Correspondence: Eva Hofmann, Department of Economic Psychology, Educational Psychology and Evaluation, Faculty of Psychology, University of Vienna, Universitaetsstrasse 7, 1010 Vienna, Austria. Tel: +43 1 4277 47882; Fax: +43 1 4277 47889; e-mail: eva.hofmann@univie.ac.at

¹is Scientific Assistant at the Faculty of Psychology, University of Vienna. She specialised in purchasing behaviour, costumer commitment, psychology of money, and socially responsible investment behaviour. Using several qualitative and quantitative research methods, she has written and published on topics such as money management and gender influences in purchasing decisions, and recently concentrated on motives and attitudes of socially responsible investors.

²is Assistant Professor at the Faculty of Psychology, University of Vienna. Her main research interests are in economic psychology, especially in the analysis of attitudes towards money and currencies. But she also focuses on consumer psychology, purchasing behaviour, and market research.

³has been Professor of Economic Psychology at the Faculty of Psychology, University of Vienna since 1992, and Head of the Department of Economic Psychology, Education and Evaluation. He was President of the International Association for Research in Economic Psychology (IAREP) and President of the Austrian Association for Psychology. Apart from investigating investment decisions, he focuses also on saving and credit decisions, tax compliance, and psychological aspects of the euro.

Received 5 September 2007; Revised 5 September 2007.

Abstract

While ethics and utility maximisation in economics seem mutually exclusive, ethics has recently become an issue in financial markets. The market demand for ethical investment is increasing, suggesting that investment decisions are influenced both by financial and moral considerations. Therefore, marketing strategies for ethical investment are needed. First designed for describing ethical decision processes in business organisations, the issue-contingent model of ethical decision making in organisations is applied in the present study to explain ethical investment decisions. Using a questionnaire, 286 participants completed items regarding one of four investment scenarios of companies differing in the morality of their business conduct. Results show that the issue-contingent model is suitable to describe ethical investment decisions. High perceived moral intensity led to the recognition of the moral issue and positively influenced the making of a moral judgment. For marketing these findings imply an increase of perceived moral intensity by vivid descriptions of companies' business conduct.