When Ethical Transgressions of Customers Have Beneficial Long-Term Effects in Retailing: An Empirical Investigation

70 Pages Posted: 2 Oct 2017

See all articles by Zhao Yang

Zhao Yang

University of Zurich

René Algesheimer

University of Zurich

Utpal M. Dholakia

Rice University - Jesse H. Jones Graduate School of Business

Date Written: September 30, 2017

Abstract

The conventional wisdom, grounded in deontological ethics, is that retailers should extinguish unethical customer behavior. However, there exists an opposing teleological view that unethical behavior may be tolerated if its ultimate consequences are beneficial for all stakeholders. This is supported by a survey of retail managers conducted by the authors that revealed over 80% of the respondents are inclined to tolerate unethical customers whose actions have beneficial effects. The primary goal of this research is to investigate the boundaries of this teleological perspective, i.e., whether ethical transgressions that appear to have negative short-term consequences for the retailer and other ethical customers can have beneficial longer-term consequences for all parties. We examine this question empirically with a longitudinal dataset, covering seventy weeks and over 48,000 accounts, from a popular Swiss online retailer. We focus on increased revenues and customer engagement as the benefit for the retailer. Our results show that customers registering multiple accounts in violation of the retailer's policy comprise fewer than 11.5% of accounts, yet generate more than 27.6% of the retailer's revenue. Specifically, their behavior leads to higher retailer revenues and greater engagement by other customers in the long-run. We discuss the implications of this insight for retailing managers as well as scholars.

Keywords: unethical customer behavior, marketing ethics, online shopping, ethical transgression, gamification

Suggested Citation

Yang, Zhao and Algesheimer, René and Dholakia, Utpal M., When Ethical Transgressions of Customers Have Beneficial Long-Term Effects in Retailing: An Empirical Investigation (September 30, 2017). Available at SSRN: https://ssrn.com/abstract=3045852 or http://dx.doi.org/10.2139/ssrn.3045852

Zhao Yang

University of Zurich ( email )

Rämistrasse 71
Zürich, CH-8006
Switzerland

René Algesheimer

University of Zurich ( email )

Department of Business Administration
Andreasstrasse 15
Zurich, 8050
Switzerland

HOME PAGE: http://www.market-research.uzh.ch

Utpal M. Dholakia (Contact Author)

Rice University - Jesse H. Jones Graduate School of Business ( email )

6100 South Main Street
P.O. Box 1892
Houston, TX 77005-1892
United States

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