Relationship between the salespersons ethical behavior customers satisfaction the case of mercedes benz vietnam

Abstract Salesperson’s ethical behavior plays a critical role in the formation and maintenance of long-term relationship Gundlach and Murphy, 1993; Roman and Ruiz, 2005 and has a signi

RELATIONSHIP BETWEEN THE SALESPERSON’S ETHICAL BEHAVIOR & CUSTOMER’S SATISFACTION-

THE CASE OF MERCEDES BENZ VIETNAM

In Partial Fulfillment of the Requirements of the Degree of

MASTER OF BUSINESS ADMINISTRATION

In Marketing

By Mrs: Ly Thien Huong ID: MBA03014

International University – Vietnam National University HCMC

February 2013

RELATIONSHIP BETWEEN THE SALESPERSON’S ETHICAL BEHAVIOR & CUSTOMER’S SATISFACTION-

THE CASE OF MERCEDES BENZ VIETNAM

In Partial Fulfillment of the Requirements of the Degree of

MASTER OF BUSINESS ADMINISTRATION

In Marketing

By Mrs: Ly Thien Huong ID: MBA03014 International University – Vietnam National University HCMC

Acknowledgments

First, I would like to thank Dr Pham Hong Hoa, for a strong support as well as

comments on my research Thanks to her instructions and reference materials, my

thesis is more perfect

I also wish to thank my wonderful colleagues, boss and loyal customers of MBV for

being willing to answer an in-depth interview in collecting valuable information and

ideas

Last but not least, I wish to offer my special thanks to my parents and my husband

for their encouragements during a long time to finish the thesis on time

Plagiarism Statements

I would like to declare that, apart from the acknowledged references, this thesis

either does not use language, ideas, or other original material from anyone; or has not

been previously submitted to any other educational and research programs or

institutions I fully understand that any writings in this thesis contradicted to the

above statement will automatically lead to the rejection from the MBA program at

the International University – Vietnam National University Hochiminh City

Copyright Statement

This copy of the thesis has been supplied on condition that anyone who consults it is

understood to recognize that its copyright rests with its author and that no quotation

from the thesis and no information derived from it may be published without the

author’s prior consent

© Ly Thien Huong/ MBA03014/2011-2013

Table of contents

Acknowledgments i

Plagiarism Statements ii

Copyright Statement iii

List of Figures viii

List of Tables ix

List of abbreviations x

Abstract xi

Chapter One - Introduction 1

1 Research Background 1

2 Problem Statement 2

3 Research Objectives 3

4 Theoretical Framework 4

5 Research questions 4

6 Research methodology 4

7 Thesis structure 5

8 Mercedes-Benz Vietnam overview 6

9 Conclusion 8

Chapter two - Literature Review 9

1 Customer satisfaction 9

1.1 Definition of customer satisfaction 9

1.2 Customer Satisfaction on the Salesperson 11

1.3 Customer Satisfaction Index 13

2 Sales Behavior 14

2.1 Ethical and Unethical Sales Behavior 14

2.2 Determinants of ethical sales behavior 17

2.3 Consequences of ethical sales behavior 20

3 Compensation 24

3.1 Definition of compensation 24

3.2 Components of compensation 25

3.3 Relationship between compensation and salesperson’s performance 27

4 Case study development 28

4.1 Definition of the case study as a research strategy 28

4.2 Case study types 31

4.3 Research design 31

4.4 Case study requirements 32

Chapter three - Research Methodology 35

1 Justification of qualitative case study methodology 36

2 Sampling procedure 38

3 Data collection 39

3.1 Pilot study 39

3.2 In-depth Interview 41

3.2.1 Customer in-depth interview 42

3.2.2 Sales staff and sales management in-depth interview: 43

4 Data analysis 44

5 Concluding remarks 45

Chapter four - Data Analysis 47

1 Within-case analysis 47

1.1 Customer in-depth interview 47

1.2 Sales staff and sales management in-depth interview 58

2 Cross-case analysis 73

2.1 Cross-case analysis for research issue 1: What do the aspects of salespersons influence on customer satisfaction of Mercedes-Benz’s service? 73

2.2 Cross-case analysis for research issue 2: How does the ethical sales behavior impact on salespersons’ job satisfaction, performance and role conflict-intersender? 78

2.3 Cross-case analysis for research issue 3: How would the compensation plan be designed to motivate the salesperson? 83

Chapter five - Conclusion and Implications 88

1 Conclusion about the three research issues and implications for theory 89

1.1 Conclusion about the research issue 1: What do the aspects of salespersons effect on customer satisfaction of Mercedes-Benz Vietnam service? 89

1.1.1 The literature 89

1.1.2 Findings 90

1.1.3 Conclusion and implication 91

1.2 Conclusion about the research issue 2: How does the salesperson’s ethical behavior impact on salesperson’s job satisfaction, performance and role conflict- intersender? 92

1.2.1 The literature 92

1.2.2 Findings 95

1.2.3 Conclusion and implication 96

1.3 Conclusion about the research issue 3: How would the compensation be

designed to motivation the salesperson? 97

1.3.1 The literature 97

1.3.2 Findings 99

1.3.3 Conclusion and implication 101

2 Research limitations 102

3 Suggested further research 102

4 Conclusion 103

References 104

Appendices 108

1 Appendix 1- CSI questions 108

2 Appendix 2- In-depth interview questions………110

2.1 Questionnaire for customer survey 110

2.2 Questionnaire for sales staff & sales management survey 112

3 Appendix 3- Worksheet 116

List of Figures

Figure 1.1 Mercedes-Benz Vietnam Passenger Cars and Commercial Vehicles 6

Figure 1.2 Customer satisfaction index from 2006 to 2011 7

Figure 2.1 Outline of chapter 2 9

Figure 3.1 Outline of chapter 3 35

Figure 4.1 Outline of chapter 4 47

Figure 5.1 Outline of chapter 5 88

List of Tables

Table 2.1 Relevant situations for different research strategies 29

Table 2.2 Case study tactics for four design tests 32

Table 3.1 Research issues and associated interview questions 40

Table 4.1 Summary background of customer’s in-depth interview 48

Table 4.5 Customer’s assessment in term of sales behavior 74

Table 4.6 Sales staff and sales management’s assessment in term of satisfaction 78

Table 4.7 Sales staff and sales management’s assessment in term of motivation level 83

Abstract

Salesperson’s ethical behavior plays a critical role in the formation and maintenance

of long-term relationship (Gundlach and Murphy, 1993; Roman and Ruiz, 2005) and

has a significant effect on customer satisfaction Customer’s satisfaction has positive

impact on business result and is understood as a long term experience In contrast,

unethical behavior can even generate liability to problems for salespeople’s

organizations through both intentional and inadvertent statements (Boedecker et at.,

1991) Customer’s dissatisfaction may lead to customer base decline and therefore

generate lower return

In light of the above, a review of the literature on ethical sales behavior and customer

satisfaction, the purpose of this study is based on conceptual model introduced by

Roman and Ruiz in 2005; Sergio Roman and Jose Luis Munuere in 2005 to analyze

and explore the relationship between salesperson’s ethical behavior and customer

satisfaction in Mercedes-Benz Vietnam From the exploratory results, the study

makes some suggestions for Mercedes-Benz Vietnam Management in recruiting,

motivating and training sales force in order to achieve high level of customer

satisfaction

The case research methodology was adopted to answer the research issues For

preparation of data collection, the case study protocol and interview questions were

developed Then, the data were collected primarily through conducting in-depth

interviews with customers, sales staff and sales management of Mercedes-Benz

Vietnam as well as secondary data from Mercedes-Benz Vietnam Company Finally,

after analyzing the data in within-case and cross-case, conclusions and

recommendations of the study for Mercedes-Benz Vietnam Management were

presented

Key words: customer satisfaction, ethical sales behavior, salesperson, compensation,

Mercedes-Benz Vietnam

Chapter One - Introduction

1 Research Background

Customer satisfaction is fundamental to marketing success It determines whether

customers make additional purchases and recommend the product to others Therefore,

understanding the factors that affect customer satisfaction is critical to a company’s

marketing plan (Oliver and Swan, 1989) While there has been extensive research on

customer satisfaction with regard to products and services (see Singh 1988; Oliver and

Swan 1989), both academics and practitioners recognize that there has been little

research on the effects of salesperson ethical behavior on customer satisfaction

Salespersons are the primary source of communication for the customer in industrial,

business and retail market situations and thus, a salesperson’s behavior affects

customer’s satisfaction (Harmon and Coney 1982, Wilkie and Dickson, 1985;

Olshavsky, 1973; Oliver and Swan, 1989) To understand the effect of salesperson’s

ethical behavior on customer satisfaction, a conceptual framework for determinants and

consequences of ethical sales behavior will be presented As stated by Sergio and Jose

Luis Munuere (2005), there are two factors influence on the salesperson’s ethical

behavior such as personal factors (age and education) and organizational factors (reward

system and control system) Further that this behavior, in turn, influences the

salesperson’s job satisfaction, performance and role conflict –intersender Consequently,

to increase customer satisfaction, salesperson needs to understand customer’s

expectations and occasionally shapes his/her day-to-day selling presentations towards

ethical behaviors

2 Problem Statement

Dunlap et al., (1988) indicate that a salesperson to engage in behaviors that increase

long-term customer satisfaction and avoid behavior leading to customer dissatisfaction

Consequently, salesperson’s ethical behavior plays a critical role in the formation and

maintenance of long-term buyer-seller relationship (Gundlach and Murphy, 1993;

Roman and Ruiz, 2005), it leads to keeping and growing customers and long-term

profitability In contrast, unethical behavior can even generate liability to problems for

salespersons’ organizations through both intentional and inadvertent statements

(Boedecker et at., 1991) and generate negative word-of-mouth promotion

Furthermore, salespersons are exposed to greater ethical pressures than individuals in

many other jobs They work in relatively unsupervised settings; they are primarily

responsible for generating the firm’s revenues, which at times can be very stressful and

they are often evaluated on the basis of short-term objectives (Dubinsky et at., 1986;

Bellizzi and Hite, 1989; Wotruba, 1990) In such situations, salespersons need to have

more explicit guidelines laid down in corporate policies regarding ethical actions Sales

management engages in efforts to shape the ethical climate for motivating ethical

behavior and avoiding unethical behavior in selling activities To motivate the

salesperson’s ethical practices, compensation plan would be designed for salesperson to

achieve both individual and organizational goal

This research aims to explore the relationship between salesperson’s ethical behavior

and customer satisfaction in Mercedes-Benz Vietnam In addition, there has been little

research on the effects of salesperson ethical behavior on customer satisfaction both

academics and practitioners For these reasons, it is very important to point out the

significant implication for Mercedes-Benz Vietnam Management in controlling,

recruiting, motivating and training salespersons in order to produce an excellence their

performance and to reach high level of customer satisfaction

3 Research Objectives

A review of the literature on ethical sales behavior and customer satisfaction, the

purpose of this study is based on conceptual model introduced by Roman and Ruiz in

2005; Sergio Roman and Jose Luis Munuere in 2005 to analyze and explore the

relationship between salesperson’s ethical behavior and customer satisfaction in

Mercedes-Benz Vietnam From the exploratory results, the study makes some

suggestions for Mercedes-Benz Vietnam Management in recruiting, motivating and

training sales force in order to achieve high level of customer satisfaction

In order to reach the basic goal as the above mention, the research objectives are focused

on the thesis as follow:

 To identify what aspects of salesperson influences on customer satisfaction of

Mercedes-Benz Vietnam’s service

 To examine how does the ethical sales behavior impact on salespersons’ job

satisfaction, performance and role conflict-intersender

 To investigate how the compensation would be designed to motivate the

salespersons

4 Theoretical Framework

The researcher will adopt the conceptual model introduced by Roman and Ruiz (2005)

as the theoretical framework for the study This conceptual model presents the impact of

ethical sales behavior on customer’s satisfaction

In addition, in order to identify what the aspects of salesperson influence on customer

satisfaction, the conceptual model developed by Sergio Roman and Jose Luis Munuere

(2005) is also adopted According to this model, the determinants including personal

factors (age and education) and organizational factors (reward system and control

system); and consequences of ethical sales behavior consisting of job satisfaction,

performance and role conflict –intersender will be presented

5 Research questions

The research will attempt to find answers to the following questions:

 What do aspects of salesperson influence on customer satisfaction of

Mercedes-Benz Vietnam’s service?

 How does the ethical sales behavior impact on salespersons’ job satisfaction,

performance and role conflict-intersender?

 How would the compensation be designed to motivate the salesperson?

6 Research methodology

This research follows the methodology of Yin (2003) to build analytical case study

consisting of designing the case study, conducting the case study and analyzing data

collected First, the research starts to justify why qualitative approach will be applied in

this study Second, it mentions what procedure is employed for choosing the sample

size, how and why the sample size is selected After developing of case study protocol,

data collection will be conducted with ten cases interviews Finally, data analysis

procedures are presented

7 Thesis structure

There are five parts in the thesis’s structure as follows:

Chapter 1: Introduction

The introduction section indicates the reason why the research’s conducted It shows for

us the general background, problem statement, objectives, theoretical framework,

research questions, research methodology

Chapter 2: Literature review

The literature review section studies some theories which play a basis role for this

research It includes the concepts of customer satisfaction, ethical sales behavior,

compensation of case study

Chapter 3: Research methodology

The research method section will show clearly the research process It includes

justification of qualitative case study, sampling procedure, data collection and analysis

Chapter 4: Data Analysis

In-depth interview data will be collected and analyzed in within-cases and cross-case It

will explore the relationship between ethical sales behavior and customer satisfaction

Chapter 5: Conclusions and recommendations

The conclusions section will summarize of results and comments on the thesis

8 Mercedes-Benz Vietnam Overview

Mercedes-Benz Vietnam was established in 1995 as a member of DaimlerChrysler,

Mercedes-Benz Vietnam (MBV) is one of the top auto makers in Vietnam It supplies

both passenger cars and commercial vehicles to the market MBV tries to complete its

vision to become No.1 in automotive business in Vietnam regarding Customer

Satisfaction, Quality and Innovation

Figure 1.1 Mercedes-Benz Vietnam Passenger Cars and Commercial Vehicles

Mercedes-Benz Vietnam takes all endeavors to make customers satisfy and to exceed

their expectations These can only be achieved by skilled employees who can fulfill our

We aim to delight our customers constantly with our high quality standards, with our

innovative products and with our outstanding service anytime, resulting from the

excellence of our processes and people Therefore we are keen to create an atmosphere

for motivated and team oriented workforce, especially focusing on salesperson in order

to achieved high level of customer satisfaction

Figure 1.2 Customer satisfaction index from 2006 to 2011

Source: CRM Department

Highlighting the importance of customer satisfaction, the chart above shows that CSI

performance is increased every year and it is reported as an index score based on

100-point scale

(See the appendix 1- CSI questions)

9 Conclusion

This chapter has developed the foundation of the research It provides the background

description, problem definition, research objectives Then the conceptual models

introduced by Roman and Ruiz (2005) and Sergio Roman and Jose Luis Munuere (2005)

are explored in chapter 2 Further, in-depth interview of ten cases selected is presented

in chapter 3

Chapter 2 continues to review the literature related to ethical sales behavior, customer

satisfaction and compensation and to analyze them further in the research issues

Chapter two - Literature Review

This chapter introduces us some theories linked to customer satisfaction (section 1),

sales behavior (section 2), compensation (section 3) and case study development

(section 4) The structure of this chapter is showed in the below

Figure 2.1 Outline of chapter 2

1 Customer satisfaction

1.1 Definition of customer satisfaction

The concept of satisfaction which was defined by Swan and Oliver (1989) is an affective

or emotional response to a specific consumption experience, with increasing satisfaction

reflecting more positive affect and dissatisfaction reflecting greater affect Satisfaction

includes emotional responses of the consumers as they relate to purchases (Mano and

Oliver, 1993; Oliver, 1993) These emotional influences may result from factors related

to product performance and also from the process of acquiring and using a product

Customer satisfaction, from the perspective of both the retailer and manufacturer, is an

important issue because it is related to several desirable outcomes It affects future

purchase intentions- satisfied customers are more likely to purchase the same product

from the same source (Furse, Punj, and Stewart, 1984; Sambandam and Lord, 1995)

Satisfied customers also can provide a steady flow of word-of-mouth promotion, thereby

reducing the expense required to find new customers (Swan and Oliver, 1989) In

addition, customer satisfaction reduces the size of the set of products and retailer

considers and minimizes switching behavior among previous purchasers (Sambandam

Source: Johnson 1996

The above table presented four types customer related to high and low satisfaction

Customer’s satisfaction has positive impact on business result and is understood as a

long term experience Dissatisfaction may lead to customer base decline and therefore

generate lower return The more satisfaction they have the more benefit we get

1.2 Customer Satisfaction on the Salesperson

One of the important determinants of overall customer satisfaction is product

performance, but it is not the only one For example, Westbrook (1981) indicates that

salesperson influences overall customer satisfaction with a purchase Thus, the

importance of salesperson behavior as an antecedent of overall customer satisfaction

should be concerned

Salesperson behavior should be considered under two elements as below:

Firstly, salesperson’s top priority is to meet the customer’s needs According to Sujan

(1986) and Petty (1983) show that reactions of the salesperson when they make

interactions with their customers will influence product’s process related to information

which can be considered as a direct route of persuasion Thank to knowledge of

customer’s needs, salesperson are able to evaluate how well its current offerings serve

customer’s needs By helping a buyer obtain product information and providing

guidelines about what should be expected during the acquisition process and use of a

product, a salesperson may influence customer expectations concerning the product and

thereby reduce the likelihood of negative disconfirmation with its accompanying

dissatisfaction (Grewal and Sharma, 1991) Previous findings from Szymanski (1988);

Spiro and Weitz, (1990) indicate that successful salespeople often tailor their

presentation to the needs of each customer so that not only product and service desires

are addressed but also the consumer’s sales process needs By being customer- oriented,

a salesperson is more likely to identify customer needs and match his presentation to

those requirements, increasing overall customer satisfaction (Dunlap, Dotson, and

Chambers, 1998)

Secondly, salesperson’s emotional reaction will also effect on customer retention The

emotional reactions to a sales interaction have a positive impact of consumer satisfaction

with the purchase experience and future purchase intentions (Babin, Bole, and Darden,

1995) Following Westbrook (1981) suggests that non-product satisfaction offered by

retailers may be just as significant as product- related satisfaction in determining

customer patronage This emotional response to a salesperson could be considered an

indirect or peripheral persuasion route since it does not directly relate to the product

According to Oliver and Swan (1989), for retail purchases the quality of the

customer-salesperson communication appears to impact satisfaction with the product While there

has been very limited research associated with the linkage between satisfaction with the

salesperson as an indicator of satisfaction with the product, it appears that perceptions of

equity by the consumer influence customer satisfaction with the salesperson which leads

to satisfaction with the retailer- affecting product satisfaction

1.3 Customer Satisfaction Index

According to J.D Power Asia Pacific Study, an international association that conducts

research and survey to help vehicle manufacturers improve their sales and services,

Customer Satisfaction Index (CSI) is supposed to measure the level of customer

satisfaction with car usage during the first three years of the automobile use The CSI is

composed of variables, while each of them is measured by few questions

Based on results released for German market in 2005, the four variables explaining

customer satisfaction are:

 Quality and reliability of vehicle- covers problems with vehicle

 Vehicle appeal-means satisfaction with the vehicle’s performance, design,

function and styling

 Service satisfaction- is understood as customer satisfaction with salesperson,

dealership and service

 Ownership costs- cover costs of car use, insurance and repairs

J.D Power vehicle quality and satisfaction measurement studies are used widely among

automobile industry organizations They enable to evaluate satisfaction levels and

benchmark them against competitors

2 Sales Behavior

2.1 Ethical and Unethical Sales Behavior

Salesperson behavior can have a significant effect on customer satisfaction Chen and

Mau (2009) state that the ethical and unethical behaviors are based on this fact that how

much an activity is correct or wrong, good or bad, fair or unfair In order to survive in

competitive environment business, managers in organizations should always strive for

ethical behavior It may not be easy to always act in an ethical way, but as a leader, it is

necessary to follow the corporate codes and to support the corporate code of ethics

Customer requires a,”… salesperson to engage in behaviors that increase long-term

customer satisfaction and avoid behavior leading to customer dissatisfaction” (Dunlap et

al., 1988) Furthermore, Saxe and Weitz (1982) indicate that the effect of salesperson

behavior on customer satisfaction is more important when: (1) a salesperson can offer a

range of alternatives and has the expertise to assist the customer; (2) it is a complex

buying task; (3) a cooperative relationship exists between salesperson and customer;

and, (4) referrals and repeat sales are an important source of business An examination

of top performing dealerships suggests that these factors are present in the current

consumer market for automobiles (Eisman, 1991)

Figure 2.3 Impact of ethical sales behavior on customer satisfaction- Roman and

Ruiz (2005)

Ethical sales

behavior

Customer satisfaction on the salesperson

Salesperson’s ethical behavior plays a critical role in the formation and maintenance of

long-term buyer-seller relationship (Gundlach and Murphy, 1993; Roman and Ruiz,

2005) In contrast, unethical behavior can even generate liability to problems for

salespeople’s organizations through both intentional and inadvertent statements

(Boedecker et at., 1991) Salespeople are exposed to greater ethical pressures than

individuals in many other jobs They work in relatively unsupervised settings; they are

primarily responsible for generating the firm’s revenues, which at times can be very

stressful and they are often evaluated on the basis of short-term objectives (Dubinsky et

at., 1986; Bellizzi and Hite, 1989; Wotruba, 1990)

Besides that, salesperson may behave unethically, when interacting with different

stakeholders such as customers, competitors and employers In the hierarchy of

stakeholder importance, it appears that salespeople regard ethical transgressions against

customers as being less ethical than any controversial actions against competitors or

their colleagues (Chonko and Burnett, 1983; Chonko and Hunt, 1985) In addition,

ethical selling behavior is a highly elusive construct and is often situation specific

(Lagace et at., 1991) Nevertheless, it can be argued that ethics requires an individual to

behave according to the rules of a moral philosophy with an emphasis on the

determination of right and wrong (Gundlach and Murphy, 1993) More specifically,

ethical sales behavior is related to widely “recognized” societal norms such as fair play,

honesty and full disclosure (Robertson and Anderson, 1993; Futrell, 2002

Consequently, in the context of this study, ethical sales behavior is defined as fair and

honest actions that enable the salesperson to foster long-term relationships with

customers based on customer satisfaction and trust Example providing true and full

information about product (e.g when comparing with the competitors’ products, or in

term of its benefits or availability) and implementing low-pressure selling techniques

(Chonko and Burnett, 1983; Dubinsky et at., 1991; Lagace et at., 1991; Reidenbach et

at., 1991; Tansey et at., 1994; Verbeke et at., 1996; Singhapakdi et at., 1999)

The next part will present some determinants and consequences of ethical sales

Performance

Job satisfaction

Source: Adapted from European Journal of Marketing- Sergio Roman and Jose Luis

Munuere (2005)

2.2 Determinants of ethical sales behavior

Sergio Roman and Jose Luis Munuere (2005) conclude that there are two factors effect

on the salesperson’s ethical behavior such as organizational factors (reward system and

control system) and personal factors (age and education)

 Reward system and Control system The organizational factors including reward

system and control system have been found to be key managerial factors affect

on salesperson’s actions For instance, finding from Craven et at., (1993) and

Oliver and Anderson (1994) show significant effects on customer-oriented

selling, a behavior that is closely linked to ethical behavior (Howe et at., 1994)

Moreover, the influence of the reward system and control system on ethical

behavior deserves further attention For example, findings from Honeycutt et at.,

(2001) indicate that the firm’s reward structure significantly influenced the

ethical sales behavior In addition, past research of Verbeke et at., (1996)

concludes that the effect of a control system on a salesperson’s ethical

decision-making

Chonko et at., (1996) defines that reward system includes a set of processes through

which behavior are directed and motivated to achieve individual and organizational

goals Compensation plan emphasizing salary is recommended, when firm wants its

salespeople to adopt a long-term orientation and invests time servicing accounts to

realize future sales In contrast, compensation plan emphasizing incentives is advocated,

when firm wants its salespeople to get immediate sales (John and Weitz, 1989; Howe et

at., 1994)

Other results from Victor and Cullen (1988) indicate that commission of sales

organization develops instrumental ethical climates characterized by statements such as

“in this company, people are mostly out for themselves” and people are expected to do

anything to further the company’s interests, regardless of the consequences” In this

vein, commission pay systems create a conflict of interest for the salesperson On the

one hand, it rewards salespeople to act in the firm’s interest, as well as their own

interest, but fails to similarly directly reward salespeople to act in the customer’s interest

(Kurland, 1995; 1999) This is the case, when the salesperson may find in his best

interest to act unethically (e.g by withholding information from the client) in order to

make the sale and earn the commission (Kurland, 1999) In order words,

commission-based compensation methods might motivate the salesperson to act in an unethical

manner that will result in maximum sales Such a motivation is likely to be absent in

salary-based methods (Honeycutt et at., 2001) A salary-based compensation system is

likely to encourage the salesperson to adopt a long-term perspective with his customers,

since under this system the company assumes most of the risk of lost deals and the

salesperson little, so he feels less pressure to get immediate deals, thereby reducing the

changes of unethical practices being used (Robertson and Anderson, 1993)

Anderson and Oliver (1987) define that control system is a set of procedures the firm has

for monitoring, directing, evaluating and compensating its salespeople Salespersons are

thought to behave differently depending on the control system they face Results from

Hunt and Vasquez-Parraga (1993) document that one of the advantages of

behavior-based control system is “the development and maintenance of an organizational culture

that encourages ethical behavior and discourages unethical behavior”

 Age and education Among the personal antecedents, two clear empirical

generalizations from the non-sales ethics literature are that, although the findings

are not unanimous, older and more educated salesperson generally behave more

ethically than younger and less educated ones (Browing and Zabriskie, 1983;

Jones and Gautschi, 1988; Ruegger and King, 1992; Deshpande, 1997)

There are many reasons to explain why the older salespeople to be more ethical than

younger salespeople Firstly, as age increases, subjects have displayed more

conservative and strict ethical tendencies and hold less compromising interpretations of

what is to be judged ethical (Sikula and Costa, 1994) Secondly, ethical decision-making

and intended ethical behavior, in general, increases as individuals move from lower

levels to higher levels of moral reasoning (Wotruba, 1990) and moral reasoning is

directly linked to age (Rest, 1986) Thirdly, older salespeople have been exposed longer

to ethical dilemmas in non- business contexts (Izzo, 2000), therefore they are more

willing to accept and conform to ethical standards and behave accordingly (Serwinek,

1992)

In addition, education to have a positive influence on a salesperson’s ethical behavior for

several reasons as follows First, it can be argued that the educational process is

designed to foster critical thinking and the ability to view situations from multiple

perspectives (Levy and Sharma, 1994) In this sense, previous research has found that

education is positively related to moral judgment (Rest and Thoma, 1985; Rest, 1986)

Similarly, the effect of education on ethical behavior can be supported by Kohlberg’s

(1986) typology Therefore, education is believed to result in greater sensitivity to

different points of view and to be linked to a salesperson’s stage of cognitive moral

development (Singhapakdi et at., 1999)

2.3 Consequences of ethical sales behavior

Further that this behavior mentioned above, in turn, influences the salesperson’s role

conflict- intersender, performance and satisfaction

 Role conflict-intersender Following Rizzo et at., (1970), role conflict can be

defined by the dimensions of congruency-incongruency or compatibility-

incompatibility in the requirements of the salespeople role, where congruency

and compatibility is judged relative to a set of standards that affect role

performance This research focuses on the relationship between ethical behavior

and role conflict-intersender This type of role conflict occurs, when two or more

role partners have simultaneous expectations, such that compliance with the

expectation of one role partner makes it difficult or even impossible to fulfill the

expectations of the other role partners (Michaels et at., 1987) For example,

salespeople may perceive role conflict-intersender, when simultaneously trying

to meet company expectations and customer demands A customer may demand

better credit terms or quicker delivery schedules, which may be unacceptable to

the management Role conflict-intersender is likely to be the most pervasive and

intensely felt conflict experienced by salespeople (Walker et at., 1975)

Role conflict-intersender involves conflicting expectations from two or more role

partners (Singh, 2000) Generally, the major sources of this type of role conflict are the

company (employer) and the customers (Walker et at., 1975) The salesperson must try

to satisfy the expectations of his company and his customers One the one hand,

recognizing the negative consequences of unethical sales behavior, a company will

expect its salespeople to behave ethically On the other hand, customer try to satisfy

their own objectives and need a sales transaction are often unaware of the policies and

constraints under which a salesperson is operating (Walker et at., 1975) Since, among

other things, ethical selling behavior implies taking into account customers’ needs, when

selling a product (e.g by refraining from selling product that customer do not need)

(Ingram et at., 2001), we propose that a salesperson’s ethical behavior will reduce role

conflict-intersender, at least by the percentage that is attributable to the conflicting

expectations of the company and the customers In a similar fashion, following

Kelman’s (1958) theory of identification, in order to maintain a satisfying ego-identify,

which is also known as the self-concept or self-image, the salesperson must maintain

positive relationships with others, such as their customers, who support that positive

self-image (Kelman, 1961) In turn, interactions with customers who do not support this

positive self-image are likely lead to feeling of embarrassment and cognitive discomfort

(O’Shaughnessy, 1971) When salespeople behave unethically (e.g implementing

manipulative sales tactics or high-pressure selling techniques), they may be a fear of

personal refection by the buyer, because the use of such actions is not supportive of

positive relationships (Boyle and Dwyer, 1995)

 Performance Performance is comprised of behaviors (the activities salespeople

perform) and outcomes resulting from behavior; the former has been termed

behavioral performance, whereas the latter is known as outcome performance

(Behrman and Perrault, 1982; Grant and Cravens, 1996) According to anecdotal

literature, successful salespeople focus on customers, earn the customer’s trust

and respect and develop partnership relationships with them (Manager’s

Magazine, 1995; Schiffman, 1998) Likewise, a salesperson’s ethical behavior is

positively related to customer trust and satisfaction, thus enhancing relationship

quality and the probability of future rewards to the salesperson (Lagace et at.,

1991; Roman and Ruiz, 2005) More importantly, buyers tend to purchase from

salespeople they trust (Ganesan, 1994) Focusing on customers, building

relationships based on satisfaction and trust, and making sales are generally part

of a salesperson’s job Consequently, it is plausible to expect that more ethical

salespeople are more likely to achieve such goals and subsequently improve their

performance

According to Weeks and Nantel (1992), salespeople who understood their company’s

ethical business policy were moderately successful in their jobs Similarly, Honeycutt et

at., (1995) find that high-performance salespeople showed high ethical behavior and

Schwepker and Ingram (1996) have provided empirical evidence of salespeople’s moral

judgments as being positively related to their job performance And recently, results

from Turner and Valentine (2001) indicate that altruism and performance were

positively correlated among salespeople

 Job satisfaction Churchill et at., (1974) defines job satisfaction as: “all

characteristics of the job itself and the work environment which salesmen find

rewarding, fulfilling and satisfying or frustrating and unsatisfying” In a

non-sales context, Vitell and Davis (1990) found that management information

systems professionals were less satisfied with their job when, unethical behavior

was common within either their industry or company Bellizzi and Hite(1989)

show that the job satisfaction of salespeople can be weakened if they perceive

their organization as rewarding the unethical behaviors of co-workers Similarly,

studies by Weeks and Nantel (1992) and Schwepker (2001) indicate that the code

of ethics and the ethical climate respectively influenced a salesperson’s job

satisfaction Finally, the qualitative research of Beatty et at (1996) noted that

salespeople’s ethical behavior (e.g having customer’s best interests in mind and

being honest to them) led to higher levels of job satisfaction

A salesperson’s ethical behavior will have a positive impact on his job satisfaction On

the one hand, it can be argued that because of the negative consequences of unethical

sales behavior previously mentioned, a company will expect its salespeople to behave

ethically Thus, a salesperson who behaves ethically will comply with management

expectations and will experience feelings of success, which in turn, will increase his job

satisfaction (Brown et at., 1993) On the other hand, a salesperson is likely to be more

satisfied with his work, most of which is carried out interacting with customers (Ingram

et at., 2001), if he behaves ethically, such as not lying to customers or not applying

deceptive and manipulative techniques Finally, following Kelman’s (1958), the practice

of ethical sales behaviors supports a positive self-image and, consequently, is likely lead

to feeling of satisfaction

3 Compensation

In order to motivate the salespeople to achieve individual and organizational goals, firms

shall use the reward system According to Chonko et at., (1996), reward system includes

compensation plan focusing on salary In contrast, John and Weitz, (1989) and Howe et

at., (1994) indicate that compensation plan should emphasize bonuses In this study,

compensation plan will be explored as below

3.1 Definition of compensation

According to the American Compensation Association’s (1995), the concept of

compensation can be defined “cash and non-cash remuneration provided by an employer

or services rendered” (ACA, p.9) There are several ways to classify, sort, characterize

and re-define of compensation Previous studies have showed that compensation can be

intrinsic or extrinsic, financial or non-financial, and/or direct or indirect (Clampitt and

Potempa, 1994) Moreover, compensation is a form of rewards that flow to employees

arising from their employment (Dessler, 1995) As Bernardin and Russell (1993)

conclude that compensation has a bit influence in the recruitment of employees,

motivation, productivity and employee turnover Recently, Hafiza N.S., Shah S.S.,

Jamsheed H., Zaman K (2011) reveal that there is a positive relationship between

extrinsic reward and employee motivation, but it has been observed that firm is not

offering right amount it into each situation, it should be learned more, because it will

effect on salespeople’s performance

In the literature, expectancy theory and agency theory provide insights concerning

motivation of the salespeople and designing the compensation plan In the one hand,

expectancy theory is often discussed in research on sales motivation and may also be

beneficial in designing effective compensation systems (Brown et at., 2005; Flaherty and

Pappas 2002) In the other hand, agency theory is particularly beneficial in building

compensation plan for salespeople, because it addresses the necessity of having

individuals influence in term of rewards, the need to balance rewards with risk, and the

importance of performance that can be measured (Bartol, 1999) Results from Brown et

at., 2005; Erevelles, Dutta, and Galantine (2004) indicate that salesperson is often

multidimensional and may involve in supporting after-sale services as well as building

good relationships with their customers, so it is essential to design an effective

compensation emphasizing on different dimensions or tasks that comprise a

salesperson’s effort (Brown et at., 2005; Erevelles, Dutta, and Galantine 2004)

3.2 Components of compensation

Compensation can be divided into different types for several ways Previous studies of

Mondy and Noe (1993) document that compensation can be divided into two types, such

as financial and non-financial compensation First, the financial compensation includes

of direct financial and indirect financial compensation The direct financial

compensation consists of salary, wages, bonuses and commissions The indirect

financial compensation is named benefits, which are all financial compensations not