Tourist demand for counterfeits and the ethical decision-making process

Abstract

Counterfeiting is a well-recognized and growing problem around the world. Although there are laws regulating the supply of counterfeits, the problem still exists because of the demand for counterfeits. One third of the total demand is non-deceptive and the majority of non-deceptive counterfeit consumption is by tourists. Previous studies have found that consumer behavior is different when on vacation because of the hedonic nature of tourism and lack of social constraints; thus tourists are more likely to partake in unethical behaviors. Tourist decision-making of destination choice has been studied a lot in previous literature. The topic predominantly assumes that tourists are rational decision makers who make the best choices after careful consideration. This rational assumption dominates literature of consumer decision-making and ethical decision-making. However, according to dual-process theories in psychology, there are two types of thinking: Type 1 fast thinking by intuition and Type 2 slow thinking by reasoning. Possibly, tourist decision-making is irrational and fast, especially for unplanned decisions while travelling. Various unethical tourists behaviors have been condemned by residents of popular tourist destinations. Purchasing of counterfeit goods is one of them. Therefore, it can be used as a case to investigate the ethical decision-making process of tourists. Unethical behaviors can be prevented if there is a better understanding of how tourists think and what affects their thinking when making ethical decisions. Currently, there is a knowledge gap in understanding the ethical decision-making process of tourists because their expressed ethical concerns do not necessarily translate into ethical consumption behaviors (also known as attitude-behavior gap). Research on consumer misbehavior in tourism is extremely limited. In addition, there is an urgent need to explore situations when tourists make decisions (both consumption and ethical decision) based solely on intuition. Hong Kong is a perfect place to conduct the research on tourists' purchase of counterfeit goods because shopping is an important tourist activity and popular shopping areas for tourists are at the same time common areas for counterfeit trade, such as Ladies Market and Temple Street Market. The aim of this research is to explore tourists' demand for counterfeits and the ethical decision-making process. The objectives of this research are: 1) To determine the incidence of counterfeit purchases among different tourist types; 2) To estimate the economic value of counterfeit purchase among different tourist types; 3) To explore the ethical decision-making among different tourist types; 4) To assess the degree of neutralization among different tourist types; 5) To assess the impact counterfeit goods have towards the perception of Hong Kong as a shopping destination among tourists; 6)To test the efficiency of different anti-counterfeiting strategies in combating counterfeit consumption. A conceptual model is developed after critically reviewing literature of counterfeit demand, consumer decision-making, psychology of decision-making (dual-process theory) and ethical decision-making. Dual-process model is combined with ethical decision-making model by considering the hedonic nature of tourism, time pressure, and the possibility of intuitive decision-making by tourists. Mixed methods are used to collect data from three cohorts: Hong Kong residents, mainland Chinese tourists and international tourists. The result shows that 34.8% of Hong Kong residents, 21.0% of international tourists and 15.2% of mainland Chinese tourists buy counterfeits in Hong Kong. The counterfeit demand in Hong Kong is estimated that Hong Kong residents spend HK$ 781.69 million (US$ 100.22 million) on non-deceptive counterfeits, mainland Chinese spend HK$ 5,340.77 million (US$ 684.71 million) and international tourists spend HK$ 978.83 million (US$ 125.49 million) per year. It is estimated that the tourist market constitutes 89% of counterfeit purchases in Hong Kong. Different tourist types use similar neutralization techniques. The availability of counterfeits tend not to reduce the shopping experience for those who do not buy counterfeit products. International tourists and mainland Chinese tourists still agree Hong Kong is a shopping paradise despite the existence of counterfeit products. The result of hypothesis test of the dual-process thinking shows that characteristics of Type 1 fast thinking and Type 2 slow thinking are different from previous literature. Both types of thinkers are teleological when making ethical judgement. Culture, age, education, religion, and travel companionship are found to have significant effect on ethical judgement. Price discounts of genuine products is the most effective anti-counterfeiting marketing strategy for all tourist types. The results of binary logistic regression shows that the conceptual model is statistically significant. The model correctly predict 77.1% overall, specifically correctly predict 96.1% non-buyers and 15.8% buyers. Six factors prove to be significant determinants (p < 0.05) of the likelihood to purchase counterfeits: moral intensity, motivation, personal relevance, type of thinking, effect of others, and religion. This research adds new knowledge to consumer decision-making, ethical decision-making, and tourist misbehavior. It also helps brand companies and Hong Kong Special Administrative Region (HKSAR) government to have a clearer understanding of tourists' demand for counterfeits and its impact on destination image, and thus improve anti-counterfeiting strategies.