Influence of corporate ethical/unethical behavior on customer satisfaction

Masahiro Sato


The purpose of this paper is to clarify how ethical/unethical behavior of firms results in higher/lower customer satisfaction. The progress and widespread availability of information and communication technology (ICT) has brought about the business environment in which the cost of communication between firms and their customers has dramatically become cheaper. Therefore, customers have bigger power of influence over firms than before and are likely to choice “voice” rather than “exit” or “loyalty” when they consider that firms’ behavior is improper, and customer relationship management (CRM) has become more vital for many firms. Moreover, the advent of the Net society makes it difficult for any firms to keep their behavior covert. Hence, modern firms should be sensitive about how people including their customers evaluate their behavior.

Studies on customer satisfaction have focused on two types of customer satisfaction. The first one is customer satisfaction affected by corporate behavior related to provision of products and services by firms. For example, supply of high quality products at low price can achieve high customer satisfaction in general. Conversely, exaggerated advertisement should deteriorate customer satisfaction. This type of customer satisfaction is called the first stage satisfaction. When customers feel that quality of products and services provided by a firm declines, then they can take one of the following behaviors: exit and voice. Exit is a brand switch to the other companies or is to take the behavior that will not be bought at the next term. There are two patterns in the voice. One is a behavior that the customer satisfied with the product and service makes a further proposal as customer’s voice. Another is a behavior that the customer who has dissatisfaction in the product and service indicts the firms.

The second stage satisfaction, another type of customer satisfaction, is associated with corporate response to customer behavior, especially voice. When a firm is complained of its products, services or behavior by its customers who have chosen voice activity in the first stage, sincere response of the firm to the complaint would provide the customers with high customer satisfaction and then the customers might become supporters or even spokespeople of the firm. On the other hand, grudging response of the firm should deteriorate customer satisfaction and then even loyal customers would decide to choice exit behavior. Therefore,

In addition, by exploring the relation between this problem and Information and Communication Technology (ICT), it seems clear that the model of second stage for customer satisfaction will gain further importance in an information society. It is plausible this society aims at the construction of an interactive relation with the customer by the use of ICT. In fact, before the dawn of information society, though consumers had the intention to take a voice behavior, they were unable to know to whom they should address. Moreover, even in case of dissatisfaction, consumers were unable to communicate this information to other persons. However, the development of ICT, enabled consumers to easily take voice behavior, such as suggesting and complaining behaviors.

In addition, the advent of the Net society, in which ICT has become ubiquitous technology and people have adequate ability to transmit information as they like, has made the second stage satisfaction critical for many firms. As Toshiba “claimer” incident in 1999 revealed, improper corporate behavior, which most people consider unethical, cause significant damage to the firms’ reputation and trustworthiness. Because reputation and trustworthiness is the most significant intangible asset for almost all modern firms, they have to be sensitive to avoid any behavior which is not defensible in order to do their business successfully.

In short, if we consider the influence that an ethical behavior of the enterprise exerts on customer satisfaction under the precondition that the present age is an information society, we will say that the second stage satisfaction is more important than the first stage satisfaction.