The Global Economic Crisis and its Impact on the Danish Consumer Behavior

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The Global Economic Crisis and its Impact on the Danish Consumer Behavior

A Cultural Analysis about whether the Danish Consumers have shown more Interest in Organic and Social Responsibility after the Recession

Thesis

By Maja Hansen Cand.ling.merc

Intercultural Marketstudies April 2011

Supervisor: James Menzies

Word Count: 143206 (79,5 pages)

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Er øko-grøn det nye sort?

Denne afhandling undersøger og analyserer, hvordan den globale økonomiske krise påvirker den danske forbrugeradfærd.

Danmark har altid været betegnet som et trygt velfærdssamfund med en velbalanceret økonomi og en høj levestandard, men den økonomiske krise gjorde at det idylliske billede krakelerede og mange danskere mistede deres job. Et trygt velfærdssamfund med en velbalanceret økonomi giver overskud i hverdagen hos danskerne til at fokusere på hvilke produkter de ønsker at støtte, fordi de stemmer overens med værdier og behov. Men hvad sker med de danske forbrugere nu når det idylliske billede om et trygt velfærdssamfund og en velbalanceret økonomi krakelerede i forbindelse med den økonomiske krise?

Jeg tager udgangspunkt i følgende hypotese:

Danskerne trodser krisen og øger deres interesse for økologi og social ansvarlighed

Formålet med dette speciale er at undersøge hvorvidt de danske forbrugere føler sig påvirket af recessionen og om den har haft en påvirkning på deres forbrugsvaner og deres syn på social ansvarlighed.

Specialet tager udgangspunkt i danskernes værdier. For at give en forståelse af hvilken indvirkning den økonomiske krise har haft på den danske forbruger vil jeg i den teoretiske del inddrage relevante teoretikere.

Specialet består af en teoridel, samt en empirisk del, da jeg har konkluderet at det ikke ville være muligt at opnå det ønskede resultat baseret på teori alene.For give et mere nuanceret og troværdigt billede af min hypotese, vil jeg på baggrund af en forbrugerundersøgelse på 100 respondenter, et interview med Steen Vallentin som er forsker i etik ledelse og bæredygtighed på Copenhagen Business School, samt tre forbrugerundersøgelser udført af Gallup på i alt 3114 respondenter, undersøge om danskernes forbrugsvaner med hensyn til bæredygtige produkter er steget trods den økonomiske krise.

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Jeg kan konkludere på baggrund af mine teoretiske og empiriske undersøgelser, at danskerne ikke føler at den økonomiske krise har haft en negativ indflydelse på deres livskvalitet. Dog føler de sig sårbare og mentalt påvirket. Den 11. september, tsunamien, den globale økonomiske krise, samt den globale opvarmning har mindet folk om hvor lille og skrøbelig verdenen er. Regeringen og medierne minder konstant folk om miljøet, klimaændringerne, den økonomiske krise og den følgevirkning den vil have på det danske jobmarked og velfærdssamfund.

Undersøgelserne indikerer at de danske forbrugere, trods finanskrisen har øget deres interesse for social ansvarlighed og bæredygtige produkter. Denne øget interesse skyldes at folk er blevet mere opmærksomme om hvor lille verdenen er og hvor vigtigt det er at vi tager ansvar overfor miljøet, os selv, og vores omgivelser.

Engang opfattede mange det at være bæredygtig og gå i økologisk tøj med noget meget utrendy og usexet. Man forbandt det ofte med fodformede sko og hippietøj. Sådan er det bestemt ikke længere.

Gennem de seneste år er interessen for økologiske produkter steget markant. Modebranchen er blevet bevidst om dette modefænomen, og mange modehuse og designere har indset at social ansvarlighed er gået hen og blevet et must hvis de vil undgå dårlig omtale.

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1 INTRODUCTION

1.1 Problem Area

Imagine living in a small, safe country with a high standard of living, a balanced economy, free health care, and education. No one has to starve and all have a roof over their heads. This may sound too good to be true for some nationalities, but actually this was how the living standards in Denmark used to be in 2008 before the Global Economic Crisis struck us.

The Global Economic Crisis took the Danes by surprise and a lot of people lost their jobs and homes. According to Instituttet for Fremtidsforskning, September 11 2001 and September 2008 are two very different but very important incidents in history that have changed our lives as well as our view of life. 9/11 eliminated the belief in a safe and peaceful world and September 2008 eliminated the belief in a world without financial problems. Incidents like a global economic crisis can create a fundamental paradigm shift and thereby change our needs and view of life (Olesen, 2008).

The Danish Government are encouraging the Danes not to give up, but instead to hold on to their norms and values, support each other, and show compassion to one another during the recession.

They believe that a strong culture of trust is the key to a well-functioning welfare society. The Danish Government would like to turn these threatening challenges that the recession has brought upon Denmark around and change them into new opportunities. Two of the government´s ten initiatives for 2020 are that Denmark should become a green sustainable society and that the Danes should be among the most trusting and safe people in the world (Regeringen, 2010, pp. 5-39).

During the last couple of years, IC Companys´ fourth largest brand Jackpot managed to be at the head of the organic and sustainable fashion with the clothing line “Jackpot Organic”. Jackpot Organic has with a good combination of ambitious collaborators, social awareness and strong will raised millions of DKK for improvements of school facilities in Bangladesh. Jackpot Organic has currently 8,000 farmers in India to convert their conventional cotton production into an organic production.

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I find it very interesting to examine whether the Danes are still able to hold on to their norms and values during the recession, because one could assume that people would focus more on themselves and their own needs rather than other people in need during this recession. Is this due to the fact that Denmark is still a very peaceful and safe place to live despite the recession? Are our Postmodern values so deeply rooted in our upbringing that our whole identity as a Dane is characterized by self- actualization and quality of life? I would therefore by means of consumer surveys like to examine whether the Danish consumers are willing to compromise with their Post-materialistic identity, or whether they will hold on to it even more?

1.2 Problem Statement:

!

! The aim of this assignment is to examine whether the Danish consumers have shown more interest in organic products and social responsibility after the recession.

Which effect does the recession have on the Danish consumer behavior?

• How important is social responsibility for the Danish consumer?

• Has the demand for organic and sustainable products changed, and if so, how?

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1.3 Structure

The thesis is divided into five chapters:

The thesis is divided into five chapters. The first chapter introduces the Problem Area, the Problem Statement, the structure, delimitation, and methodological approach of the thesis. It forms the foundation for the remaining four parts of the thesis.

The second chapter introduces the theoretical part of the thesis. Its purpose is to give the reader an insight in the fundamental values of the Danish Consumer, Political Consumerism, and Business Ethics. The conceptual framework for the theoretical part of this study will also be used to form the basis for the empirical part of this study.

The third chapter of thesis indentifies the empirical study. The empirical study consists of a consumer survey and a personal interview.

In chapter four, I will compare and discuss the results of the empirical study with the placed theory.

The closing chapter rounds off the thesis with a conclusion.

1.4 Delimitation

As it appears from the problem statement, my aim of this study is to examine whether the Danish consumers have shown more interest in organic products and social responsibility after the recession. This study will therefore only concentrate on cultural and social aspects and will not concentrate on the economic or financial side of the situation. This thesis is based on the application of certain theories, consumer surveys, and an interview with Steen Vallentin, who is a researcher and specialist within the field of CSR. This means that given parameters and subjective evaluations are used to determine the end result.

I have chosen to make use of Hofstede, Inglehart´s and Maslow´s theories because I believe that they are very relevant for this particular thesis. Other possible and relevant theorists such as Schein,

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and Rokeach are therefore neglected. This has been considered beforehand and the different theories have been thoroughly evaluated in order to find the best result.

Due to the fact that I would like to examine whether the Danish consumers have shown more interest in organic products and social responsibility after the recession, I would like to gather an overall picture of the Danish consumer’s values. I believe that value differences will always exist between the different genders, social layers, and age groups regardless of where in Denmark you live. I would therefore like to limit myself from focusing on geographical and other demographic value differences.

Furthermore, I would like to delimit myself from examining how Jackpot Organic could improve their market positioning for example by creating more visibility through campaigns or better distribution. Additionally, I will not focus on the political aspects of the recession. This study will merely focus on the social and cultural aspects.

1.5 Methodology

In this following chapter, I will describe the scientific and methodological considerations of this thesis. I will hereby explain the methodological approach, choice of theory and method, and critique of sources.

1.5.1 Methodological Approach

As mentioned above in the problem statement, my aim of this assignment is to examine whether the answers that I have gathered from the consumer surveys and the interview support my hypothesis that the Danish consumers have shown more interest in organic products and social responsibility after the recession. In order to answer this research question, I will in the theoretical part discuss the theoretical background of culture, values, political consumerism, and business ethics.

The purpose of this study is not to conclude whether the theories of Geert Hofstede, Ronald Inglehart, Abraham Maslow theories are correct or incorrect. They are merely used as a tool to examine the above-metioned topic. In the second part, I will compare and analyze the results from

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1.5.2 Choice of Theory and Method

This thesis is a descriptive study about whether the recession has had an influence on the Danish consumer behavior and whether the demand for organic products and social responsibility has changed (Andersen, 2008, p. 21). I will use a deductive approach to interpret my data, which means that I will illustrate the concrete problem by using theory (Andersen, 2008, p. 35).

As I mentioned above in the chapter about the structure of this study, I have decided to divide the theory into five chapters:

The first chapter is an introduction to IC Companys A/S and Jackpot Organic. Based on the material, which I have received from the PR- Manager Nina Hurvig from Jackpot Organic, I will describe the story behind IC Companys A/S. Furthermore, I will describe the story behind Jackpot Organic and what makes this particular brand and their project Chetna in India so unique.

In the second chapter, I will define the meaning of “National Culture”. I have chosen to use Geert Hofstede because I believe that it will help get a better understanding about why the Danes do not feel more affected by the recession than they do. Furthermore, I will try to draw a parallel with Geert Hofstede´s theory about how the daily choices and tendencies of a human being derive from his or her cultural background with the answers, which I have retrieved from the consumer surveys and the interview with Steen Vallentin.

The third chapter defines Ronald Inglehart´ definition of values and Abraham Maslow´s hierarchy of needs. In order to examine why the Danes consumption and interest for organic and sustainable products have not decreased during the recession, I will compare my results from the consumer surveys and the interview with Steen Vallentin with Ronald Inglehart´s definition about values.

Furthermore, I will examine whether the reason why the Danes are still able to focus on self- actualization despite the recession and why the Danes put a lot of emphasis on the psychological needs such as belongingness, prestige, and feeling accepted by other people.

Given that consumer behavior and the demand for sustainable products are linked together with the consumer´s fundamental values, I have chosen to make use of Inglehart´s and Maslow´s theories about fundamental values in order to illustrate which affect values can have on human behavior. I have chosen these particularly theories about values, because I think they contribute with a lot of

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important information about human values, which are crucial for the understanding as well as the result of my problem statement. Due to the fact that this study concerns the ethical product “Jackpot Organic” which is often bought by consumers with certain values and beliefs, makes it uttermost relevant to look at the Danish consumers values.

Chapter four, will based on Wayne Hoyer and Debroah J. Machinnis´s three factors: Motivation, Ability, and Opportunity describe the factors that influences the consumer behavior and consumer- choice. I have chosen to make use of the MAO-Model, because I find it a very essential tool for analyzing why only 7 percent out of 100 respondents have bought or received clothes from Jackpot Organic. Furthermore, based on Morgan Friedman´s theory about the terms “boycott” and

“buycott”, I will describe the differences between negative and positive consumerism. I chose to use this particular theory because it describes two different ways that the consumer can make a statement about their lifestyle, beliefs, and values. Additionally, I will use the economist Albert Otto Hirschman´s theory about: Exit, Loyalty, and Voice. I believe that this theory is very relevant because it explains the options that the consumer has if the product, price, or company do not live up to the consumers´ expectations.

In the fifth chapter, I will based on Albert Carr and Carroll and Buchholtz examine the significance of business ethics. Furthermore, I will on the basis of the secretariat director at DIEH Hanne Gürtler and Rupal Jain, lecturer at Atharva Institute of Management Studies examine challenges a company may approach when operating in a Third World Country and how important social responsibility, honesty, and transparency are for a company in order to succeed in the world we are living in today.

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1.5.3 Critique of Sources

It is important to keep in mind that all authors have a certain agenda, which they are trying to convey through their work. As I mentioned above, the aim of this study is not to conclude whether the theories are correct or incorrect, but to use the theories as a tool to examine the Danish values, lifestyle, and consumer behavior. I believe that the theorists that I have chosen to use for my study are very relevant for my analysis and I consider them to be reliable for this particular purpose.

However, in order to get a more differentiated and more up-to-date picture of the Danish values, lifestyle, and consumer behavior, I have gathered information from the Danish consumers through consumer surveys and an interview with Steen Vallentin. I am aware of the fact that it is not possible to lump all these together, but I believe that value differences will always exist regardless of where in Denmark you live and that it is therefore possible to reach a valid result and a good overall picture about the Danish consumer behavior. Furthermore, the information that I have gathered from Jackpot Organic derives from some newsletters from IC Companys intranet about Jackpot Organic support project in Chetna and chronological CV that PR Manager Nina Hurvig was so kind to share with me. It is important to be aware of the fact that the participants may not be interested in sharing information that could put the company in a bad light or even harm the company. However, I do not believe that this was the case. Nina Hurvig embraced me with a lot of honesty and openness.

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2 THEORY

2.1 INTRODUCTION TO IC COMPANYS A/S AND JACKPOT ORGANIC 2.1.1 Company Profile “IC COMPANYS A/S”

IC Companys A/S is a Danish fashion corporation, which operates with 11 different designer brands, which are exported to more than 40 different countries around the world. It was founded in 2001 through a merger of Carli Gry International A/S and InWear Group A/S and it is now one of Northern Europe´s largest clothing companies with sales companies in Denmark, Sweden, Norway, Finland, the United Kingdom, Ireland, Germany, Holland, Belgium, Poland and Canada. Their target group is primarily fashion and quality–conscious men and women in Scandinavia and Europe (IC Companys A/S Annual Report, 2007/08, pp. 48-49).

The Danish fashion company represents brands such as Jackpot, In Wear, Peak Performance, Part Two, Tiger of Sweden, By Malene Birger, Saint Tropez, Designers Remix Collection, Soaked in Luxury, and Matinique. Each brand appeals to different segment groups. Their brands are sold through their distributors, retail and franchise stores in more than 40 countries. Additionally, the Danish fashion corporation has 259 company-owned shops and 22 factory outlets in 13 different countries (IC Companys A/S Annual Report 2007/08, p. 8).

IC Companys A/S is aware of the fact that the fashion industry is very competitive. In order to reach a higher percentage of the market share, IC Companys A/S has developed a Multi-brand strategy. The idea behind a Multi-brand strategy is to increase focus on customer loyalty, brand differentiation, economies of scale and a reduction in costs (IC Companys A/S 2007/08, p. 17).

The Global Recession has been a very challenging time for the fashion corporation IC Companys A/S. In the fiscal year 2008/09, IC Companys A/S had a turnover of DKK 3,601million, which is a decrease of 4 percent compared to the previous year. Considering the difficult market situation, IC Companys A/S is quite pleased with a decrease of only 4 percent ( IC Companys A/S 2008/09, p.

3). According to Line Flensborg, the change in the Danish consumer behavior may be due to

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mentally affected by the crisis rather than economically affected by it (Direkt, 2009). The Chief Director of the magazine “TØJ” supports this statement in her article “Krisemæthed undervejs”.

She suggests, that it is the media that has put a lid on the Danish consumerism (TØJ. Nr 2. 2009 p.

4).

2.1.2 The Story behind “Jackpot Organic”

Jackpot is listed as IC Companys third largest brand, with an annualized turnover of DKK 450 million. In February 2007, Jackpot brought a new organic and sustainable clothing line called

“Jackpot Organic” onto the market. It is a clothing line based on organic materials only. Jackpot Organic has within only a few years achieved to become one of the largest manufacturers of ecologically sustainable fashion within The Nordic countries and the demand for it has increased a lot over the last couple of years. It comprises 20 percent of the complete Jackpot clothing line.

People often combine organic clothing with unfashionable alternative clothing. Jackpot Organic would like to change that image by showing the consumers that it is possible to be fashionable and have a green consciousness at the same time. Jackpot Organic has proven that it is possible to change the world with fashion and style and it is now sold in 23 different countries around the world (Jackpot Organic – Kronologisk CV, pp. 43-44).¹

It is important for Jackpot Organic´s CSR² strategy that they can ensure that all the requirements according to SA8000 standards and the Control Union³ (former known as S.K.A.L International) are met. This is the reason why Jackpot Organic decided to cooperate with MADE-BY, which is a Dutch umbrella organization. To ensure traceability and consumer confidence, Jackpot Organic has together with the Dutch NGO MADE-BY made a “Track and Trace” system on their homepage.

Jackpot Organic can with the help of Track and Trace assure 100 percent transparency. Every single piece of Jackpot Organic garment will have a special hang-tag with a button attached to it which indicates that Jackpot Organic is cooperating with the non-profit organization MADE-BY and their commitment to sustainable fashion. Along with the hang-tag is a code which can be used to trace how the Jackpot Organic garment was produced. The code makes it possible for the consumer to

1 See appendix

2 Corporate Social Responsibility

3 Social Accountability International. SA8000 is the highest standard in the world for sustainable clothing

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check whether their piece of clothing was produced under the right conditions according to the international standards for sustainable products. When the consumers buy organic sustainable clothes, they will expect that the clothes have been produced at a safe factory where the social standards are consistent with the SA8000 standards (Jackpot Organic Support Project Chetna in India pp. 49-50).

In spring/sommer 2009, Jackpot Organic was nominated for the award “The Ethical Price of the Year” at the Danish Fashion Awards 2009 and in autumn/ winter they launched a new sustainable t- shirt in connection with COP15. The t-shirt had a print on it with the message “care for people &

planet” (Jackpot Organic – Kronologisk CV p. 45).

In autumn/winter 2010, Jackpot Organic launched a new clothing line called “Recycled Polyester and Recycled Cotton”. And they are now working on changing most of their viscose production into Tencel. Tencel is less harmful to the environment (Jackpot Organic –Kronologisk CV p.46).

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2.1.3 Jackpot Organic and Chetna in India

The conventional cotton industry has not only been really bad for the environment in India, but also for the Indian farmer´s health and economy. According to the World Health Association, more than three million people are poisoned of pesticides every single year, and more than 200,000 have died from it. The Chetna Organic project was founded in 2004. The main idea behind the project was to protect the farmers by making their farming systems more profitable and sustainable (As reported in

“The Chetna Organic Cotton Project”, 2010).

Jackpot Organic got associated with the Chetna project through the two Dutch NGOs: MADE-By and Solidaridad. MADE-BY is a non-profit organization which was founded in 2004 by Solidaridad. Solidaridad has a long track record within the field of Fair Trade. They support organizations in developing countries that would like to fight structural poverty. Solidaridad believe that it is possible to fight structural poverty by improving the social and environmental conditions for the farmers in the developing countries (Annual Report 2008, p. 4).

So, how does Jackpot Organic support Chetna? In their cooperation with the cotton farmers, Jackpot Organic has witnessed extreme poverty. They have therefore decided in conjunction with Solidaridad, the parent organization of MADY-BY, to make a donation policy in order to help the farmers break the vicious circle. Jackpot Organic´s donations go directly towards medical care, schooling, nutrition, and infrastructure. In order to help raise money for the farmers, Jackpot Organic has designed a special donation t-shirt. It is sold throughout most of Scandinavia and in most of Europe. The first donation t-shirt that Jackpot Organic launched, raised enough money to help pay for a rice mill and a new warehouse building, which was a request from the farmers themselves.

In order not to spoil the soil, the farmers had to rotate between different crops in the fields. The rice mill and the new warehouse were therefore very important for the farmers, because they needed a storage where they could dry their lentils and rice. Jackpot Organic´s next donation will involve an education centre for both children and adults. The purpose of it is to help them to improve their lifestyle by supplementing their regular schooling with better educational materials, such as a computer and to help them put more focus on environmental studies as well (Jackpot Organic -

“Chetna in India”, p. 47).

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According to the Chetna´s annual report, there has been great progress among the Chetna farmers in 2009. In conjunction with Made-By and Solidaridad, Jackpot Organic has by the end of 2009 managed to open a new warehouse, establish a garden centre, where the farmers are taught how to improve their methods of cultivation, started an implementation of micro-loans for the farmers, Jackpot Organic will not keep the money when the farmers pay back their loan. In addition, they will give back the money to the local community by buying land, cattle, and new and improved agricultural equipment for the farmers. This is a great help to the farmers, because the rent for land is very expensive in India and without land to grow the crops on, the right agricultural equipment, and a nutritionally correct diet, it is very difficult for the Indian farmers to escape the vicious circle of eternal debt and reduced living conditions. Furthermore, Jackpot Organic established a Children´s Ressource Centre, where the farmers children can come and play after school, a Farmers Self Help Group, and a Women Vocational Training Centre, where the local farmers meet up and educate themselves further by e.g. taking sewing classes. The various Self Help Groups have been an enormous success and it have helped the farmers gain self-confidence and to believe in a brighter future with an improved quality of life (Jackpot Organic – Kronologisk CV p. 45).

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2.2 NATIONAL CULTURE

In the first part of this study, I will define the meaning of “National Culture”. I find it very relevant for my thesis, because it deals with the values and behavior of the Danes. Ones values, behavior, habits and identity are highly influenced by ones “National Culture”.

In this chapter, I will first describe how “National Culture” creates our identity as human beings and how we assimilate these national cultural features, which differentiates one culture from another.

Finally, I would like to examine the term “National Culture” based on Geert Hofstede´s definition of culture.

2.2.1 Definition of Culture

“Culture is everything that people have, think, and do as members of their society”

(Ferraro, 2002, p.19)

The term “national culture” can be described as a complex and coherent system of knowledge, norms and values combined with other factors such as art, laws, moral and manners which are learned in the society that the individual grows up in (Usunier 2000, p. 6). Consequently, the general perception of culture is bound to be defined by its roots in history as local culture is passed on through the generations as a result of family traditions and social behavior. Despite these basic regional features in a culture, shared by all members of that particular culture, people evolve individually throughout life in relation to the community and the culture in which they live (Søderberg og Villemoes 1994, p.91f).

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2.2.1.1 Geert Hofstede´s Definition of Culture

Hofstede defines culture as a set of mental programs that control an individual’s behavior in a given context. According to Hofstede (2005, pp. 3-4), one´s mental programs are determined by one´s social environment and life experiences. They can therefore vary depending on the social environment that the person grew up in. A person who grew up in an upper-class environment may emphasize on other values than a person who grew up in the ghetto. These patterns of acting, thinking, and feeling can be very difficult to unlearn, because we do them unconciously (Hofstede, 2005, pp. 2-3).

According to Hofstede, the mental programs of a human being can be divided into three levels:⁴

Culture: Culture is a collective phenomenon because it is shared among a large group of people with the same background. It is what distinguishes one group from another. Hofstede believes that culture is largely learned and that it derives from our social environment, rather than our genes”(Hofstede, 2005, p. 4).

Human nature: Human nature is genetic and can therefore be inherited. It determines one’s physical and psychological function such as the human ability to show and express emotions.

However, how these feelings are expressed may vary from culture to culture (Hofstede, 2005, pp. 4- 5).

Personality: The personality of an individual is partly learned and partly genetic. People learn how they are supposed to act in society from a very early age. However, it may vary depending on the environment in which they grew up. The experiences that we have throughout our lives will help form us into unique individuals (Hofstede, 2005, p. 5).

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2.2.2 Chapter Summary

Culture is a very essential part of a society because it brings people closer together. It is what makes a society unique and different from societies of other cultures. Even though the world is getting smaller in this globalized world and we do share some of the same patterns of behavior, there are still certain elements of culture that makes one culture differ from the other. It is often elements, which can be very difficult for an outsider to understand or even be able to spot if they have not been growing up in the same environment. According to Geert Hofstede, people learn how to interact within a society from a very early age. Every society has a different culture, where the people within this particular society share the same pattern of behavior, ideas, traditions, values, and beliefs. Culture is not inherited. It is something that a person learn from his or hers family and the environment they grow up in. It is the culture that gives them an identity and makes them feel like they belong in a certain society. Due to the fact that the mental programs that control an individual’s behavior are acquired very early in his or hers childhood, it can be very difficult to unlearn them because they are so deeply ingrained in our behavior that we do them unconsciously.

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2.3 VALUES

In order to understand the effect that values can have on consumer behavior, we need to understand the concept of values first. My aim in this chapter is to examine whether our values are determined by our national culture and whether we due to our national culture are more focused on sustainable products.

2.3.1 Ronald Inglehart´s Definition of Values

Ronald Inglehart has done extensive research to prove his ideas on value change. Inglehart conducted his research from the World Values Survey. It is so far the largest investigation conducted of values around the world. His research covered 65 countries which is almost 75 percent of the world´s population. As opposed to Geert Hofstede, who is only focused on people with a higher income, Inglehart covered everything from societies with per capita incomes as low as three hundred dollars per year, to an income on more than 30.000 dollars per year; from long- established stable democracies to authoritarian states (American Sociological Review, 2000, p.23).

According to Inglehart, people from advanced industrial societies such as North America, Western Europe and Japan tend to put more emphasis on Post-materialistic values such as self-expression and the quality of life rather than the Materialistic values. Materialistic societies with economically or political insecurity do not have the luxury to focus on either self-expression or how to improve their quality of life. Their main concern is survival (The Washington Quaterly, Winter 2000, pp.

219-220).

2.3.2 Economic Security and Value Change in Denmark

Values do not change overnight. They are usually shaped by our experiences. According to Inglehart, there is a large difference between the values of the older and the younger generation.

The majority of the older generation tends to be materialists, whereas the younger generation tends to have shifted toward more post-materialistic values. He suggests, that the generational shift from material values to post-materialistic values is due to the economic miracles of the postwar era combined with a modern welfare state. The older generations that had experienced World War !,

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physical security, whereas the younger generation tends to put much more emphasis on the quality of life and self-actualization (Abramson & Inglehart, 1995, p. 54).

One could be tempted to think that the relatively high levels of Postmaterialism among the youth or the so-called young adults in Denmark are caused by ignorance and lack of experience. Young adults often have less economic problems and fewer responsibilities, because they often only have to take care of themselves. As they grow older, they are likely to get married, have children and a fixed income. The Postmaterialistic values could therefore be interpreted as youthful idealism among persons who have not yet experienced economic difficulties and responsibility for other people than themselves. However, Inglehart´s research contradicts this life- cycle interpretation.

Ronald Inglehart had now followed these respective age groups over a quarter of a century and the younger generation did not become more materialistic as they grew older. Belgium was the only West European country where the younger generation moved towards more materialistic values as they grew older. The shift towards Postmaterialism was not only due to generational replacement, but also impact of economic and political security (Abramson & Inglehart, 1995, pp. 45-67). The shift towards Postmaterialism increased rapidly in Denmark. This may be due to the fact that Denmark did not suffer from either economic, or political insecurity. Denmark did however show a downward fluctuation linked with the Global Economic Crisis in the early 1980´s (Abramson &

Inglehart, 1995, p 18).

Inglehart´s research (1997, p. 33) about intergenerational value change was guided by two main hypotheses:

• A scarcity hypothesis: The priorities of an individual are often reflected by ones socioeconomic environment. The greatest subjective value is placed on the things that are in relatively short supply.

• A socialization hypothesis: The basic values of an individual are shaped by the experiences within the environment that he or she grows up in.

2.3.3 Value Trends in Denmark

According to Abramson and Inglehart (1997, p. 41), the Danes tend to put a lot of emphasis on the quality of life. Most of the Danish population does not live under conditions of hunger and

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economic insecurity. If one grows up without economic and political insecurity, it will influence ones attitude towards authorities, religion, cultural diversity, and sexuality. The younger generation’s attitude towards homosexuality, abortion, divorce, sex outside of marriage, prostitution and active euthanasia is much more tolerant than the older generation´s. The Postmodern society is moving towards a more accepting and self-expressive environment, where “different” is considered to be “normal” (The Washington Quaterly, Winter 2000, pp. 223-224). Since 1989, it has been accepted for homosexual couples to get married and buy a house together, just like anyone else in Denmark (As reported in “Tidslinje: Homoseksuelles rettigheder”, 2008, 13 Nov.). The Government is debating whether it should be possible for homosexual couples to be able to adopt a child (As reported in “Danskerne siger ja til homo-adoption”, 2010, 17 March).

According to Abramson and Inglehart, we can expect the majority of the Danish population in 2010 - 2020 to have Postmaterialistic values. This is due to the fact that most of the older generation with the heavily materialistic values has passed away. Postmaterialism will, however, not increase indefinitely. In order to increase, the values of the new cohorts need to be more Postmaterialistic than the former cohorts. If this is not the case, the trend toward Postmaterialism will slow down and eventually come to an end (Abramson & Inglehart, 1995, p. 96).

2.3.4 Denmark, the Happiest Place in the World

According to the famous American talk show host Oprah Winfrey, Denmark is the happiest place on earth. Oprah visited Denmark during the Olympic congress in Copenhagen in October 2009.

Some of the things that Oprah Winfrey admired the most about Denmark were the free healthcare, the free education system, and that the Danish social system allows a long leave for both parents when a child is born. She believes that it is the simple life and the strong Danish social system that make Denmark one of the best places in the world to live. She was also very amazed by the fact that the Danes left their babies unattended in their baby carriages outside of a shop or a café. She suggests that the Danes must be the most trusting, honest, and safe people in the world and that is the reason why they were voted to be the happiest country in the world (As reported in “Oprah praises Danes on show”, 2009, 5 Nov.).

As reported in the American government–funded World Values Survey (2009, 12 Dec.), Denmark was rated the happiest country in the world. Ronald Inglehart suggests that happiness is strongly

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2.3.5 Values and Needs

It is important for a business to understand the needs of the consumer in order to be successful. A company cannot sell its products if it does not meet the consumer´s needs. It is, therefore, very important for a company to understand the consumers’ needs as well as their buying behaviour. The company needs to know what segment group they are aiming at and what their buying behavior and values are like in order to meet their needs.

2.3.5.1 Hierarchy of Needs

In order to understand why the Danish consumers behave the way that they do, we need to make a more thorough investigation into some of the more fundamental traits of human behavior, such as the physiological needs, safety needs, social needs, esteem needs, and the need for self- actualization.

In 1954, Abraham Maslow created a theory about personality that has influenced a number of different fields, including consumer behavior. Maslow set up a hierarchy of human needs based on three main groupings:⁵

1. Basic Needs

2. Psychological Needs 3. Self- fulfillment Needs

The basic needs cover the biological, physiological, and safety needs: basic life needs- air, food, water, shelter, warmth, sleep, protection, security, law, order, limits, and stability. The psychological needs cover the belongingness, love, and esteem needs: intimate relationships, friends, affection, achievement, status, responsibility, and reputation. The Self-fulfillment needs cover the self- actualization: At this particular stage one will have the need to unfold ones full potential, to innovate, and help other people in need (Maslow, 1972, pp. 35-50).

5 See appendix: Figure 2, p. 3

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According to Maslow, a human being needs to have his or her basic needs fulfilled in order to concentrate on other needs. In order to be able to move from the basic needs up to the self- fulfillment needs, a person needs to have the basic needs as well as the psychological needs fulfilled. A person who lives in an unsafe environment without any food would be more likely to hunger for food, rather than the latest Macbook or a new car.

The basic needs do not play a very important role in Denmark, which is a very safe country with a very high standard of living. It is therefore possible for the Danes to focus on the psychological as well as the self-fulfillment needs.

Due to our welfare system, the Danes do not need to worry about whether they will have to go to bed hungry or whether they will survive the next day. It is as opposed to many developing countries, a matter of course for the Danes to have food on the table, a roof over their heads, or clothes on their bodies. Instead of focusing on whether they will have food on the table or not, shelter, or clothes on their bodies, the Danes seek products that will fulfill their psychological and self-fulfillment needs. They use the products to create an identity that makes sense for them in order to self-actualize themselves. It is very important for the Danes to feel accepted by other people.

They often use material goods to create an image in which they would like to be perceived by other people (Maslow, 1972, pp. 37-38 ).

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2.3.6 Chapter Summary

Values are the beliefs and the ideals shared by the members of a society. They are usually shaped by our surroundings and experiences and over time they will become integrated in the culture and become an important part of people´s traditions and day-to-day lives.

Denmark is a country that put a lot of emphasis on Post-materialistic values such as self-expression and quality of life. The two theorists Ronald Inglehart and Abraham Maslow both suggest that the reason why the younger generation in Denmark tends to have shifted toward more post-materialistic values is because the younger generation has not experienced any economic, political, or physical insecurity like their former generation who have witnessed World War !, World War !!, and the Great Depression. The post-materialistic values of the younger generation are the result of the economic miracles of the postwar era combined with a modern welfare system. Due to the Danish Welfare System, the Danes feel safe because they know that no matter how bad their economic situation is, the Danish Government will not leave them on the street to die, but instead try to help them by giving them unemployment benefit and a place to stay. According to Abraham Maslow, the Danes are able to focus on self-actualization because they do not need to worry about their basic needs such as being able to get medical treatment, a place to stay, or food on the table.

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2.4 POLITICAL CONSUMERISM

The media is constantly feeding us with information about how bad the conditions in the developing countries are and about how we in the Western world are slowly destroying the environment with our greed and consumerism. This influences and encourages a lot of people to think about the health and wellbeing of other people and to take matter into their own hands in order to make the world a better place to live. In this chapter, I will first describe the three critical factors that influence the consumer behavior and consumer-choice. Then, I will examine the emotional framework of the ethical consumer and which buying strategies they may use when buying a product.

2.4.1 Consumer Behavior

According to Wayne Hoyer and Debroah J. Machinnis (2010, pp. 44-55), there are three critical factors that influences the consumer behavior and consumer- choice:

• Motivation

• Ability

• Opportunity

The first critical factor is “motivation”. The motivation for buying a product is often influenced by ones values, goals, and needs. A consumer who e.g. only buys organic and sustainable products would probably be more motivated in buying them than a consumer who does not possess these values and needs. Furthermore, the motivation is dependent on the cognitive and affective involvement, which is put in consumerism.

The second critical factor is the “ability”. Even though the consumer may have the motivation for buying a certain kind of product, he or she might not have the ability to do so. The choice that the consumer makes when buying a product often depends on the income. Additionally, the ability factor is determined by ones economy, knowledge, experience, intelligence, education, and age.

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from buying the given product such as lack of information where to purchase the product, lack of time, or other distractions.

2.4.2 The Political Consumer

The term “Political Consumer” is a new term. However, the concept goes far back in history. The first co-operative society was established in Rockdale, England in 1844. It was established in order to ensure the employees and the consumer’s credibility (Kjeldgaard & Bregengaard, 1999, p. 9).

When a consumer e.g. chooses to only buy organic clothes or food or only go to restaurants that cooperate with local markets it is often because he or she cares about the environment and the wellbeing of others. The product itself therefore not only influences the political consumer’s choice in products, but also his or her feelings, emotions, and careful consideration (Kjeldgaard &

Bregengaard, 1999, p. 10).

2.4.2.1 The Buying Strategy

When the political consumer has to decide whether to purchase or not to purchase the product, they often use a double strategy in a form of negative or positive consumerism. For example the consumer can either choose whether they want to buy organic and sustainable clothes, which is a bit more expensive or whether they want to buy regular clothes which is a lot cheaper, but not always produced under the right conditions (Sørensen, 2004, pp. 14-15).

2.4.2.1.1 Negative Consumerism

Boycott of products and manufactures is probably the most effective weapon, which the political consumers can use in order to manifest themselves. The term “Boycott” is not a new phenomenon.

The British newspaper “The Daily Mail” invented it in 1880. The newspaper had an article about some Irish farmers who organized a resistance movement against an English estate manager and captain by the name of Charles Cunningham Boycott (Sørensen, 2004, p. 16).

The purpose of a boycott can vary a lot. As a fundamental basis one could be tempted to think that the goal would be to make the corporations suffer an economic loss. However, this is rarely the case (Sørensen, 2004, p. 20).

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2.4.2.1.2 Positive Consumerism

Positive consumerism is when the product or the manufactures are living up to the consumer’s expectations. The political consumer often purchases products that are consistent with his or her norms and values. Buying organic products often means more expenses for the consumer because these products usually are more expensive and not as easy to get a hold of.

Morgan Friedman (1996, pp. 439-45) introduced the term “buycott” in 1996, which is supposed to have the opposite meaning as the term “boycott”. Buycott is a positive strategy where the consumer chooses the products or the manufacturers, which are consistent with the values of the consumer.

The political consumer thereby rewards the corporations that are social responsible by buying their products.

2.4.2.1.3 Exit, Voice, and Loyalty

The economist Albert Otto Hirschman suggests, you can divide consumerism into three different options:

• Exit

• Voice

• Loyalty

According to Hirschman (1970, pp. 21-25), the exit option is the most used and most powerful strategy, because the consumer may choose to buy the product elsewhere if the product or price is not living up to his or her expectations. Voice is when the consumer chooses to either complain or demonstrate in order to make a public statement (Hirschman, 1970, pp. 30-31). Additionally, loyalty is when the consumer is being loyal towards a certain product, despite unsatisfying changes within the corporation (Hirschman, 1970, pp. 76-77).

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2.4.3 Chapter Summary

Consumer behavior is influenced by three main factors: Motivation, Ability, and Opportunity. The consumer will only feel motivated to buy the product if it is equivalent to his or her values, needs, and goals. However, it is not always enough to only have the motivation for buying a product.

Some people may not be able to buy organic and sustainable products due to financial limitations.

Furthermore, it is not always that the consumer is given the opportunity to purchase the product because they have never heard about the product or where to purchase it.

There are usually many feelings and emotions involved when the political consumer buys a product.

There are different methods that the political consumer uses to make a statement. The most effective weapon is to boycott the product or manufacturers. However, the consumers could also choose to demonstrate or complain in order to make a statement. In contradiction to the term

“boycott”, the political consumer uses the term buycott” in a positive context. This is also referred to as “positive consumerism”.

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2.5 BUSINESS ETHICS

In this chapter, I will examine the importance and concept of business ethics. Many Danish companies use Corporate Social Responsibility as part as their business strategy, but what happens if they are not being sincere? In this chapter, I will examine the concept of business, its importance, and which consequences there may be for the corporation if the media finds out that the product was produced under unacceptable working conditions.

2.5.1 The Concept of Business Ethics

In 1968, an article called “Is Business Bluffing Ethical?” by Albert Carr was published in the Harvard Business review. In his article, Carr compares the nature of business with a game of poker.

Carr suggests, that business ethics is significantly different from the ethics of ones private life (Crane & Matten, 2010, p. 4). According to Carr, a man must play to win in order to be a winner. A businessman is just like a poker player sometimes compelled to bluff and be dishonest in order to gain a profit. He does however mention that a company will gain more success in the long run by having a good and honest reputation (Harvard Business Review, 1968, p.6).

Andrew Crane and Dirk Matten support Albert Carr´s theory to some extent. They believe that

“Business ethics is the study of business situations, activities, and decisions where issues of right and wrong are addressed” (Crane & Matten, 2010, p. 5). According to Crane & Matten, business ethics merely exists in order to help us evaluate why certain decisions are considered morally right or wrong. Even though, business ethics and the law are both concerned with distinguishing between “right” and “wrong”, there are still many unwritten moral factors within the field of business ethics which are not covered by the law. It is for example in some countries not considered illegal for companies to test their products on animals, make use of child labor, or even prevent their employees from joining a union. As mentioned above business ethics usually deals with issues, which are not covered by the laws. Due to the fact that these rules of ethics are not guided by the law, it is often referred to as the “grey areas”, because it sometimes can be unclear what is considered to be ethical and what is not. It is therefore very important that a Western company keep in mind that it may face some challenges when getting its products produced in a Third World

The Global Economic Crisis and its Impact on the Danish Consumer Behavior