The decision process for ethical investment

Abstract

While ethics and utility maximisation in economics seem mutually exclusive, ethics has recently become an issue in financial markets. The market demand for ethical investment is increasing, suggesting that investment decisions are influenced both by financial and moral considerations. Therefore, marketing strategies for ethical investment are needed. First designed for describing ethical decision processes in business organisations, the issue-contingent model of ethical decision making in organisations is applied in the present study to explain ethical investment decisions. Using a questionnaire, 286 participants completed items regarding one of four investment scenarios of companies differing in the morality of their business conduct. Results show that the issue-contingent model is suitable to describe ethical investment decisions. High perceived moral intensity led to the recognition of the moral issue and positively influenced the making of a moral judgment. For marketing these findings imply an increase of perceived moral intensity by vivid descriptions of companies' business conduct.