Do Consumers’ Ethical Judgments Matter for Purchase Intentions in Online Gray Markets?

Abstract

Gray market goods are genuine goods sourced in an unauthorized manner from a distribution channel and sold at lower prices in different markets. Due to its unauthorized nature, gray marketers use authorized firms’ reputable brand identities to make profits without investing the capital associated with establishing market demand and such identities. We investigate consumers’ ethical decision making and purchase intention when they are confronted with a choice to purchase from either a gray market retailer or genuine retailer under various financial risk scenarios. Results reveal that consumers predominantly use deontological evaluations (e.g., rightness of the act) to form their judgment rather than whether they gain something positive (e.g., savings) in the exchange. Importantly, we also found that trust fully mediates the relationship between ethical judgment and purchase intention. The current study provides several implications and recommendations to online retailers and consumers.