Attitudes toward Counterfeit Products: An Ethical Perspective

ABSTRACT Counterfeit products cause a considerable amount of damage in the free market economy. Moreover, future investment in research and development is placed at risk from the unfair competition generated by counterfeit products. Despite the importance of this phenomenon, there is lack of understanding of the factors that may influence customers to buy and evaluate these counterfeit products. The purpose of this study is to empirically investigate some ethical and personal traits, plus product characteristics, to assist in understanding and ultimately addressing this phenomenon. Some cross-cultural comparisons are made between Anglos and Hispanics. A cross section of consumers in a small city in south Texas was surveyed about their preferences for and buying intentions regarding counterfeit products. A total of 211 usable questionnaires were gathered. Results show that consumer ethics and locus of control are strong predictors of the evaluation of counterfeit products. The results also suggest that the more evaluation the subject has for the counterfeit products, the more intention the subject would have to purchase the counterfeit product. INTRODUCTION A company's product brand is often its most valuable asset. (Green and Smith, 2002). Unfortunately, the success of the brand breeds counterfeit practices (Delner, 2000; Nill and Shultz, 1996). Brand image is the part of the brand that is related to the perception of the customer about a specific brand. The symbolism and elements that are constructed around a brand are important factors that determine the propensity of a product to suffer this type of unfair competition (Nia and Zaichkowsky, 2000; Cordell, Wongtada, and Kieschnick, 1996). The total losses estimated every year for counterfeiting is about $200 billion dollars worldwide (Chaudhry and Walsh, 1996). The consequences are not only economic for the company, there also is a great number of job looses within companies affected by counterfeiting (Chakraborty et al., 1997). The majority of counterfeit products are manufactured in countries where legal sanctions are not as strong as in the US (Grossman and Shapiro, 1988). The countries that are more frequently associated with the production of counterfeit products are Taiwan, China, Singapore, and Thailand (Gentry et al., 2001). Despite the worldwide legal sanctions against the manufacturing and the consumption of counterfeit products, the problem is expanding rapidly (Cordell, Wongtada, and Kieschnick, 1996). Many companies even employ a team of lawyers and investigators to work to addressing this problem (McDonald and Roberts, 1994). A number of articles can be found in the literature that deals with anti-counterfeit strategies that are implemented worldwide to try to protect industries from the practices of illegally producing and selling brand name products (Chaudhry and Walsh, 1996; Olsen, 1992; Delner, 2000). The problem is not related only to the manufacturers of counterfeit products. The demand for these types of fake name brand products is a key element in the increase in the trade in counterfeit goods (Chakraborty, Allred, and Bristol, 1996; Gentry et al., 2001; Bloch, Bush, and Campbell, 1993). This study will analyze the factors that influence customers to purchase counterfeit products. These factors include demographic factors such as gender and income, product characteristics, like the type of product (hedonic or utilitarian), and other personal traits that may affect the intention to purchase counterfeits items. These traits include locus of control, perception of risk, and price consciousness. In addition, the study investigates the purchase intention and the post-purchase feeling of counterfeit products. Our research involves four elements: 1) individual ethical factors, 2) perception of financial risk, 3) product characteristics (hedonic and utilitarian), and 4) personality factors such as locus of control and value consciousness. …