo-logical/deontological dichotomy instructive. A teleo-logical theory of ethical behavior subordinates theconcept of duty, right conduct, or moral obligationto the concept of the good or the humanly desirable.Teleology — a branch of natural philosophy thatcenters on final causes — originated with the ancientGreeb (Fulton, 1967).

A deontological theory is one in which the con-cept of duty is logically independent of the conceptof good and thereby denies the necessity of justifyingduties by shoAving that they are productive of good.Immanuel Kant was the first to develop an unam-biguous formulation of a deontological theory ofethics (Olson, 1967a, 1967b). He probably is bestknown for his categorical imperative.^

Robin et al (1989) recommend examining thespecifics of codes of ethics in terms of the deonto-logical/utilitarian dichotomy. Utilitarianism is anethical theory in which one's choice from amoi^two or more alternative courses of action turns on anestimate of the net good or the net harm proceedingfrom each action. Utilitarianism recommends asmorally good whatever action maximizes the netgood or, if all alternatives have harmful conse-quences, minimizes the net harm (Grisez and Shaw,

1974). The origins of utiUtarianism are found in thework of Jeremy Bentham (Smart, 1967).

Within utilitarianism there are several distincttypes: act and rule, egoistic and universahstic, hedo-nistic and ideal, normative and descriptive. Ruleutilitarianism considers the consequences not of aspecific action but from adopting some general rule.In that regard, rule utilitarianism strongly resemblesKant's deontological theory (Smart, 1967).

For purposes of understanding the ultimatemeaning of a code of ethics, we suggest that moralabsolutism is simpler, more famihar, and much moreinstructive. A moral absolute is an ethical principlethat should not be violated. "Thou shalt not steal" isa moral absolute. To the extent that circumstances orconsequences are used to justify a departure from amoral absolute, ethical decision-making becomesutilitarian, that is it begins to follow the rule that theend justifies the means (Grisez and Shaw, 1974).Even so, violating a moral absolute may be justifiedwhen it conflicts with a higher-order ethical princi-ple. Breaking the speed Umit, which has been esta-blished to protect public safety, may be justified byemergency personnel respondii^ to an accident, afire, or an explosion. Stealing may be justified if it isthe only way that a family provider can meet thefamily's subsistence needs. Such violations are not tobe taken Ughtly or accepted routinely. The burden ofjustification rests with the person who subordinatesone moral absolute to another in order to justify aviolation.

Allowing departures from strict adherence to aspecific moral absolute acknowledges that individualconscience is critical in selecting and applying a set ofmoral absolutes in circumstances where there isconflict. Demanding justification for such departuresrecognizes that individual conscience alone is unreli-able in defining and establishing a set of ethical guide-lines.

Hypocrisy is the affirmation of a moral absolutein principle and the routine violation of that abso-lute in practice so as to reap whatever net benefitsmay accrue without having to accept the responsi-bility for justifying the moral inconsistency. Fhght,as in the classic example of the fiim-flam man, isused by the person who is unable to pubhcly justify adeparture from a given moral absolute and is unwill-ing to meet his/her obligation under that standard.

Although a specific moral absolute indeed may be

924 Edward J. and Lyndon E. Dawson, Jr.

arbitrary, moral absolutes are not arbitrary by defini-tion. Even in the absence ofthe ten commandments,an orderly, tranquil, and efficient society soon wouldcondemn stealing for the social chaos that it brings.

Moral relativism rejects the idea that there are anymoral absolutes. All values are relative to a partictilarsituation and the worth of any value is determinednot by anything inherent in that value but by thesituation in which the individual finds him/herself(Grisez and Shaw, 1974). For that reason, moralrelativism commonly is known as situation ethics.Strictly speaking, under moral relativism there is nohypocrisy because affirming a given value in princi-ple and violating it in practice may be defended ongrounds of some momentary special circumstances.

Grisez and Shaw (1974) differentiate culturalrelativism — all ethical norms are determined byone's own culture — and individuaUstic subjectivism— each person spins his/her own moral norms fromhis/her ovra interior and the only criterion forjudging behavior is consistency. Grisez and Shawcombine the two and we follow that simphfyingpractice herein.

We suggest, therefore, that insofar as the AMAcode of ethics is practiced without compromise, it

can be regarded as a set of moral absolutes. Undermoral absolutism, the code has real meaning because inprinciple human beings are considered capable ofmaking judgments that, objectively speaking, aremorally wrong.

If in different situations, however, individualmarketers are not morally obliged to conform to thedictates of the code, it can be considered a set ofmoral relatives. In that case, rational criticism endswith "It all depends." Any effort to decide whatactions are right and what actions are wrong, andwhy, is virtually impossible (Grisez and Shaw, 1974).Under moral relativism, the code becomes meaningless. SeeTable I for a summary of the historical roots andultimate meaning of codes of ethical conduct.

What is the ethically proper path inmarketing?

Ignorance as to the ethically proper path to followcan be reduced either by word or by deed, that isthrough the skill of the ethics instructor or theexample of a role model. In that regard, a code ofethics for marketing can be characterized as words

TABLE ICodes of ethical conduct roots and meaning

Historical Roots: Ultimate Meaning:

Both

Greco-Roman Tradition:

addresses the obstacleof ignorance by specifyingthe things human beingsmust do to live a morallygood life. . . such as con-ducting their economicaffairs in accordance withthe principles of economicjustice along with otherprinciples(see Tables II and III)

and

Judeo-Christian Tradition:

addresses the obstacle ofconflict by asserting thathuman beings are free tochoose between good andand evil and they areresponsible for the choicesthey make

Either

Moral Absolutism:

because human beingsare capable of makingjudgements thatobjectively speakingare morally wrong,codes are:

meaningful

Moral Relativism:

because all values arerelative to a specificsituation and the worthof any value depends onthe situation at hand,it is impossible todetermine objectivelywhat is right and what isviTong and for thatreason codes are:

meaningless


whose meaning one learns in the classroom andwhose significance one sees affirmed or rejected inthe marketplace.

In matters of marketing, the code of ethics of theAmerican Marketing Association is particularly in-structive as to the question What is the ethicallyproper path to follow? The AMA code consists of sixitems. The first five relate to the duty of a memberof the Association. The sixth affirms the right of theAssociation to withdraw a person's membership forviolations of the code.

As a member of the American Marketing Association, Irecognize the significance of my professional conductand my responsibilities to society and to the othermembers of my profession:

1. By acknowledging my accountability to society as awhole as well as to the organization for which I work.

2. By pledging my efforts to assure that all presentationsof goods, services, and concepts be made honestly andclearly.

3. By striving to improve marketing knowledge andpractice in order to better serve society.

4. By supportii^ free consumer choice in circumstancesthat are legal and are consistent with generally ac-cepted community standards.

5. By pledging to use the highest professional standardsin my work and in competitive activity.

6. By acknowledging the right of the American Mar-keting Association, through established procedure, towithdraw my membership if I am found to be inviolation of ethical standards of professional conduct(Ctmimings, 1987).

A code of ethics may be aspiradonal, educational,or regulatory. An aspirational code is a set of idealsto be achieved. An educational code is a tool toimprove understanding and a means for addressingethical problems. A regulatory code is a device forhandlii^ grievances (Frankel, 1989).

For the most part, the AMA code of ethics isaspirational, that is a set of ideals toward whichprofessional marketers are encouraged to strive.When the second item is stated in negative form —dishonesty and ambiguity in presentations are notallowed — the code's regulatory or limiting characterbecomes more visible.

If, as Kass (1989) asserts, setting limits on theproper use of power is the beginning of ethics,marketers have moved well beyond a beginnii^ withthe AMA code of ethics. In contrast, in the special-

ized area of marketing known as direct selling, acode of ethics which was adopted in 1970 is largelyregulatory. Indeed, it can be reduced to five limits(CBoyle and Dawson, 1990).

Three general principles of economic justice —equivalence, distributive justice, and contributivejustice — are embedded in the AMA code of ethics.These three principles define in general terms theobligations governing the three basic human rela-tionships in economic affairs: one equal to another(equivalence), the manager to his/her subordinates(distributive justice), and the member to his/hergroup (contributive justice) (Dempsey, 1958). Thereis some disagreement or carelessness as to their prop-er names. There is none regarding their substance.

These three principles are crucial because they arefoundational to ethical decision-making. They arefoundational precisely because they are widely ac-cepted. Without these principles, judging cases ofspecific wrongdoing has no ethical meaning. With-out specific cases, however, these principles have nopractical value (Purcell, 1978). In other words, theethically proper path to follow has been laid out soas to meet die demands of justice. But the map iscrude, and there is much uncharted ethical territory.

Distributive justice regulates the relationship be-tween the person with greater responsibilities andhis/her subordinates. This principle requires thatperson to distribute the benefits and burdens ofgroup activities among the group's members in someequal fashion. Favoritism and arbitrariness are twomain abuses that are condemned by the principle ofdistributive justice. Both are intolerable in a personin a manager's position because the manager's pri-mary task is to shape and mold his/her subordinatesinto an effective team capable of undertaking (1)certain jobs through group action that simply are notpossible through individual action alone and (2)other jobs that are accompUshed more effectivelyand more efficiently through collective action thanthrough individual action alone. Favoritism andarbitrariness diminish and, in the extreme, destroythe credibility and leadership of the manager andthereby undermine the group's ability to completeits common purposes and frustrate the individuals inthe group from accomphshing their individual pur-poses.

A common expression for distributive justice isthat the sales manager owes his/her salespersons


"equal pay for equal work" This principle specifiesthe scope of economic justice in the conduct ofprivate organizations and public institutions towardtheir members or constituents. In considerable meas-ure, distributive justice focuses on the workplace andthe public domain, not on the marketplace. Itinstructs marketers mainly in their workplace roles.

Contributive justice^ regulates the relationshipbetween the individual and the group to which he/she belongs. As with distributive justice, the obliga-tion imposed is one-sided. Under distributive justicethe supervisor has a duty to his/her subordinates totreat them in some equal fashion. Under contribu-tive justice, the individual has a duty to support andmaintain any group from which he/she receivesbenefits. Dues is a good example of what the indi-vidual owes any membership organization to whichhe/she belongs. So too, in general, are taxes. Failurein either instance is a failure in contributive justice."Paying one's dues" or "contributing one's fair share"are simple ways of giving expression to contributivejustice.

Tin men, flim-flam men, and con artists routinelyfail in contributive justice because their deviousconduct discredits everyone in direct sellii^, therebymaking it more difficult for ethical salespersons toearn a living. The apparel manufacturer who"torches" a company building for the insuranceproceeds which are desperately needed to save thebusiness also fails in contributive justice becauseeveryone insured by his/her insurer will have theirpremiums raised to cover the loss.*

It is the principle of equivalence,^ however, thatinstructs most persuasively in matters of ethicalconcern in marketing. This principle sets forth themutual obligation of buyer and seller. Each party hasa two-part obligation to the other. For an exchiangeto be fair or just, the buyer and seller are obliged to(1) exchange thirds of equal value and (2) imposeequal burdens on one another. In the marketplace, aviolation of the principle of equivalence on occasionis called "a ripoff."

Specific violations include counterfeiting of mon-ey or merchandise, price gouging, inflated creditsales, and selling below cost. Counterfeiting of goodsor money violates the first condition of the principlebecause the things exchanged are not of equal value.Inflated credit sales violate the second condition.

Interest is justified generally as a way of equalizingthe burden between the seller who must finance theitem at the time of the sale and the buyer who doesnot have to pay the full purchase price until some-time later. The violator of truth in lending abusesthe principle of equivalence by imposing a grosslyunequal interest burden on the borrower. Suchviolations are illegal precisely because they arewidely regarded as unjust.

Because the economy is a human system thatdepends critically on individuals entering into andfulfilling their obligations to one another as em-ployer and employee, as buyer and seller, these threeprinciples are indispensable tools for addressingethical issues (see Table II for a summary). A market-place where central obligations are ignored or dis-missed breaks down and becomes disorderly, con-tentious, inefficient, and dangerous. Counterfeiters,embezzlers, inside traders, loan sharks, con men, andthe like, find it to their personal advantage to shucktheir obligations. In so doit^ they tear asunder thehuman relationships and associations that are neces-sary for the orderly, peaceful, efficient, and safetransformation of resources into goods and servicesand the distribution, exchange, and final consump-tion of those goods and services. Markets are recip-rocal and repetitive. They cannot function unless theparties involved are trustworthy, unless they meettheir obligations to each other.

Without lengthening the code of ethics perse, it ispossible to make it more specific by linking it moreexplicitly to the principles of equivalence, distribu-tive justice, and contributive justice as follows.

I. By acknowledging my accountability to society as awhole as well as to the organization for which I work

Under contributive justice the individual is obligedto maintain and support the various groups to whichhe/she belongs and from which he/she as a memberderives benefits. Ethical conflict may arise relating tothe interests of one's employer or customer and thewider interest of other persons in society which isnot satisfactorily resolved by "the invisible hand" ofmarket forces. In those circumstances, the individualmust judge whether his/her primary obligation is tohis/her customer, employer, or others in society.


TABLE IIThree principles of economic justice

Principle ofEquivalence.

For an exchange to be regarded as just, the parties involved are obliged to (1) exchange things of equal value and (2) imposeequal burdens on one another.

This principle appUes to consumers and producers, to employers and employees, and to resourceholders and purchasing agents.

Principle of Distributive Justice.

For the person with greater responsibihties in a group to act in a manner that is just, he or she is duty bound to distribute thebenefits and the burdens of that group among its members in some equal fashion.

This principle applies only to the person with greater responsibilities.

Principle of Contributive Justice.

For a member of a group to meet the demands of justice, he or she must contribute to the support and maintenance of thatgroup.

This principle applies to the individual member only insofar as he or she has received some benefits from membership in thegroup.

To illustrate, if the household use of a newproduct causes a significant sohd-waste disposalproblem, the marketer who is promoting that pro-duct has a responsibihty to address that concern inthe context of the costs and profits of his/heremployer, of the customer, and the well-being ofthose persons who work for that employer or thatcustomer and others in society insofar as they areimplicated.

The marketer in such circumstances may needassistance from his/her own company in determin-ing which obhgation is paramount. Several years agoPurceU (1982) identified several company reformsthat would be helpful in this regard: an ethics com-mittee on the board of directors, courses in ethics formanagers at various levels, company codes of ethics,an officer specially charged with overseeing theethical concerns of the company, ombudsmen, andcompany-wide ethics committees.

Under equivalence marketers are accountable fora full day's work for a full day's pay and for refrain-ing from any misappropriation of what rightfullybelongs to their employers or their customers. Herethe marketer's obhgation is straightforward. Anyproblem with regard to this obligation likely residesin the human will and not in the human intellect

IL By pledging my efforts to assure that all presentations of

goods, services, and concepts be made honestly and

clearly

This obhgation derives from the principle of equiva-lence under which the marketer has an obhgation toproperly inform the buyer about the product orservice to be exchanged so that the buyer's finaldecision to proceed is made knowledgeably andfreely. An exchange in which one party is not trulyfree is ethically offensive because exchange requiresthat both parties be responsible and a buyer who isnot free is not fully responsible. Moreover, such anexchange is destructive of the trusr between buyerand seller that is necessary for repeat sales. As withthe duty to render a full day's work for a full day'spay, any problem with regard to this obhgationlodges more in the will than in the intellect

Insofar as any ethical failure by one marketer in agiven organization damages the reputation of othersin that organization, marketers also have an obliga-tion to their colleagues under contributive justice topreserve their good names and the good name of theorganization for which they work. Stated in theaffirmative, marketers meet their obhgations to theircolleagues and their employers under contributive

928 Edwardf. and Lyndon E. Dawsonjr.

justice in part by fulfilling their obligations to theircustomers under the principle of equivalence.

III. By striving to improve marketing knowledge andpractice in order to better serve society

This obligation logically precedes the obligations setforth in the first two statements. In order to meethis/her obligation under equivalence to properlyinform the buyer, the marketer has a prior obliga-tion to be fully informed about the product orservice he/she represents. The obhgation to be fullyinformed proceeds from the intellectual traditionthat asserts that thought precedes action and power-fully conditions it.

To meet his/her obligation to others in societyunder contributive justice, the marketer has a priorobligation to be informed about the societal impactsassociated with the production, distribution, ex-change, and consumption of the item that he/she isselling. In other words, marketers cannot in goodconscience argue that they were ignorant in suchmatters unless they had been deceived by others whofailed to inform the marketers properly. Once anydeception of this sort has been! uncovered, however,there is no further justification for not being fullyinformed.

At times the full range of societal impacts is notwell understood or specialists may disagree as to thenature and extent of such impacts. Under suchcircumstances, the marketer's obligation is to admitthat there remain some unanswered questions ratherthan to dismiss them as inconsequential.

rv. By supporting free consumer choice in circurrnumcesthat are legal and are consistent mth generally acceptedcommunity standards

This obligation is correlative to the obligation setforth in the second statement of the code. Someindividuals are not fully responsible persons andtherefore are not as free to choose as are otherpersons. For example, minor children are not free topurchase alcoholic beverages; the feeble-minded arenot free to enter into a sales contract or purchaseagreement. For that reason, marketers have anobhgation under equivalence not to take advantage

of persons who are not fully capable of exercisingfree will. Disregarding this obUgation not onlyinjures those who are not entirely competent butalso reduces the marketer to a predator.

Freedom of choice, however, is not an ultimateprinciple, especially as regards the use as comparedto the purchase of a given product or service. Rather,freedom is subject to the limits imposed by the well-being of others. For example, marketers have anobhgation under contributive justice to the com-munity at large to warn buyers of vehicles such asdirt bikes and snowmobiles about operating them inways that are environmentally destructive or that areirritating to other persons. Thus, marketers have anobhgation to be fully informed as to the intent of thelaw in this regard and to the meaning of the well-being of everyone in the community where theproduct or service is used.

V. By pledging to use the highest professional standards inmy work and in competitive activity

This statement calls for the marketer to meet his/herobligation with a maximum as opposed to a mini-mum effort so as to remove any doubt as to whetherhe/she has met that obligation properly. Here theissue is not ignorance. Indeed, the presumption isquite the opposite — that the intellect has beenproperly informed. What is needed, therefore, is tourge the will to follow that informed intellect.

VI. By acknowledging the right of the AmericanMarketing Association, through established procedure,to withdraw my membership if I am found to be inviolation of ethical standards of professional conduct

This statement informs the marketer that he/she hasan obhgation to his/her professional peers undercontributive justice to remain faithful to the AMAcode of ethics and that, whenever it is necessary towithdraw a person's membership, the Associationaccording to distributive justice proceeds in a man-ner that is free of vindictiveness and arbitrariness.Expulsion is the traditional practice for deahng withany member who disregards the rules estabhshed bythe group.

One of the central intended effects of the AMA


codes of ethics is to socialize marketers, that is tomake them more aware of the fact that they aresocial beings no less than individual beings and thatas social beings they have obligations to the personswhom they contact through their work and to thepersons who are affected by the consumption of thegoods and services produced by their employers.

What price must one pay to follow theethically proper path in marketing?

It is unreasonable to expect faithfulness to any codeof ethics including the AMA's own code withoutproper instruction as to its meaning. Even so, carefulinstruction is not sufficient because faithfulness alsodemands a willingness to act in accordance with therequirements of the code even at some personalexpense, that is even when the demands of the codeconflict with pure self-interest.

In that regard, examining two general types ofcases is helpful because both turn critically on theexercise of free will. The two general types are thedilemma and the so-called "hard case."

There is a long-standing legal maxim to the effectthat "hard cases make bad law," which means that ingeneral the law is based primarily on routine actionwith certain exceptions allowed for the unusual. Aswe have indicated already, although stealing isuniversally regarded as wrong, it may be justified inthe case of the person who otherwise is unable toprovide the minimum needs of his/her dependents.The dilemma and the hard case are used herebecause they are very instructive regarding the limitsor boundaries of faithfulness to a code of ethics andfor that reason are referred to as hmiting cases.

While conformance to a speed limit is not all thatis required of the safe driver, knowing that limit isessential to safe drivir^. So too, while there is moreto faithfulness to a code of ethics than complying atthe limit, knowing that hmit is essential to ethicalconduct.

The hard case

The hard case is a situation where a certain moralambiguity exists because there are two outcomesfrom one action: one that is morally ethical and one

that is morally unethical. To illustrate, in order towin a sales contest that is drawing to a close in hours,the seller remains silent regardit^ certain misinfor-mation regarding price or deliverabihty, knowingthat the misinformed buyer will suffer some nega-tive consequences and that the buyer would notagree to the sale if he/she were properly informed.The seller, in other words, would profit handsomelyif he/she is willii^ to disregard the second provisionof the AMA code to the effect that all presentationsare made honestly and clearly.

In such circumstances, the principle of the doubleeffect applies. This principle states that any humanaction •with two effects, one good and one bad, isunethical unless four conditions are met (see Grisezand Shaw, 1974). First, the morally good effect isgreater than the morally bad effect. Second, themorally bad effect is not intended. Third, the actiontaken is morally good in itself or is no worse thanmorally neutral. Fourth, the good effect is not theresult of the bad efFect because both flow directlyfrom the same action.

In this case, the last condition is satisfied. Theseller's gains from the contest do not derive from thebuyer's losses from the sale or from any losses thatmight befall the seller's company for treating itscustomers in that manner. However, even if the firsttwo conditions are met — the good effect is fargreater than the bad effect and the seller does notintend to harm the buyer — the third condition isnot. It is ethically wroi^ to remain silent in thesecircumstances because "silence gives consent." Theseller's silence, in other words, effectively affirms themisinformation as valid. It is the moral equivalent ofa lie.

This case becomes even harder when the seller'sgain is very large. The lure of a sizeable gain from asituation characterized by ethical ambiguity effec-tively raises the cost of faithfulness and underscoresthe fact that ethical conduct is a learned experience:a person is less likely to be faithful in circumstanceswhere the ethical compromise and the gains arelarge if previously that person has been unfaithful incircumstances where the compromise and gains aresmall.

More and more private firms in the United Statesare acknowledging that there are no petty departuresfrom faithfulness in quality and, in order to becomemore competitive and to improve their prospects for


survival, many have established an exphcit goal ofzero defects. The lesson for marketing is that, eventhough the law recognizes a difference between apetty crime and a serious one, there are no pettydepartures from faithfulness to the AMA code ofethics or from a company code. As item 5 of thecode suggests, zero defects in ethical matters is anappropriate and attainable goal. Indeed, for the firmthat depends on repeat sales, zero defects in ethicalmatters may be a necessary condition for long-termsurvival.

The dilemma

The second general case that is instructive as tolimits or boundaries is the dilemma. The dilemma isa situation wherein all of the outcomes are morallyunethical whether one acts or does not act Forexample, the marketer who is required to dehber-ately misrepresent the company's product becausethe company otherwise will not survive and whothereby violates item 2 of the code is mired in adilemma. If that person takes part in the misrepre-sentation, he/she becomes directly responsible forlying. Similarly, if he/she refuses to actively partici-pate but remains silent about the misrepresentation,that person becomes indirectly impHcated in thelying. If he/she speaks out, the company will fail andmany innocent persons, including not only theemployees and their dependents but also suppliersand their employees and dependents, will likely besignificantly hardshipped.

Just as there is "no free lunch," there is no way outof this dilemma without some ethical or financialcost It is essential, however, to inquire as to whetherthe marketer mired in this dilemma is free to act Ifhe/she has no real freedom to act because of, say,believable threats made against his/her own life oragainst the lives of loved ones, he/she carmot be heldmorally responsible for any involvement in themisrepresentation or silence. The applicable ethicalprinciple may be stated as follows: there is no moralculpabihty where there is no authentic freedom toact

If, on the other hand, the marketer is not coercedby threats directed against his/her person or againstothers, he/she is morally responsible for any choicemade to participate in the misrepresentation or

silence. The apphcable ethical principle, which alsoarises in the instance of the hard case, is that there isno moral acquittal for a person involved in a morallybad act simply because ofthe moral good that it maybring. The end does not justify the means.

Higher-order ethical responsibility:the senior manager as a role model

The case ofthe dilemma raises the issue ofthe moralresponsibility ofthe person holding a higher positionin an organizatiorL Moral responsibility for such anindividual means, wherever possible, never makii^demands on subordinates that amount to creating adilemma for them or shifting a dilemma to them.Here, the ethical principle is that no one has theright to take away another persons's freedom to actbecause loss of personal freedom is a form of slavery.

This principle apphes even when the personal costto the marketing or sales manager is considerable. Asone moves up the hierarchy of any organization,responsibility in all organizational matters includingones that are ethical in nature increases preciselybecause empowerment and the rewards that attendthat empowerment increase. Contrivances such as"plausible deniability" are morally repugnant be-cause they argue that the person who heads anorganization can escape moral responsibihty in acloud of ignorance. See Table III for a summary ofthe four principles articulated above.

It is widely agreed that, in questions of businessethics generally, the role of senior managers iscrucial (see, for example. Business Roundtable, 1988;and Across the Board, 1988). Positive role models orchampions in ethical affairs are necessary becauseonly human beings have the existential qualities —intellect and free wall — to be moral agents. Further,because humans are social beings, the behavior ofone influences the values, attitudes, perceptions,principles, and conduct of others. Literature, espe-cially biography, is one popular source of informa-tion about models of exemplary, even heroic, per-sonal conduct (Danner, 1980).

In matters of ethical decision-making where thewill plays a critical role, senior managers by theirown conduct reinforce the wilhngness of others,particularly those to whom they are close becausethey belong to the same organization, to be steadfast


TABLE IIIFour ethical principles for hard cases and dilemmas

Principle of the Double Effect.

A human action which has two efFects, one that is morally good and another that is morally bad, is unethical unless fourconditions are met (1) the good effect is greater than the bad effect; (2) the bad effect is not intended; (3) the action itself ismorally good or morally neutral; and (4) the good effect is not the result of the bad effect because both flow directly from thesame action.

Principle of Culpability.

There is no culpability where there is no authentic freedom to act

Principle of the Good End and the Bad Means.

There is no moral acquittal for a person involved in a morally bad act simply because of the moral good that it may bring.

Principle ofSelf-Determination.

No one has the right to take away another person's self.-determination because no one has the right to hold another person inbondage.

to a set of ethical standards, to be indififerent to thosestandards, or to dishonor them. Human heings willconform to the customs and practices of an organi-zation hecause of their need as social heings tohelong, that is hecause of their need for the companyand support of other human beings. More so thanothers in the organization, senior officials by theirown actions determine what it takes to conform andtherefore what it takes to belong. Given their role inreducing ignorance hy virtue of what they say andwhat they do, along with their complementary rolein dealing vntk conflict, senior officials generally,and senior officers of the AMA specifically, are rolemodels with great potential to lead professionalmarketers toward the moral good or in the otherdirection.

Concluding remarks

The code of ethics of the American MarketingAssociation is not a panacea. By itself, the code is tooabstract to be definitive in most day-to-day market-ing activities with ethical dimensions and too narrowto be instructive in ethical dilemmas. The marketeralso needs an elementary set of ethical principles thatcan be applied directly to the conflicts at hand and,as previously suggested, may require assistance from

his/her company in the form of a company code ofethics, courses in ethics, a company-wide ethicscommittee, along with other institutional structures.Otherwise, he/she is at a great disadvantage inanalyzing ethical problems and in determining theappropriate ethical pathway to follow. Because it is aset of moral absolutes, the AMA code itself teachesone extremely important lesson: for the marketerwho is willing to learn and master them, moralabsolutes or ethical principles are reUably instructivein ethical dedsion-making.

The Association's code of ethics alone will not puta halt to "knockoffs," product tampering, dumping,expense padding, and like practices. Champions areneeded to strengthen the resolve of marketers tofollow the ethically proper path. In Robert Bolt'splay A Man For All Seasons, Thomas More under-scores the nexus between conflict, heroes, and thehuman will.

If we lived in a State where virtue was profitable,common sense would make us good, and greed wouldmake us saintly. And we'd live like animals in the happyland that needs no heroes. But since we see that avarice,ai^er, envy, pride, sloth, lust, and stupidity commonlyprofit far beyond humility, charity, fortitude, justice, andthought, and have to choose, to be human at a l l . . . whythen perhaps we must stand fast a little — even at the riskof being heroes. (Bolt, 1962).


As long as human beings are frail and free, that is aslong as humans may choose an action that is unethi-cal, marketers as with all others will need standardssuch as the AMA code of ethics to enlighten theirintellects and heroes to strengthen their wills.

Notes

' By routinely pursuing his/her own self-interest, a personalso serves the common good through the "invisible hand ofthe market."^ "To do this I have only to ask myself the simple questionwhether I could will that the maxim (or subjective principleof my action) should become a universal law, governing notmerely this particular action of mine, but the actions of allagents similarly circumstanced" (Walsh, 1967).•• Also called "social justice" or "legal justice" by some.* Both failures are demonstrated in the feature-length filmsTin Men and Save the Tiger.' Known as "commutative justice" or "exchange justice" insome quarters.

References

Allmon, D. E. and Grant, J.: 1990, 'Real Estate Sales Agentsand the Code of Ethics: A Voice Stress Analysis', yoMrrw/ ofBusiness Ethia 9, pp. 807-812.

Backof, JfF. and Martin, L. Jr.: 1991, 'Historical Perspectives:Development of the Codes of Ethics in the Legal, Medi-cal and Accounting Professions', Journal of Business Ethics10, pp. 99-110.

Bollom, W. J.: 1988, 'Ethics and Self-Regulation for CPAs inthe \J.SA.',Journal of Business Ethics 7, p. 57.

Bolt, R.: 1962, A Man For All Seasons (Random House), pp.140-141.

Brooks, L J.: 1989, 'Ethical Codes of Conduct: Deficient inGuidance for the Canadian Accounting Profession', yoMr-nal of Business Ethics 8, pp. 325-335.

The Business Roundtable. Corporate Ethics: A Prime BusinessAsset, February 1988, p. 4.

Claypool, G. A. et al: 1990, 'Reactions to Ethical Dilemmas:A Study Pertaining to Certified Public Accountants',Journal of Business Ethia 9, pp. 699—706.

Cohen, J. P. and Pant, L. W.: 1991, "Beyond Bean Counting:Establishing High Ethical Standards in the Public Ac-counting Profession', _/oMma/ of Business Ethia 10, pp. 45—56.

Conway, J. and Houlihan, J.: 1982, "The Real Estate Code ofEthics: Viable or Vaporous',_/oHnw/ of Business Ethia 1, pp.202-203.

Cummings, R.: 1987, Contemporary Selling (Harcourt BraceJovanovich Publishers), p. 476.

Danner, P. L: 1980, An Ethia for the Affluent (University Pressof America, Lanham, MD), p. 370.

Dempsey, B. W.: 1958, The Functional Economy: The Bases of

Economic Organization (Prentice-Hall, Englewood-ClifFs,NJ), pp. 164-165.

Ferrell, O. C. and Gresham, L. GJ 1985, 'A ContingencyFramework for Understandii^ Ethical Decision Makingin Marketing', _/<JMrmj/ of Marketing (Summer), p. 89.

Finn, D. W. et al.: 1988, 'Ethical Problems in PublicAccounting: The View From the Top', Journal of BusinessEf/iicj 7, pp. 605-615.

Frankel, M. S.: 1989, 'Professional Codes: Why, How, andWith What itapictV, Journal of Business Ethia 8, pp. 110—111.

Fulton, W.: 1967, Teleology', Encyclopedia of Philosophy, P.Edwards (ed.) (The MacMillan Company and The FreePress, New York) 12, pp. 215-216.

Fulton, W.: 1988, 'Getting It Right What Leaders Can Do',Across the Board (May), p. 20.

Grisez, G. and Shaw, R.: 1974, Beyond the New Morality: The

Responsibilities of Freedom (University of Notre DamePress, Notre Dame, IN), pp. x—xiii, p. 100, pp. 128—136,p. 98, pp. 55-62, pp. 138-146.

Kass, L. R.: 1989, 'Neither for Love nor Money: WhyDoaors Must Not Kill', The Public Interest (Winter), p. 36.

O'Boyle, E. J. and Dawson, L E. Jr.: 1990, 'Ethical Issues inSales: A Direct-selling Perspective', Business Insights 9, p.42.

Olson, R. G J 1967a, 'Deontological Ethics', Encyclopedia ofPhilosophy, P. Edwards (ed.) (MacMillan Company andThe Free Press, New York), Volume 2, p. 343.

Olson, R. G.: 1967b, 'Teleological Ethics', Encyclopedia ofPhilosophy, P. Edwards (ed.) (The MacMillan Companyand The Free Press, New York), Volume 8, p. 88.

Purcell, T. V.: 1982, The Ethics of Corporate Governance',Review of Social Economy (December), pp. 360—370.

Purcell, T. V.: 1978, 'Institutionalizing Ethics on CorporateBoards', Review of Social Economy (April), p. 46.

Robin, D. et al.: 1989, 'A DifFerent Look at Codes of Ethics',Business Horizons January—February), pp. 68—69.

Smart, J.J. C : 1967, 'Utilitarianism', Encyclopedia of Philoso-phy, P. Edwards (ed.) (The MacMillan Company and TheFree Press, New York), Volume 8, p. 207, pp. 206-207.

Vitell, S. J. et al: 1991, The Business Ethics of Pharmacists:Confiicts, Practices and Beliefs', Journal of Business Ethia10, pp. 295-301.

Walsh, W. H: 1967, 'Immanuel Kant', Encyclopedia of Philoso-phy, P. Edwards (ed.) (The MacMillian Company and TheFree Press, New York), Volume 4, p. 317.

Louisiana Tech University,College of Administration and Business

P.O. Box 10318, Ruston, LA 71272-0046,U.SA.

the american marketing association code of edward f o...

Documents