Advertising and Knowledge Intermediaries: Managing the Ethical Challenges of Intangibles

Author(s): Carla C. J. M. Millar and Chong Ju Choi

Source: Journal of Business Ethics, Vol. 48, No. 3, Special Issue on Advertising Ethics: The
Ultimate Oxymoron (Dec., 2003), pp. 267-277
Published by: Springer
Stable URL: http://www.jstor.org/stable/25075183
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Advertising and Knowledge
Intermediaries: Managing the
Ethical Challenges of Intangibles
ABSTRACT. In today's business environment, the
knowledge-based society, globalisation, and informa
tion and communication technologies (ICT) have
increased the role of "intangible" values of assets and
resources for all industries. As a result there is an
increased role for knowledge intermediaries; one of
these, advertising, plays an important role in affecting
consumer choice and knowledge. Ethical issues
which arise for traditional purveyors of intangibility
- cultural industries such as art, music, or film, spread
to advertising. Building on our perspective of the
measurement of intangibles we propose a new cate
gorisation of types of goods or services, and a frame
work for identifying some future ethical challenges
in today's global knowledge based society.
KEY WORDS: advertising, ethics, intangibles,
knowledge intermediaries, social goods
Carla C.J. M. Millar is currently professor of International
Marketing & Management at the University of
Groningen, and Dean of TSM Business School in the
Netherlands. A social scientist she spent 10 years with
major MNC's before joining the University of
Greenwich and later City University, London, U.K.
Her research and consultancy interests are in culture and
values, intangibles, branding and reputation, governance,
international business. Publications in e.g. Journal
of Management Studies, British Journal of
Management, and Security Journal.
Chong Ju Choi is presently professor of International
Business and Dean of the Australian National
University's National Graduate School of Management.
His research is in the areas of comparative institutions,
international business, knowledge based competition. His
recent research has been published in journals such as:
Journal of International Business Studies, Human
Relations, Organization Studies, and Management
International Review.
?? Journal of Business Ethics 48: 267-277, 2003.
r" ? 2003 Kluwer Academic Publishers. Printed in the Netherlands.
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Carla C. J. M. Millar
Chongju Choi
Introduction
Challenges to advertising ethics frequently call
for answers which can only be given if we know
how to assess uncertain outcomes, e.g. would a
given piece of advertising be violating the
autonomy of the consumer or unjustifiably trying
to manipulate wants and needs (Arrington,
1982). For the practitioner there are three
problems - how to assess the probable outcome,
whether this is morally acceptable, and how to
ensure consistency and comparability among
cases which seem very different at a detailed
level. Such issues are arising now against a
background in which globalisation, and infor
mation and communication technologies (ICT),
have increased the awareness and importance
of intangible assets in the global business envi
ronment. This intangibility both increases the
levels of uncertainty and raises issues whose
solution may give a pointer to how to deal with
the latter two of these problems. Works like
Giddens (1998), and Spender and Grant (1996)
underline the importance of intangible and
knowledge based assets in this developing envi
ronment.
Traditionally, it has been the cultural and
creative industries such as art, music, media and
film that have manifested the highest levels of
intangible and difficult-to-measure value issues
for businesses (Thoburn, 2001; Weaver, 2001;
Soar, 2002). Existing business and management
research on intangible value measurement in
institutions and society has tended to focus either
on measuring the value of products and services
in competitive situations (Aoki, 2001; Knight,
1992) or measuring the value of corporate
reputation (Fombrun, 2000). Bourdieu (1977)
 268 Carla C. J. M. Millar and Chongju Choi
and sociologists have also raised the importance
and value of "symbolic capital" as distinct from
monetary or pure economic capital. Real life
disagreements about the value of assets such as
goodwill underline the uncertainty which arises
from differences in "value to" different market
participants. The competitive market-place
driven measurement of products and services has
tended to follow an industrial economics
methodology, whereas the measurement of cor
porate reputation has combined sociology, mar
keting and institutional analysis. The latter has
echoes of research on knowledge management,
where the importance of social interactions in
the creation and dissemination of intangible assets
such as knowledge has been identified in the
literature (Kogut and Zander, 1996; Calas and
Smircich, 2002; Hassard and Kelemen, 2002;
Grant, 1996; Nonaka, 1994). This relationship
demonstrates the inherent linkage between intan
gible assets, society and hard-to-measure
benefits/values in market transactions.
The significance of such measurement and
intangibility issues for advertising and advertising
ethics has not been analysed in business and
management research. In now addressing this,
there are three strands in this paper: first, it
develops the issue of the measurement of intan
gible value, which can create uncertainty in the
valuation of goods, services and brands. This
raises North's (1990) important point that trans
action cost theory has taken "measurement" as
exogenous (Hirsch and Lounsbury, 1996);
throughout the paper we also discuss how
globalisation and ICT make this issue more
important for today's global business and society.
Second, we show how advertising and other
types of "knowledge intermediaries" play an
important role in connecting consumers and
producers of such intangible value assets. The
importance of intermediaries in providing
information that impacts consumer knowledge
goes at least as far back as Nelson (1970) and
Darby and Kami (1973). The current increase
in intangibles as well as in information overload
means that advertising as an intermediary and
advertising ethics will play a much larger role in
today's global business and society. Thirdly, we
develop a framework to assist advertising inter
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mediaries to be more in control of moral ques
tions that make them uncertain.
Knowledge and knowledge measurement
If data are defined as measures of the levels of
variables (Bohn, 1994), information is defined
as data that has been given a structure and
knowledge is information that has been given a
meaning by an organisational or individual
interpretation process (Glazer, 1998; Huber,
1991; Weick, 1979). Given that the interpreta
tion process which thus differentiates knowledge
from information adds to the information only
something that is intangible, the increased
importance of knowledge as an asset for organ
isations and society (Grant, 1996) has increased
the importance of research on the measurement
of intangible value and intangible assets.
Management and organisation theory
researchers have followed Polanyi's (1966) dis
tinction between explicit and tacit knowledge.
Explicit knowledge is codified knowledge and
thus similar to information (Grant, 1996;
Spender and Grant, 1996). Knowledge codifica
tion reduces the cost of knowledge acquisition
because the information content of codified
knowledge becomes searchable, identifiable,
accessible, transferable, reproducible and storable
(Cowan and Foray, 1997). However, knowledge
can remain tacit (Nelson and Winter, 1982) and
difficult to measure (North, 1990; Hirsch and
Lounsbury, 1996) and tacit knowledge makes a
vital contribution to knowledge generation and
distribution (Senker, 1995). Tacit knowledge is
more difficult to formalise, impart, exchange, or
purchase because it resides in peoples' beliefs,
experiences, values, organisational routines, and
institutions (Inkpen, 1998). The issue of "mea
surement" has as yet not been sufficiently
addressed by recent researchers in the areas of
knowledge based theory of the firm.
To obtain the benefit of tacit knowledge easily
there is an imperative to make it explicit by the
process of codification, "the process of conversion
of knowledge into messages which can then be processed
as information" (Cowan and Foray, 1997, p. 596).
However, Cowan and Foray (1997, p. 604) stress
 Advertising and Knowledge Intermediaries 269
that the process of codification is not simply a
process of knowledge translation but one of
creation, because it "typically entails transformations
in the way knowledge is organised so the codified
knowledge-base cannot exactly cover the tacit knowl
edge-base for which it tried to substitute". Therefore,
knowledge codification and codified knowledge
transmission cannot be considered as the absolute
substitute for tacit knowledge transmission. If we
wish to accept that tacit knowledge is in fact
transmitted then there is a need for an explana
tion in terms of a separate mechanism that shows
how the transmission of this tacit knowledge
makes sense from an individual and societal
viewpoint.
Following Glazer (1998) we can say that
information, or codified knowledge, and tacit
knowledge both only have economic value, that
is value in exchange, when used, and that the
value increases with usage. In general, codified
knowledge is independent of the individual or
organisation that owns it and hence the ra
tionale and process for its dissemination are
unproblematic. The value of codified knowledge
is also independent of the receiver because it is
data structured according to some well-defined,
explicit and public rules. A prime example of
that would be company accounts - structured
data with a standardised meaning.
On the other hand, the value of tacit knowl
edge is fundamentally dependent on the receiver
because its full valuation requires the study of
"the interaction . . . between the 'knower*, the subject
of knowledge and the 'known', the object of knowl
edge!' (Glazer 1998, p. 177). In particular, if
knowledge has no value (or measure) unless it is
used and if it is the knower who is the user of
knowledge, then measuring knowledge is ulti
mately a matter of "measuring the knower and
. . . measuring the meaning of a piece of information
to the information processor". (Glazer, 1998, p. 177).
This introduces a role for intermediaries, who
through experience, skills or greater access to
data and information can complement the basic
perception of a knower and, by inducing the use
of the transmitted information and knowledge
can give it additional value. This can be seen as
a role of marketing, and in particular of adver
tising, and a corollary to this is that without the
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advertising intermediary the message - as mere
unvarnished information - would be of less value
to the consumer. In marketing terms, such an
enhanced value is usually attributed to the brand
which is being advertised and is thought of as
part of the brand value that has been created.
This part of the brand value is created through
the advertising process and is a legitimate part
of the "benefit" accruing to the consumer.
Advertising intermediaries could face moral
dilemmas, however, when the advertising
produces a perception of value on the part of
the consumer, which is in conflict with other
experiences or brand values of the product or
with later or less committed perceptions of what
constitutes "real" value.
The issue of whether the value of codified
knowledge that is disseminated has a component
which depends on its ability to convince and to
facilitate its own use may also create a need for
knowledge intermediaries.
Knowledge intermediaries
We define knowledge intermediaries as follows:
Knowledge intermediaries facilitate a recipient's
measurement of the intangible value of knowledge
received. Based on greater information, expertise,
or skills, knowledge intermediaries give additional
meaning mostly to tacit knowledge, facilitating its
use, and help to bridge the gap between consumers
and producers in their measurement of intangible
value.
Traditionally, in cultural and creative industries
such knowledge intermediaries were called
"experts". For example cultural industries such
as film, art, gourmet food, wine industries, all
have experts and expert guide-books. Without
such experts, supply and demand would find it
difficult to meet (Weaver, 2001), due to mea
surement and valuation uncertainties of products
and services that cannot easily be sampled and
codified by consumers themselves. We use the
term "knowledge intermediary" to include not
only such traditional experts, but also advertising
"experts" since advertising also embodies
elements of such expert advice. Advertising plays
 270 Carla C. J. M. Millar and Chongju Choi
a vital role in communicating the company's
messages to its target audience. Whether seen as
the total of the promotional mix, or just in the
narrower sense as "any paid form of non personal
presentation and promotion of ideas, goods, or services
by an identified sponsor" (Kotler et al., 1999,
p. 998) advertising is the intermediary between
the company and its product, service or brand
and the consumer. The advertising intermediary
enables the consumer to attribute value to the
product or brand. Advertising "translates" the
intentions of the producer into messages that will
be understood, made sense of and ultimately
acted upon by the targeted consumer. The
increase in intangible value areas in a knowledge
based society will further increase the role of
advertising and knowledge intermediaries,
creating crucial issues of advertising ethics.
Advertising adds to the brand strength, not just
creating an ability to recognise goods from a
certain origin, but actually inducing consumers
to attribute value, to believe in the brand and to
take action, such as purchase it, purchase more,
use it, use it differently. Tacit knowledge of what
the product can mean for the consumer is a large
part of what the advertising tries to transmit.
Thus there is a knowledge-like intangible benefit
which advertising transmits and does so for cars
and clothes as well as paintings. Its role as knowl
edge intermediary however increases in the case
of goods and services which are themselves intan
gible.
When a good or even service has highly
tangible value, or can be seen as a commodity,
then consumers and producers can undertake
exchange directly. But as the intangible value
component increases in today's global, also more
ICT and internet driven environment, the role
of knowledge intermediaries becomes much
more important in the nature of the relationship
between consumers and producers. This is shown
in Figure 1 below.
Managing customer perceptions: search,
experience, credence and social goods
As discussed in the previous section tacit knowl
edge exchange requires "measuring the knower"
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(Glazer, 1998), i.e. measuring the meaning of the
information to the receiver. Unlike transaction
cost theory which emphasises only the structural
aspects of exchanges and cost minimisation, mea
suring the knower requires that we pay atten
tion to the procedural issues of exchanges. As
discussed by North (1990) and Hirsch and
Lounsbury (1996) a major weakness of existing
research on transaction costs is the assumption
that they are exogenous and exchanges do not
entail measurement or enforcement costs.
However, we have stated that measuring knowl
edge, i.e. measuring the knower, incurs costs.
Moreover, measuring the knower implies that we
can align our thesis with the more behaviourally
oriented organisational researchers who believe
that exchange partners need not necessarily be
seen as untrustworthy or driven solely by oppor
tunistic motives (Burt, 1992; Etzioni, 1988).
Exchange relationships can be maintained
without legal or contractual governance mecha
nisms too ? this in contrast to views of the
transaction cost and economically oriented
researchers.
Knowledge intermediaries, which include the
advertising process, can also help to overcome
issues such as identity. From a consumer's view
point, if the producer's identity is unfamiliar or
unknown, the knowledge intermediary provides
the key information, the data allowing the
consumer to better measure the value of the
intangible assets. Here, the economic approach
to quality uncertainty may be helpful. Nelson
(1970) first distinguished between search and
experience goods. The quality of search goods
such as commodities including cheap clothing or
vegetables can be ascertained before purchase;
while the quality of experience goods, such as
holidays, restaurants can only be learned after
consumption.
Darby and Kami (1973) introduced a third
category, that of credence goods, the quality of
which is rarely learned. Examples of such goods
include the worth of a financial advisor on stock
market investments, the advice given by lawyers,
and medical treatment received on hospitalisation
for a non-specific illness (Choi and Hilton,
1995). Cultural goods such as media, music, arts
and film also mostly fall under the third category
 Advertising and Knowledge Intermediaries 271

Consumer Information Producer

Experience of & advertising
Benefit

The classical perspective

Knowledge
intermediary's
valuation of
intangible
Consumer Producer
Experience of
Benefit

The arena for advertising ethics in the knowledge economy

Figure 1. Commodities versus intangible assets ? knowledge intermediaries and advertising ethics.

of "credence" goods. As mentioned earlier,
globalisation, ICT and internet have created an
increase in intangible values being part of all
industries, not just traditional cultural industries.
We introduce a fourth category, to supplement
the existing categories of search, experience and
credence goods* We posit that in today's glob
alised society account also needs to be taken of
a category of what we will call "social goods".
Here, in fact, no single consumer knows the
quality as the quality or value is determined by
society, social networks, and the number of
consumers that agree that the good has a specific
value. Up till now the published literature cate
gorises most cultural goods such as music and
art as "credence goods" (Darby and Kami, 1973),
but this fourth category of goods will provide the
framework for a more accurate description of
some of the goods currently categorised as
credence goods.
Examples from cultural industries
Two examples from cultural industries will clarify
this distinction:
An individual performance of a play or piece
of music, for instance, would normally be a
credence good for those members of the
audience whose appreciation is affected by what
the critics have written about it (Nelson et al.,
2001; Skov, 2002; Banks et al., 2000). On the

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 272 Carla C. J. M. Millar and Chongju Choi
other hand, the availability of music or drama as
a feature of the environment one lives in, or the
availability of museum tours on the internet, are
examples of a social good, for which one pays
through taxes, cultural donations or sometimes
through direct purchases when one goes to an
event "to support" the company or institution
which stages it. Recent academic works in the
areas of cultural studies, socio-economics and
institutions that have analysed the importance of
this social effect in the context of arts, and other
cultural heritage include Mazzanti (2002), Nixon
and du Gay (2002), Harr? (2002).
Whilst credence goods' value can still be
driven by a business economics type of rationale,
with social goods society-as-a-whole, the com
munity determines the value of the good or
service, not a one single person. The market
price is not determined by a seller, or dealer, but
by the "social market" of the community as a
whole. The concept of "social goods" can extend
to the quality or value of a political decision, the
value of the monarchy, the post-traumatic value
of Enron, etc. - all "issues" or "social goods" that
advertising or Public Relations may have to
service. It also shows the increasingly important
role of society, social embeddedness (Granovetter,
1985) and network effects (Giddens, 1998).
In a second example, Thoburn (2001) provides
a clarifying example of how intangible value can
be driven by social valuations, helping to identify
our idea that goods can be categorised into
search, experience (Nelson, 1970), credence
(Darby and Kami, 1973) and social goods. The
famous Dutch artist Rembrandt's painting "Man
with Golden Helmet" was shown to capacity
crowds and lauded by professionals as being of
high quality and value. This happened until it
was discovered that the painting was not a
genuine Rembrandt after all. The picture
immediately lost nearly all its economic value and
the crowds dispersed (Thoburn, 2001). The
painting however had not changed. Thoburn
raises the interesting question that if the "Man
with Golden Helmet" was indeed discovered and
reattributed to Rembrandt, would its value soar
again and would professionals once again praise
its high value and quality?
To many people the painting "Man with
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Golden Helmet" would be classified as a
credence good: i.e. its value, and to a large extent
the pleasure derived from looking at it, derives
in considerable measure from the fact that some
one, e.g. an intermediary like a trader or auc
tioneer has provided an expert opinion of its
worth (Mazzanti, 2002). This would apply to
many paintings and other works of art. But in
the case of attribution to an artist of Rembrandt's
fame, there seems to be an additional source of
"value" (Skov, 2002; Banks et al., 2000). The
changes in attribution do not affect an expert's
judgement of the quality of the artistic work, but
they do affect the market price; and the market
price is in turn a reflection of the value which
individuals put upon the experience of looking
at the painting or on what the community
believes it is worth. The huge change in valua
tion is based upon the idea that "having the
opportunity to look at a real Rembrandt" is a
(social) good and that good is lost, and re-found,
as the attribution changes (Nixon and du Gay,
2002; Nelson et al., 2001).
The four categories of goods are shown in
Table I, below.
Advertising intermediaries and ethical
challenges
Intangible value issues as described above have
begun to accelerate, through globalisation and
ICT A number of researchers in social sciences,
business and management have analysed the
increased role of such intangible assets and
resources in today's business environment (Negus,
2002; Thrift, 2000). This provides a greater role
for advertising, and for the more general defin
ition introduced in this paper, of knowledge
intermediaries. Whereas experts bridged a
knowledge gap in cultural industries, knowledge
intermediaries who will also include the adver
tising and media industries will bridge this gap
for all industries. In our view, in line with the
increase in intangibility and uncertainty of so
many issues, the challenges to ethical behaviour
for knowledge and advertising intermediaries will
increase too. The new fourth category of good,
"social good", will be most highly influenced by
 Advertising and Knowledge Intermediaries 273

TABLE I
Search, experience, credence and "social" goods

Type of good or service Linkage to knowledge intermediaries

Search goods ? consumer knows the quality even before Very little connection
purchase, consumption
Experience goods - consumer knows the quality only Slight connection
after purchase, consumption

Credence goods ? consumer is not totally sure of quality Substantial potential role by "experts"
even after consumption

"Social" goods ? consumer never knows the quality, Crucial role played by knowledge intermediaries
as quality is determined by society, and the community

knowledge intermediaries, raising increased issues
of advertising ethics for today's and future
business environments.
Advertising, as a knowledge intermediary, in
interpreting product or brand communication
briefs against the objectives set, and struggling
to reach the target consumer with a new message
that is gripping, on target, and effective, often
pushes and stretches boundaries. Competition is
high, time spans are short, messages have to have
impact ? and there is often little substance or
proof in the differentiating evidence the message
can be based on. With the increase of knowledge
based products and services the communication
of the valuation of these products and services
will become more and more difficult. Indeed as
we have argued the value is a function of what
the consumer can be persuaded to believe about
them, and to use them for, - sometimes seen as
"the value is what the market will bear". It is
only to be expected that the intermediaries
sometimes ask themselves whether they are "over
the top" and whether what they say might be
stretching the bounds of morality; but they do
not have a framework within which to decide
which are the really serious cases and what it is
that makes them so bad. We assume that the basic
moral principle they wish to uphold is to not
deceive people - and that they are more sophis
ticated than to think that words have only one
meaning or that every claim is to be taken liter
ally .... They are forced to consider what it
really is that the advertising is aiming to com
municate, not just the words, sounds or pictures
used.
Criteria such as the CAP Code (CAP, 2003)
standards stating that advertising "should be
'legal', 'decent', 'honest, 'truthful' " do not at this
stage help because one is not sure whether the
material one is producing is "legal", "decent",
"honest", "truthful", and the second criterion of
"should be prepared with a sense of responsibility
to consumers and to society" (CAP, 2003) only
adds to one's uncertainty by introducing a sub
jective criterion without any guidance as to what
factors might help resolve any personal dilemmas
or doubts.
The ethical challenges reference
framework
We have attempted to construct a framework, to
provide a point of reference for advertising. The
framework we developed should be seen as a
stimulus for thinking about ethics, rather than as
a prescription of what or what action is actually
right or wrong. Instead of abstract formulations,
examples of actual advertising intermediary
practice have been used. As there is a clear dif
ference between ethics and moralising we posit
that unfortunately much of business ethics is
simply moralising - i.e. preaching to people
about what is right and wrong. Ethics, by
contrast would deal with creating frameworks (or
approaches to thinking about right and wrong)

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 274 Carla C. J. M. Millar and Chongju Choi

that people might find appealing as tools to grasp
and be in control of moral questions that make
them uncertain.
If the value of a good or service is in signifi
cant measure based on the particular individual
consumer and his/her use of it, then the actual
value can only be finally determined after the
consumer has made the purchase, and it will
differ from one consumer to another ? so any
attempt to judge in advance whether the adver
tising is making unjustifiable claims about value,
is hypothetical. Hence, a framework which works
in terms of the response, i.e. what action the
receiver of the message takes, or for instance
what consumers feel about a brand or buy as a
result, rather than just the stimulus (the message,
the advertisement, TV spot, etc.) - or which
relates the two in a more sophisticated way might
help advertising, as knowledge intermediary,
reach a decision on the morality of various
courses of action.
Table II provides a graphical illustration of
how it is possible to use the four-fold categori
sation to check for moves which could be

TABLE II
Search, experience, credence and social goods: A framework for advertising intermediaries' ethical behaviour

Type of good or service Moral issues and temptation Linkage to knowledge

through escalation intermediaries

Search goods ? consumer Very little

knows the quality even
before purchase,
consumption
Experience goods - consumer
knows the quality only
after purchase, consumption
Pretending that experience goods
are search goods with objective
quality characteristics
Honest approach: product
sampling and free trials
Dishonest: playing on trust;
e.g. through "user" testimonials
to give potential consumer
spurious "knowledge" of quality

Pretending that credence goods Dishonest: claims of magic

are experience goods; creating ingredients (knowledge-based
fashions, fads and insecurity input) backed up by user or
Credence goods ? consumer about not having "the best" expert testimonials
is not totally sure of quality
even after consumption Honest: real benefits supported
by genuine role for "experts",
including advertising which can be
seen as providing expert advice

Proclaiming a "gap" or perceived Dishonest: political attacks on

aimed to provoke a demand which
'Social" goods ? consumer
can never finally know the
quality, as quality is
determined by society, and
the community
need which is synthetic and
in the event is satisfied only by a
credence good, not the social
goods actually referred to
Honest: Crucial role played by
knowledge intermediaries and
by advertising
quality of e.g. schooling, policing,
etc. claiming understaffing, under
funding, malpractice etc. (which
can be solved by a credence good
without delivering the true
social good)

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 Advertising and Knowledge Intermediaries 275
regarded as unethical. On the left are the four
categories, with brief characterisations of each.
The centre column identifies issues associated
with particular promotional approaches that
might be adopted. The lines of the table are offset
deliberately - to create additional boxes corre
sponding to the boundary areas. In the bound
aries between search and experience goods and
between experience and credence goods, we
identify approaches which treat the promotion of
one type of good as if it were the promotion of
a different type. We also note, opposite each
category of good, an approach which we would
regard as appropriate to the type of good con
cerned - the "honest" approach. In this way we
can show how it is possible to raise questions
about the jump between types of advertising
whereby something can be presented as having
objective quality, or being in the "to be appre
ciated when tried" category, even though what
is being sold is of the next level, e.g. experience,
or credence in these two cases.
As we have just introduced the category of
"social goods", we have postulated a similar
opportunity as operating on the boundary
between social goods and credence goods. From
our own moral viewpoint it would be unac
ceptable to indulge in advertising which confuses
these categories; the framework will have value
for those who share this view and who wish to
find a way of applying it in practice. By consid
ering whether the message they are framing is
likely to result in the recipient being induced to
make a miscategorisation about the value-basis of
what is being communicated, they will obtain an
input to their moral decision on whether this is
permissible. The right-hand column puts this
into a more concrete form by providing examples
of the types of advertising approach which might
be tempting but would be called into question.
The introduction of the additional category of
social goods provides a framework in which, as
shown in Table II, it is possible to generalise from
the principle that it is wrong to induce people
to buy experience goods by suggesting that they
are search goods, i.e. you don't need to try them
before knowing their quality, and that it is sim
ilarly wrong to sell them credence goods by
suggesting that these really are experience goods,
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or a fortiori search goods. For instance, should
the "Man with Golden Helmet" be advertised,
advertising would be committing an ethical faux
pas if aimed to make people believe the good
actually was purely credence good, meaning that
it was purely the artistic qualities vouched for
by the advertiser that conferred value and because
of them the painting would be worth "x" and
only "x"; equally so it would be unethical to seek
to persuade viewers, readers, customers that an
experience good - the value of which to them
they would really only know after having "expe
rienced" the product - was a search good, thus
a product "everyone" knows the value of before
consumption. The customer will decide, but
advertising as an intermediary has the ethical
duty to be legal, honest, decent and truthful.
This approach is distinct from the use of a
general moral principle prohibiting any mis
representation of what is being sold - such a rule
would prohibit typical exaggeration, caricaturing
and hyping, which are widespread and widely
understood and accepted practices in advertise
ments. It is also distinct from approaches which
revolve around the issue of possible harm to the
consumer; the harm done may in practice be
very slight, but the principle would still prohibit
the deceit which occurs when one type of goods
is passed off as another.
Conclusions
This paper developed a new framework for
managing future ethical challenges for advertising
in the global knowledge-driven society. We have
integrated and synthesised the relevant literature
on the subject, from a number of disciplines. We
examined the issue of measuring intangible value
and the longstanding practice of the role of
intermediaries in industries such as cultural
industries in which intangible value has long
been seen as intrinsic to the industry and its
products and services.
Knowledge, as the major driver of business
today, due to its intangibility presents similar
measurement valuation challenges, and so also
calls for intermediaries between the producer and
consumer. Advertising fulfils the role of inter
 276 Carla C. J. M. Millar and Chongju Choi
mediary in the communication and stimulus to
action regarding product, services and particu
larly brand values between producer and
consumer, and this role will increase as the
balance of what is consumed shifts towards
knowledge products.
Brands will continue to be carriers of value
which add to the intrinsic value of the product
or service which carries the brand. This incre
mental value becomes an increasingly significant
part of what the advertiser proposes the
consumer should acquire, and in the case of
knowledge products it may be hard to distinguish
the sources of value. Thus, due to their intan
gible aspects and measuring valuation challenges,
analogous to cultural products or knowledge,
brands, both traditional ones but particularly ones
in the rapidly developing knowledge industry,
pose major ethical challenges for advertisers. To
enable us to develop a framework to assist
advertising as an intermediary in their awareness
and managing of ethical challenges, we first
developed a fourth category of goods in the con
tinuum of search, experience and credence
goods, namely social goods. These present a
particularly high level of challenge to the
consumer in measuring the value of such goods,
and an increased importance, and perhaps risk
of misuse, of the tacit-knowledge-conveying
potential of advertising.
We then presented a framework which works
in terms of consumers' expected understanding
of the nature of what they are being offered,
using the dimension defined. It enables the
advertising to work on the stimulus (the adver
tisement) with freedom to deploy creativity and
imagination, but accepting responsibility to avoid
this particular form of misrepresentation.
Advertising as a knowledge intermediary may
well wish to use the framework of the four
categories of goods and the recognition of the
temptation towards escalation in the considera
tion of and discrimination amongst moral
actions.
Further research should evaluate the category
of "social goods" further; we would stress the
importance of empirical work in this area. There
may also be opportunities to rephrase the frame
work in more abstract terms, and to investigate
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the implications for market economics, which
would result from widespread confusion amongst
the categories of goods we distinguished.
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Caria C. J. M. Millar
TSM Business School,
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P.O. Box 217,
1500 AE Enschede,
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E-mail: c.millar@tsm.utwente.nl
Chongju Choi
Australian National University,
National Graduate School of Management,
Sir Roland Wilson Building, McCoy Circuit,
Canberra, ACT 0200,
Australia,
E-mail: chong.choi@anu.edu.au