1.1 Research Background
Concerns for ethical issues in business have dramatically increased over the last two decades. Much of the existing research on business ethics has focused on marketing and marketing related activities (Ferrell & Gresham, 1985; Hunt & Vitell, 1986; Vitell & Muncy, 1992). This is because marketing, in particular, the buyer/seller dyad, is a place where many ethical problems in business arise (Brenner & Molander, 1977; Vitell & Festervand, 1987;
Vitell & Muncy, 1992). Thus, much of research concerning ethics in the marketplace has focused primarily on the seller side of the buyer/seller dyad. Relatively few studies have examined ethical issues in the marketplace from the perspective of consumer ethics. However, consumers are major participants in the business process and not considering them in ethics research may result in incomplete understanding of that process. An understanding of why some consumers engage in unethical behavior may be helpful in ultimately curtailing many questionable practices.
Among the first consumer ethics studies in the post-1990 time period were those of Muncy and Vitell (1992) and Vitell and Muncy (1992). In these articles, they established a consumer ethics scale (general ethical judgments) that examined the extent to which consumers believe that certain questionable behaviors are either ethical or unethical. The majority of general ethical judgment research conducted over the years has focused on examining consumer behavior in various countries, which is ethically questioned, in all of its variety (e.g., Rawwas, 1996). More specifically, ethical judgments are generally regarded as dependent variables and explore their antecedents (e.g., individuals’ethical ideologies) or examine the extent to which these ethical judgments related with other variables (e.g., attitudinal characteristics) (Chan et al., 1998; Vitell & Muncy, 1992). The few field studies
consider them as independent variables or mediator and explore their consequences. Vitell (2003) stated that future study in consumer ethics could link the Muncy-Vitell Consumer Ethics Scale to intentions and/ or behavior. Consequently, ethical judgments may play a crucial role in explaining the cause of unethical behavior.
The credit card industry has developed into a major financial service used by most consumers across all income classes. An example of the pervasiveness of credit card use is provided by the U.S. fast food industry. After the U.S. fast food industry began to accept credit payment, credit sales rapidly grew to exceed cash transactions by 50-100% (Ritzer, 1995). The use of credit cards in Taiwan has also grown rapidly during the past decade. Based on recent statistical data, the number of credit cards issued in Taiwan has reached 40 million (Directorate-General of Budget, 2003). Despite their convenience, the wide availability of such cards has created a problem of card user failure to repay the issuing company, creating heavy losses for credit card companies (e.g., banks).
“Card slave,” aterm coined in Taiwan to referto a person who is being tied down with his/her credit card debts, has been hogging the news for months (Kang, 2006). People who fail to manage personal finances can bring serious long-term, negative social consequences (e.g., bankruptcies, suicide). Financial service providers should seriously face a “moral hazard”situation wheresomedebtorsmay try to avoid paybacksthrough adebtnegotiation mechanism or the individual bankruptcy law. By understanding the causes of not repaying credit card expenses, credit card companies should be able to effectively reduce their losses.
1.2 Research Objective
Ross and Robertson (2000) stated that decision-making about ethical issues may harm one or more of the groups or individuals affected by the outcome of the decision. It appears
behavior (EQB) in consumption (Fukukawa, 2002) due to its harmful outcomes. Because not repaying card expenses involves ethically questionable behavior, consumers’decisions to engage in this action will depend on their ethical judgments. Rallapalli et al. (1994) have explored the relationship between individual personality and general ethical judgments.
Additionally, Vitell (2003) suggested that future studies on consumer ethics could examine the link between general ethical judgments and intentions and/or behavior. While interest in the influence of personality on behavior is growing, little attention is paid on the relationship between individual traits and the intentions/behavior of not repaying credit card expenses. The object of this thesis is to propose a model linking personality traits (locus of control and risk-taking propensity), ethical judgments regarding credit card use, and behavioral intention to not repay credit card expenses (hereafter ‘intention to not repay’). External locus of control and risk-taking propensity can predict intention to not repay through ethical judgments.
Furthermore, external locus of control can directly affect the intention. Regarding the ethics of credit card use, this study strives to provide beneficial information for credit card companies.
Specifically, the current research is designed to examine the mediating processes which explain the linkages between personality and intention to not repay. That is, we attempt to see how the four dimensions of ethical judgments (actively benefiting from illegal activities, passively benefiting at the expense of others, actively benefiting from questionable actions, and no harm/no foul) regarding credit card use mediate the relationships between two well-established personality traits associated with ethical issues (locus of control and risk-taking propensity) and intention to not repay. These relationships will be empirically examined by using the data collected from a large and diverse sample in Taiwan. The results will provide evidence regarding how personality traits influence ethical judgments, how ethical judgments make individuals more likely to have intention to not repay, and if personality directly affects intention to not repay.
1.3 Organization of the Dissertation
This dissertation is organized in the following manner as Figure 1.1 shows: Chapter 1 presents the motive and objective of the study. Chapter 2 reviews the relevant literatures, thus forming a conceptual framework and hypotheses. Chapter 3 gives a brief introduction of methods. Chapter 4 shows the results of the study. Chapter 5 provides the detailed discussion for the study. Chapter 6 concludes this dissertation.
Figure 1.1 Research Flow Chart
Chapter 1 Introduction►Research Background
►Research Objective
Chapter 3 Methods
►Sample
►Measures
►Analysis
Chapter 5 Discussion Chapter 2 Literature Review
►Ethical Judgments
►Ethically Questionable Behavior
►Conceptual Framework
Chapter 4 Results
►Measurement Model
►Structural Model
Chapter 6 Conclusions