Use of Codes of Ethics by New Zealand Marketing Research Organisations. Anca C. Yallop, Auckland University of Technology,

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1 Page 1 of 8 ANZMAC 2009 Use of Codes of Ethics by New Zealand Marketing Research Organisations Anca C. Yallop, Auckland University of Technology, anca.yallop@aut.ac.nz Abstract This paper examines codes of ethics prevalence and use in the New Zealand marketing research industry and reports on the quantitative portion of a study that endeavours to examine the codes role in ethical decision-making. The findings are based on an empirical study of 207 market research practitioners. The majority of the respondents indicated that while they purport to adhere to the Market Research Society New Zealand (MRSNZ) code of ethics, less than half of them use the code on a regular basis when confronted with an ethical dilemma in their relationships with clients. It appears that the most prevalent methods of arriving at a resolution in ethical conflicts are consultation with peers and trusting personal values and judgments. Keywords: codes of ethics, marketing research, ethical decision-making, business ethics

2 ANZMAC 2009 Page 2 of 8 Use of Codes of Ethics by New Zealand Marketing Research Organisations Introduction Various ethical decision models (Ferrell and Gresham, 1985; Ferrell, Gresham and Fraedrich, 1989; Hunt and Vitell, 1986, 1993, 2006; Malhotra and Miller, 1998; Schwartz, 1998) have identified codes and norms as being influential in the ethical decision-making processes of marketing professionals. It is suggested that codes of ethics influence behaviour. Therefore, in recent years the attention of academics and marketing professionals has been oriented towards codes of ethics and their role in ethical decision-making. But do such codes exist in the New Zealand marketing research industry and are they used by market researchers? Literature Review Previous studies show that codes of ethics are now prevalent around the world and attract an increased popularity in organisations (Chonko, Wotruba and Loe, 2003; Oliver and McGhee, 2005; Schlegelmilch and Houston, 1989; Weaver, Trevino and Cochran, 1999). However, very few studies have examined the use of codes of ethics by New Zealand organisations and no studies have examined the use of codes of ethics and the way they are implemented and perceived by New Zealand market research practitioners. Definition of Codes of Ethics Academic literature on codes of ethics has focused particularly around organisational / corporate codes of ethics (Pajo and McGhee, 2003). Various attempts have been made to define a code of ethics (Berenbeim, 1988; Hosmer, 1991; Stevens, 1994). However, there is a lack of clarity around what exactly a code of ethics consists of, and there is confusion between a code of ethics and other ethics documents that contain ethical guidelines (Pearce and David, 1987; Schwartz, 1998; Stevens, 1994). This confusion is exacerbated by codes of ethics being variously described as codes of conduct, codes of practice, ethical codes, corporate ethical codes, ethical guidelines, business conduct, codes of professional behaviour, operating principles and so on (Fisher, 2001; Marnburg, 2000; Schlegelmilch and Houston, 1989, cited in Schwartz, 1998). Several definitions of a code of ethics have been provided in the literature (Kaptein and Schwartz 2008; Schwartz, 2002; Hosmer, 1991; Berenbeim, 1988). Schwartz (2002, p. 28), for example, defines a code of ethics as a written, distinct, formal document which consists of moral standards used to guide employee or corporate behaviour. In the literature, a distinction is made between organisational (internal) codes of ethics and professional (external) codes (Kaptein and Schwartz, 2008; Schwartz, 1998; Stevens, 1994), such as codes of ethics developed by professional bodies and associations (e.g. Market Research Society New Zealand MRSNZ, European Society for Opinion and Marketing Research ESOMAR, American Marketing Association AMA, etc.). As suggested by Tucker, Stathakopolous and Patti (1999), only a limited number of studies focus on codes of ethics of professional associations. Stevens (1994, p. 64) describes professional codes as codes that communicate the goals and beliefs for groups and professionals by which individual practitioners can be guided. However, as Stevens (ibid) states, the two terms organisational and / or professional codes are often used interchangeably by corporations and in academic literature.

3 Page 3 of 8 ANZMAC 2009 Use of Codes of Ethics Over 90% of American and Canadian organisations use a code of ethics (KPMG, 2000; Lindsay, Lindsay, and Irvine, 1996). In Europe however, codes are not so widely used - 60% British, over 50% German and 30% French organisations have a code (Webley and Le Jeune, 2005, Langlois and Schlegelmilch, 1990). More and more New Zealand organisations are making steps to incorporate ethical values into their daily operations (Pajo and McGhee, 2003). However, almost 50 % of them do not have a code of ethics, and the simple existence of an ethical code is not normally seen as sufficient to guarantee ethical behaviour. Only one of the surveyed managers indicated that their organisation makes use of a code of ethics (ibid). New Zealand organisations give ethics lower priority than other values in the corporate culture (i.e. securing profits, for example). Moreover, the majority of them believe that ethical standards in New Zealand organisations have declined in the past ten years (Alam, 1999). Brinkmann and Ims (2003) suggest that most people have a positive attitude towards codes, but on the other hand, many of them seem realistic or sceptical towards code efficiency and code enforcement. In marketing research, it is becoming clear that there is more and more pressure to recognise and apply specific standards and guidelines to ensure ethical behaviour (Peterson, 1996). Marketing research associations have designed codes to be followed by their members. Market Research Society New Zealand (MRSNZ) is the association that develops the code of ethics to be used by New Zealand market research organisations. The MRSNZ code is derived from ESOMAR s (The European Society for Opinion and Marketing Research) code of ethics. The code clarifies expectations through specific description of acceptable practices in marketing research. This highlights the accepted importance of business ethics in the marketing research industry and reflects a perception of ethical issues in the industry. Despite the abundance of studies on codes in general, few studies stress the importance of codes of ethics as a necessary tool for creating and establishing an ethical environment in market research organisations (Ferrell and Skinner, 1988; Hunt, Chonko and Wilcox, 1984). Furthermore, while much literature has focused on the dyadic relationship between respondents and market researchers, fewer studies have examined the relationship between practitioner and client. This literature review has revealed an absence of research specific to the use and implementation of ethical codes by the market research industry in New Zealand. This study proposes to address this gap and to examine what kinds of ethical codes (organisational and/or professional) exist in the New Zealand market research industry, how familiar practitioners are with these codes, and whether they refer to/use codes when encountering ethical dilemmas in their client relationships. Methodology This study was designed and conducted as a preliminary stage of a larger project, of qualitative nature, on codes use and effectiveness. For this purpose, a survey was conducted in order to collect information about the marketing research industry in New Zealand and professionals involved in this industry. This information will be used as a basis for future qualitative research.

4 ANZMAC 2009 Page 4 of 8 A list of New Zealand marketing research organisations was generated from the Kompass Business to Business Search Engine and the Yellow Pages Directory. After a careful crossexamination of businesses identified (attributes considered in the selection were: organisation size, market research as main business activity, MRSNZ membership, and turnover where available), 97 organisations (18 large, 8 medium and 71 small organisations) were identified as active in the industry and were retained for the final sample of this research (refer to Table 1 for organisation size description). A letter of invitation to participate in the research was sent out. Only two organisations replied in writing, expressing their willingness to participate in the research. Therefore, the researcher contacted the organisations by phone to ask for permission to distribute the questionnaires to staff. This enabled the researcher to briefly discuss the research process and purpose of the investigation with managers. Prior to questionnaire distribution, the questionnaire was pre-tested among several market researchers. The feedback received was used to amend the survey instrument. 207 questionnaires were then distributed by mail. A total of 50 usable questionnaires were returned, a response rate of 24.2%. Given the purpose of this study to generate a preliminary understanding about codes use by New Zealand market researchers and given the generally low response rate of mailed questionnaires, this response rate was considered adequate. As noted earlier, the intention of this study is not to attempt to generalize the findings but to inform and create a platform for further qualitative research. Research Findings The data collected provided a general overview of the industry and a better understanding of the organisations operating within industry, their attitudes towards codes of ethics and the actions they take to create an ethical climate within their organisations. Descriptive information was collected describing the demographic characteristics of market research practitioners, marketing research organisations and the availability of their codes of ethics. In particular, information on how familiar the practitioners are with codes of ethics, codes presence in the organisation, codes enforcement and codes use was sought. The demographics of the sample are presented in Table 1. Table 1: Demographic Data Demographics (%) Demographics (%) Gender Male 52 Organisation Small (1-5 employees) 22 Female 48 size Medium (6-20 employees) 10 Age Large (over 20 employees) MRSNZ Yes affiliation No Don t know 6 Position Manager / Executive 40 Code Yes 70 CEO / owner / principal 22 Prevalence No 18 Research analyst Account executive / sales Other Don t know % of the surveyed market research organisations were present in the industry for more than 10 years. 68% of the responses came from large organisations. This is not surprising as codes of ethics are more likely to be developed and used in larger organisations than smaller

5 Page 5 of 8 ANZMAC 2009 organisations (White and Montgomery, 1980). Furthermore, one of the explanations received from the manager of a small organisation for refusal to participate in the survey was: There are no ethical guidelines provided to the employees, we assume that the persons are honest when employed by us. When asked why the organisation is then a member of Market Research Society (MRSNZ) the answer was: At that time, when starting to operate in the business, it was an unformed [market research] industry, a MRSNZ membership provided reputation and an image of professionalism. Out of the 50 respondents who returned the questionnaires, 35 (70%) answered that their organisation has a written code that includes ethical guidelines and principles; 9 (18%) said that there is no such code in their organisation and 6 (12%) of them did not know if their organisation has a written code. Internal and External Codes of Ethics As expected, the majority of market research organisations (80%) are members of MRSNZ, and have a written code that includes ethical guidelines and principles. Respondents were asked to provide the name of the code referred to in the organisation. Popular names were code of practice, code of ethics, code of conduct and, surprisingly, staff handbook. There is clear confusion about what represents a code of ethics (supported by Schwartz, 1998), confusion that was even more apparent when distinguishing between an internal (organisational) code and an external (professional) code. 36% of the respondents answered that the code is an internal code and was designed by the organisation, 38% said that the code is not internal and 9% were not sure. In terms of familiarity with the internal code, out of the respondents who acknowledged that their organisation has an internal code (note: only half of those addressed this question), 44% are familiar with its content, 28% have some idea about it, 17% are aware but never read the code and 11% have no awareness of the code. About half of the respondents stated that the internal code is always enforced, with the other half stating that the code is sometimes enforced (27%) or hardly ever enforced (20%). With regard to an external (professional) code, around 90% of the respondents answered that their organisation has an external code. All of them identified the MRSNZ code as the external code. Other external codes identified were: AMRO s code (23%), ESOMAR s code (14%), one respondent also mentioned the Privacy Act, and another, the QRCA code (the Qualitative Research Consulting Association based in the U.S.). Out of 35 respondents who identified an external code, about half of them (54%) affirmed that they are familiar with its content, while the other half have some idea about it. Among the 35 respondents, more than 70% said that the external code is always enforced in the organisation, while 24% said that the code is sometimes enforced. Code of Ethics Presence and Use In a second part of the questionnaire respondents were asked to provide their views on codes of ethics presence and where it can be retrieved in the organisation, codes of ethics use, and ways of dealing with ethical dilemmas when they arise. The results show a degree of confusion, which has been reflected in the market research practitioners responses all throughout this section of the questionnaire. 70% of them had previously acknowledged that their organisation has a code that it adheres to, but in this section they failed to identify that such a code can be retrieved in a written form within the organisation. Only half of the

6 ANZMAC 2009 Page 6 of 8 respondents confirmed that the code is present and stored in a written form within their organisation. The main ways of storing the code in organisations are: filed with other documents (52%), online on the organisation s website (39%), and in other ways (24%) such as intranet, employee handbooks and online on the MRSNZ website. In addition, more than half of them (56%) said that the code is not visible in the organisation, while others suggested that the code is placed in the manager s office (18%), in general offices (15%) or they did not know where the code is placed within the organisation (12%). The respondents were also asked if they make use of the code(s) when dealing with their clients. Out of 36 people who responded to this question, more than 60% of the respondents answered that they use the code(s) only sometimes, rarely or never. The respondents were asked then to say in what manner they deal with ethical issues encountered in the relationships with their clients. All 50 respondents provided an answer for this question: 82% seek advice from their peers, 56% trust their personal values and judgment, and, surprisingly, 60% stated that they refer to the code (note: only 39% stated previously that they use the code on a regular basis). Only 64% of the respondents stated that they clearly understand their organisation s position on ethical matters (i.e. ways of dealing with them). This is also reflected in the efforts that organisations make to acknowledge or highlight ethical issues and codes of ethics during recruitment and initial training, as well as on-going training. More than half of the respondents (56%) stated that the code of ethics is not always mentioned or were not aware if it is mentioned during recruitment and initial training sessions. Similarly, 60% of them said that the code is not mentioned or don t know if it is mentioned during on-going training within the organisation. Conclusion and Further Research From this study it can be seen that there is a degree of confusion among New Zealand market research practitioners around organisational and professional codes of ethics. The results show that the majority of practitioners surveyed are members of MRSNZ and have recognised the MRSNZ s code of ethics as the code they adhere to. However, only half of them are familiar with its content and less than half of them use the code on a regular basis. The most common ways of dealing with ethical issues are seeking advice from peers and trusting personal values and judgments. In addition, it appears that New Zealand market research organisations should put more efforts into providing support and training to their staff around organisational and / or professional codes of ethics. The study has shown that ethical codes are commonly to be found in filing cabinets, in amongst other documents. This begs the question: are codes of ethics really used in ethical decision making, or are market research organisations merely paying lip service to them? Accordingly, in-depth qualitative research is needed to examine the use, or lack thereof, and effectiveness of codes of ethics and their role in developing and sustaining ethical relationships between market research organisations and their clients. Qualitative information collected through in-depth interviews with market research practitioners is currently being analysed. It is hoped that this will further explain not only if and how codes of ethics are used by New Zealand market researchers, but also how effective they are in guiding ethicaldecision making by market researchers in their client relationships.

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