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AN EXPLORATORY STUDY OF THE
MEANING OF SOCIAL INDICATORS
IN PRODUCT STRATEGY

Thesis for the Degree of Ph. D.
MICHIGAN STATE UNIVERSITY
POLIA LERNER HAMBURGER
1972

 
  

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Michigan o are
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This is to certify that the
thesis entitled
An Exploratory Study of the Meaning
of Social Indicators in Product Strategy

presented by

Polia Lerner Hamburger
has been accepted towards fulfillment

of the requirements for

Ph . D . Marketing

MW

Major professor ‘

degree in

      

Date July 25, 1972

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ABSTRACT

AN EXPLORATORY STUDY OF THE
MEANING OF SOCIAL INDICATORS
IN PRODUCT STRATEGY

By

Polia Lerner Hamburger

This dissertation deals with the impact of social indicators
and social reporting on corporate decision making for product
strategy. The basic assumption is that social indicators and social
reporting are here to stay, and exploration of their implications for
marketing planning is thus justified.

It also is assumed that social indicators and social report-
ing will help define the state of the society and may indicate the
areas to which government policies and programs will be directed.
Because of government/business interfaces, whatever indicates the
direction in which government will move is bound to have an impact
on corporate decision making, specifically on product strategy
decisions.

Social indicators and social reporting will point to social

trends and consequent changes in life styles, value systems, and

 

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consumer behavior. Their use in planning corporate marketing
strategy is obvious. It is further conceptualized that social indi—
cators and social reporting eventually will be part of the information
that the Marketing Intelligence System processes in order to allow
the effective evaluation of the marketing system' 3 opportunities

and constraints.

Consistent with these assumptions, twenty -one initial
propositions were advanced. They were investigated in interviews
with fourteen executives, in three of the four domestic passenger
car manufacturing firms. Conclusions can be summarized as
follows.

Most of the subjects interviewed were not aware of the
"social information explosion. " The executives were familiar with
the social areas and issues for which such indicators are being

developed, but the term social indicators and the idea of associating

 

measurement with social issues were unfamiliar. Once the concept
was explained, it was well understood. Respondents strongly agree
that the availability of regularly published social indicators will
affect corporate decision making. They also 3333 that the avail-
ability of social indicators will have an impact on corporation goals,

organizational structure, and product strategy.

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Respondents strongly agree that the responsibility for
procurement and analysis of social indicators and policy recom-
mendations based on them should be given to a specific group as
opposed to several different groups within the corporation. There
is disagreement on whichgroup. Suggested most often were market
research or. similar-research groups, product planning personnel,
"topcorporate officers, " or an independent agency.

Respondents strongly agree that governmental regulation of

 

business in general and of the automobile industry in particular will
increase. The following areas are suggested as the most likely to
be subject to regulation in the industry: social product quality,
functional product quality, price, damageability, and noise. The
subjects Egr_e_e_ that product failure risks and the risk of introducing
new products are increasing. They also agie_e that the pace of
innovation will increase because of new market values, needs, and
potentials, or will be spurred by the‘reg’ulations themselves.

The interviewees 3.5.133 that there is popular dissatisfaction
with the overall system, the business system, and the automobile
industry. , However, they $133. that there is satisfaction with their
own company.

Subjects strongly agree that the high visibility of the auto-

mobilevindustry. in the concerns of consumers and environment

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protection is duejma-inly to the size and importance of the industry
and the characteristics of the product itself. They E that the

industry' 8 and their own company' 3 reaction to both consumer and
environmental protection pressures was about right. The answers

were indeterminate in relation to the industry' 3 reaction to govern-

 

ment regulations. They $52 that their own company reacted better
than the industry as a whole.

Respondents 3333 that to overcome criticism the auto-
mobileindustry should improve both its product and its communica-
tionwith the public.

The subjects strongly agree that the consumers' concern

 

with functional product quality is increasing. They 3.5.552 that con-
cern with social quality and with price is increasing. They 3.5.1223.
that future consumer concern with styling will remain about the
same as it is now (very high). Answers on whether or not the
increases in social product quality are proportional to its high

costs are indeterminate. Subjects strongly agree that the consumer

 

will have to pay for the added costs. Answers are indeterminate

 

about the average consumer' s willingness to pay. Respondents
agree that the average consumer will be able to pay but that there
may be some changes in the present patterns of market segmenta-

tion and product mix offerings. They strongly agree that the trend

 

in the market is toward the smaller‘car.

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Respondents agree that the number of product elimination

decisions will increase. They disagree with the initial proposition

 

that the diversification of present product lines will increase. They
think it will remain at about the present level.

Subjects strongly agree that corporate concern with functional

 

and social product quality will increase. They agree that corporate

concern with functional product features will increase. They disagree

 

with the initial proposition that concern with styling will decrease.
They perceive concern with styling as remaining at the present level
(very high). They stroneg agree that standardization of product
features will increase and 3319.9. that corporate concern with product
differentiation will decrease. In both cases, it is because of gov-
ernmental standards, cost factors, and market reaction.

All subjects perceive the issues of guarantees and warranties,
customer service,, and consumer education as closely interrelated.
They 35333 that corporate concern with guarantees and warranties
will increase. They stroggly agree that corporate concern with
customer service and consumer education will increase.

They strongly‘agree that costs will increase. The stan-
dards for safety, pollution control, and damageability protection
are adding and will add even more to the cost of automobiles.

These added costs, of course, will be passed on to the consumer.

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AN EXPLORATORY STUDY OF THE
MEANING OF SOCIAL INDICATORS

IN PRODUCT STRATEGY
By

Polia Lerner Hamburger

A THESIS

Submitted to
Michigan State University
in partial fulfillment of the requirements
for the degree of

DOCTOR OF PHILOSOPHY
Department of Marketing and Transportation Administration

1972

 

(C) Copyright by
IKILLAXLEHUNEHRILANCBEHHSEHT

1972

ii

To the memory of Hugo

To JoE’o Luis and RuthRenata

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ACKNOWLEDGMENTS

A doctoral dissertation is never the work of only one
individual. It is difficult to name all those who aided in this
study and to state precisely what each individual contributed to
the finished work.

I feel especially privileged for working with an outstand-
ing guidance committee. Its members, all long-time mentors and
friends, have greatly influenced my thinking in marketing, and I
welcome this opportunity to thank them for all they have taught me
in the many years we have been associated.

To Dr. Donald A. Taylor, Professor, Department of
Marketing and Transportation, advisor of my doctoral program and
co-chairman of the committee, I am especially grateful for the
valuable counsel throughout all phases of the program. His sug—
gestions and contributions added much to the dissertation, and his
consistent understanding, encouragement, and help, particularly
when a crisis arose, are deeply appreciated.

To Dr. William Lazer, Professor, Department of Market-

ing and Transportation, co- chairman of the commiteee, I am

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especially thankful. He suggested the challenging topic, and the
dissertation benefited greatly from the stimulating criticisms and
suggestions given throughout the work.

To Dr. Stanley C. Hollander, Professor, Department of
Marketing and Transportation, member of the committee, I am
indebted for having interested me, long ago, in well -researched,
well documented work. His scholarship is an inspiration to all his
students.

I would like to thank the automobile industry executives
who agreed to participate in this research and who spent several
hours in the interviews. Their interest in and full cooperation with
the project greatly extended my insights into the difficult topic.

To Mrs. Elizabeth Marcus who did a masterful job of
editing the manuscript and to Mrs. Shirley Swick who typed it, I
am most grateful. Both shared the time pressures and offered
valuable advice as the final work took shape.

I owe a special debt of gratitude to all my friends who
shared my great anxieties and my small successes. Their
encouragement and support helped me throughout my doctoral
program. To me and my children they have been family and a

home away from home.

Major credit for the completion of this dissertation,
however, goes to my two children, J 65:» Luis and Ruth Renata.
My special thanks to J 650 Luis for helping me proofread a major
part of the dissertation. Their unfailing understanding, coopera-

tion, and sense of proportion kept me going in the right direction.

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TABLE OF CONTENTS

LIST OF TABLES
LIST OF FIGURES
CHAPTER

1. IMPORTANCE, PURPOSE, AND
SCOPE OF STUDY

Foreword . . .
Importance of the Topic .
Purpose of the Study
Conceptual Framework
Methodology
Sampling
The Interview
The Subjects
The Interview Guide .
Analysis of the Findings
Limitations of the Study .
Limitations Regarding the Sample
Limitations Regarding the Interview
Guide and Methodology
Format . . . . .

2. AN ASSESSMENT OF THE CONTRIBUTIONS
OF ECONOMIC AND MARKETING THEORIES
TO THE EVALUATION OF QUALITY OF
LIFE

Economic Theory Perspectives
Human. Wants Assumptions .
Economic Organization Efficiency
Assumptions

vii

Page

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, xiii

13
15
19
20
21
21
22
23
23
24

25
26

30

30
32

34

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CHAPTER

3.

4.

The Capitalistic Economic System
Assumptions
A Modern Theory of consumer Behavior
Assumptions . .
Maximization Assumptions
General Equilibrium and Welfare
Assumptions
Marketing Theory Perspectives on the
Quality of Life .

Marketing Performance Assumptions .

Positive and Negative Outputs of
, Marketing . .
Criticisms of Marketing Wand
Consumerism
New Approaches to the Evaluation of
Marketing Performance .
Some Closing Remarks

HISTORICAL DEVELOPMENT OF SOCIAL
INDICATORS AND PRESENT STATE OF THE
ART: A REVIEW OF THE LITERATURE .

Introduction
Social Indicators: A Brief Historical
View .
Social Indicators: Synthesis of the Main
Contributions . .

The General Approach .

The Specific Area Approach .
Social Indicators -- The Present State of
the Art

CONCEPTUAL FRAMEWORK

Introduction

Conceptual Framework
Definition of the Problem
Operational Definitions
Propositions .

viii

Page

35

39
41

42

48
51

54
57

64
67

80
80
82

90
90

. 128
. 178
. 196

. 196
. 199
. 211
. 211
. 215

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CHAPTER

Awareness .
Perceptions of Impact of Social
Indicators on the Corporation
Perceptions of Impact of Social
Indicators on Business and Govern-
mental Interfaces .
Perception of Social Indicators as
Indicators of Changes in Life Styles
Perception of Impact of Social
Indicators on Product Strategy .
Propositions and Related Interview
Questions

MAIN FINDINGS

Introduction
Awareness of the Social Information
Explosion
Perception of Impact of Social Indicators
on the Corporation
Impact of Social Indicators on
Corporate Decision Making .
Impact on Corporate Goals, Organi-
zational Structure, and Product
Strategy. . .
Perception of Impact of Social Indicators
on Government and Business Interface
Extent of Government Regulation
of Business .
Extent of Government Regulation
of the Automobile Industry
Risk of Product Failure
Pace of Innovation . . . . .
Government' s Relative Share in
Research and Development .
Pressures for Government Regula-
tion of Business
Perception of Social Indicators as
Indicators of Changes in Life Styles,
Values Systems, and Attitudes of
Consumers

ix

Page
215

215

215
216
216
218
226
226
229
230

230

234
241
241
243
247
248
249

250

259

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CHAPTER

Consumer Concern with Functional

Quality .
Consumer Concern with Social
Quality .

Consumer Concern with Styling
Consumer Concern with Price .
Cost-Benefits of Added Social

Quality

Perception of Impact of Social Indicators
on Product Strategy.
Product Mix .
Product Quality .
Guarantees and Warranties, Customer
Service, and Consumer Education
' Product Cost

6. CONCLUSIONS AND SUGGESTIONS FOR
FURTHER RESEARCH

Conclusions .
Restatement of Propositions .
Awareness . . .
Perception of Impact on Corpora -
tion .
Perception of Business -Government
Interfaces .
Perception of Social Indicators as
Indicators of Consumer' 8
Changes . . .
‘Perception of Impact on Product
Strategy. . .
Some Additional Observations
Suggestions for Further Research .
Impact of the Availability of Social
Indicators on Product Strategy .
,An Exploratory Study of the Meaning
of Social Indicators in Communica-
tions Strategy

Page

260
260
261
261
262
265
267
270
278
283
285
285
299
301
301

301

302
302
304
311

311

315

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CHAPTER Page

An Exploratory Study of the Meaning

of Social Indicators in the Distribution
Strategy. ....319
Automobile Manufacturer -Dealer
Relationships and Their Impact on

Consumer Satisfaction/ Dissatisfaction

with Services . . . . . . 323
Business- Government- Consumer
Interrelationships . . . . . . . 3 2 7
Conceptualization and Measurement
of Social Indicators . . . . . . 335
Suggestions for Further Researmchu
Some Closing Remarks . . . . . . . . . . 335
SELECTED BIBLIOGRAPHY . . . . . . . . . . . . . . . 339
APPENDIX: INTERVIEW GUIDE . . . . . . . . . . . . . 351

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LIST OF TABLES

Table Page

1. National Performance Abstraction: Grand

and Intermediate . . . . . . . . . . . . . . . . . 96
2. Effects of Activities on Goal Output Indicators,

1970-80. . . . . . . . . . . . . . . . . . . . .108

3. Summary of Suggested Main Areas of Social
Concern 127

4. Summary of Conclusions . . . . . . . . . . . . . 300

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LIST OF FIGURES

An Abstraction Specificity Ladder
Basic Heuristic Schema

The Marketing System

The Marketing Intelligence System .

xiii

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CHAPTER I

IMPORTANCE, PURPOSE , AND

SCOPE OF STUDY

Foreword

 

Both private and government institutions are at this
juncture very concerned and involved in the process of developing
a social report and a set of social indicators. The purpose of
social indicators is to measure the performance of the society in
meeting social needs. In other words, they are indicators to
measure the quality of life. An assessment of developments leads
to the conclusion that the idea of social indicators and social
reporting is not a fad, and the exploration of their implications for
marketing planning is justified.

The recognition of the divergence between private and
social costs and the concern with the measurement of the rates of
social change are not new. Neither is the basic concern with the
quality of life. Men always have been interested in the quality of

their lives and the meaning of their existence. Man' s entire

 

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history, his self -vindication, and his progress are evidence of the

quest for that quality. But quality of life has acquired different

 

meanings for different societies, each defining it according to its
own hierarchy of values.
There do seem to be several specifically new aspects of

the present concern about the quality of life.

1) An awareness exists that there need not be a significant
correlation between tangible economic progress and the
less tangible feeling of happiness, or whatever term is
used to define the subjective feeling of satisfaction with
one' s own life and with the physical and social environ-

ment to which one relates.

2) There seems to be a difference in the quality of thinking:
(a) a multidisciplinary, systems approach which recog-
nizes the interrelationships of the multiple events that
seem to impinge upon the quality of life (perhaps. a natural
reaction to the overemphasis on specialization in various
fields of study): (b) a quest for rationality which is
expressed in a systematic effort to define the variables
that can reflect the quality of life and a methodological

concern with how to measure them adequately. In addition,

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there is concern with the uses to which these new
measurements and information should be put in the

rational management of society.

3) An ideological re-assessment of values is taking place
which involves the search for a new hierarchy of values

for the technological age.

Importance of the Topic

 

The impact of social indicators and social reporting on
decision making is an important topic. It deals with a particular
aspect of a broad and important issue of our time: the re -eva1uation
of the ideological basis of the society. 1

The "old" ideology accepted the premise that the level of
welfare of the society is measured in economic terms. The
evaluation of the economic system' 3 performance is made in terms
of the consistency between economic goals and the economic achieve-
ment of the system. This system is organized and administered
according to the capitalistic ideology (economic organization of
private property, free contract, and free competition), and production

is its central achievement. It is credited with having created wealth,

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the highest standard of living, andalife style of relative leisure and
abundance. The belief is that acquisition of material benefits allows
for greater enjoyment of life. The profit system stimulates effort,
efficiency, and entrepreneurship, and gives origin to a creative
dynamism that accounts for growth and innovation.

Within this economic organization marketing is believed to
have guided the economy, indicating what is wanted or needed. It is
deemed to have played a significant role in the acquisition of the high
standardof living and to have had a great and positive influence. on
the quality of life (since the two were assumed .to be directly corre-
lated).

But this same economic system, of late, has been subjected
to three main criticisms. First, despite the total wealth produced
some minorities remain very poor; this indicates inequity in the
distribution of wealth. Second, left to its own free enterprise
philosophy and devices, the economy. lacks the internal elements of
self -control. Thus its concentration and abuse of economic power
and its abuse of the environment are leading it into self-destruction;
over-population, traffic congestion, air and water pollution, and
other damage to the environment may seriously threaten the chances
of survival. Technological progress, responsible for the high

standard of living, paradoxically has helped to increase man' s

 

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harmful impact on the environment. Third, consumer satisfaction
as a meaning for all economic activity has been an inadequate guide
for social welfare because of the differences between private and
social good and private and social costs.

These criticisms of the performance of the economic
system imply criticisms of marketing as well. From the economic
viewpoint, marketing is considered to encourage some waste through
meaningless product differentiation, planned product obsolescence,
and inefficiency. It has not achieved a good balance between effort
and effect, between input and output. From the ethical standpoint,
marketing is accused of keeping the consumer continuously dis -
satisfied with what he has. Critics note that it may stimulate
unnecessary wants, manipulate consumers against their wishes,
and engage in malpractice, deception, and fraud. From the
aesthetic viewpoint, marketing (and especially advertising) is
criticized for-lowering values. It is said to appeal sometimes to
bad taste and to contribute to the degradation of the environment.

These criticisms raise doubts about the very basic
economic and marketing assumptions that underlie the prevailing
system. The 1970s spurred a wave of examination and re-
evaluation, and the system did not seem as adequate as previously

had been thought. 2

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The attempt to evaluate society' s performance has wide
implications. According to Pitrim Sorokin the twentieth century is
witnessing the fall of the "sensible order” of the occidental world. 3
The two world wars, revolutions, and crime are consequences of
the disintegration of society' 3 moral and legal values; these and
other internal values control and guide the behavior of individuals
and groups. The conflicts between the forces of the decaying sen-
sible order and the creative forces of the emerging socio-cultural
order underlie all areas of modern social life and culture. These
conflicts affect deeply everyone' s way of life in all spheres:
science, philosophy, religion, ethics, politics, economics, social
life, and the arts.

The problem of change is not confined to the United States
nor to the economic system; it reaches all "established" systems.
In the old ideology wealth and happiness were synonymous goals;
in the American hedonistic, materialist way of life, output of goods
has been the main objective and capitalism the way to acquire it.
Dissatisfaction with this ideology manifests itself mainly in doubting
the long-established goals of the economic system.

The discrepancy between the basic beliefs of the society and
the perceived shortcomings of its accomplishments have called into

question the prevailing values. Basic beliefs include the acceptance

 

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of equality of opportunity and the positive value of work and education
for achieving status-in a mobile society. Wealth is deemed to be a
factor of social progress, but reality shows the existence of poverty,
minority problems, and an increase of crime. The critics point out
that capitalism has failed because it has not yet been able to extend
prosperity to all levels and all groups of society; it has not granted
social justice.
Even those granted prosperity have not gained happiness.

The main quest is still for happiness --a better quality of life--and
how to attain it. This increasing social concern is, to some extent,
a result of the abundance of society. Freed from the more essential
and basic material wants, the individual is led to evaluate and aspire
to something higher in the hierarchy of values. Work and leisure
tend to be redefined. There is a growing concern with norms,
values, and social and philosophical issues that transcend the
individual' 8 own physical well -being. In other words, the individual
does not find satisfaction in wealth only.

When the getting of more and more comes to mean less and

less, when more and more Americans begin to worry over the

comparative merits of their increasingly elaborate automatic

appliances performing ever-more-trivial functions, is it any

wonder that more and more Americans become skeptical of

the salvation that lies in wealth? Is it any wonder that more

Americans should begin to rediscover the basic uses of

American wealth at the lowest level of consumption? Who can
doubt the satisfactions of having things or giving things when

  

 

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they relieve-starvation or undernourishment? . . . Is it
surprising that Americans nowadays show so striking and
sometimes even so militant a concern for poverty in Ameri-
cans? . . .

In the perspectiveof our history it is not surprising that
we should find ourselves seeking to redefine the ideals for the
Americannation. Perhaps it would be more comfortable to
live in an age when the dominant purposes were in full blood,
when the hope for fulfillment had not been overshadowed by
the frustrations of fulfillment. . . .4

It seems clear that the old ideology is doomed and a new

ideology is emerging. It is difficult to define the goals, assump-
tions, beliefs, and values that characterize this ideology. It has
been referred to more frequently in reference to the criticisms of
the-old than in assessment of the new. In Sorokin' 3 view it is
mainly characterized by a shift from "sensible" goals to ”subjective"
goals, from an emphasis on objective, to an emphasis on subjective.
Because we are in the midst of the process of change and we are
ideologically involved, it is difficult to see clearly and objectively

all the implications of the shift. But there is no doubt that recent
criticisms imply a .re -evaluation of values and that a new ideology is
developing; As Jose Ortega y Gasset points out, 5 when one begins
to ask questions about values it shows that they already are in
crisis. The discussion of values reflects the crisis of modern
society.

This reassessment of values has occurred before: ethical

values have varied in time and space. But there always has been

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the wish, the aspiration, for some kind of absolute. Thus the
existence of different values and value hierarchies in different
societies and cultures is explicable, and their validity need not be
doubted.

The individual facing the universe is selective. Of the
many elements that compose his universe, the individual integrates
some which are attuned to his sensitivity. The psychological
structure of each individual is like an antenna that is receptive to
some values, oblivious to the others. But the individual' s perspec-
tive is partially conditioned by the society to which he relates. The
differences in values among various societies or cultures and
between various periods within the same society are not meaning-
fully explained by considering the value as something that did not
exist before and now exists. The value should be understood as
something that was not perceived before and now is realized.

To use Gasset's image, one can make "mistakes" in
accounts without nullifying the truth of the numbers. Similarly,
one can make mistakes in the preference of values, by placing the
lower before the higher, without invalidating the values themselves. 6
This reasoning helps to understand why every society establishes
its own hierarchy of values and defines the quality of life accord-

ingly. But there are decisive moments in which a society more

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strongly perceives the difference between what its own reality is
and what it aspires to be.

This seems to be such a period now. As Karl Deutsch
points out, 7 the traditions, habits, political institutions, and
cultural patterns are no longer adequate to deal with new problems
and new circumstances. In the present environment, however,
the major elements of these same traditions, habits, political
institutions, and cultural patterns still are necessary for individuals,
families, groups, and nations. The divergence between what is
seen as right and what is real and the desire to identify the two are
leading to protest and rebellion against the existing order.

From these complex developments a new hierarchy of
values and a new ideology for an emerging postindustrial society

are taking shape .

According to Daniel Bell, five dimensions characterize a

postindustrial society.

"1) The creation of a service economy.
2) The pre-eminence of the professional and technical class.
3). The centrality of theoretical knowledge as the source of

innovation and policyformulation in the society.

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4) The possibility of self -sustaining technological growth.

5) The creation of a new ' intellectual technology. ' "8

The implied rapid expansion of a professional and technical
class suggests a new dimension in social affairs: an increasing
dependence on human capital. Consequently, policies relating to
the institutions concerned with knowledge and technology will
become the central political question for society.

As these new conceptions emerge, the concern with social
goals and their measurement increases. Hence the concern with
social indicators and social reporting. Why the need for a. social
report? It can indicate how well we are doing and how policy making
may be improved. It also can give social problems more visibility
and provide more insight into how different measures of national
well-being are changing. Social indicators permit a better evalua -
tion of what public programs are accomplishing in improving the
quality of life. The development of social indicators and social
reporting should be viewed as the attempt to conceptualize, measure,
and thus better assess several areas of concern that are implied in

the new conceptualization of the quality of life. These include:

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1) concern with social issues such as poverty, civil rights,

and minority groups;

2) concern with the environment, including (a) physical
environment: housing, pollution, and beauty of the sur-
roundings: and (b) social environment: crime and other

forms of social breakdown and participation;
3) concern with education, knowledge, and technology; and
4) concern with consumer protection.

Social indicators should be indicators of the quality of
life (real social welfare) and should actually include both economic
and noneconomic data, both quantitative and qualitativevinformation.
The term _s_9_<_:_i_a_l_ is used in the literature in a rather ambiguous way.
Social does include-the economic (and the GNP is still a good social
indicator, 9 if not the best or only one). However, the economic
national accounts are well conceptualized and developed and already
are being used as information input by both private and public
organizations in their decision making. Therefore, a consensus
seems to have-developed in the literature that a social indicator is

different from or contrasted to an economic indicator.

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Research onsocial indicators is being done in both private
and governmental institutions. Since the quality of life cannot be
measured directly, the investigation has focused on trying to con-
ceptualize the proxy, surrogate variables. The next step should be
to find some consensus for the direction of social change. The final
component of a social report is the recommendation of national goals
and policies. Implicit in the idea of evaluating the quality of life is
the idea of directing social change. Social indicators deal with
sensitive areas, and researchers and institutions will judge ”good"
and "bad" within the particular framework of their own value
system. 10 Because the information can be used to support both
claims and programs, it is to be expected that broad discussions
will take place in both the academic and political arenas.

Although present development is immature, there already
is so much involvement and commitment to the investigation of
social indicators and social reporting that it is safe to assume they

soon will be part of the information base for decision making.

- Purpose of the Study

 

This study focused on the impact of social indicators and
social reportinginformation on corporate decision making for

product strategy.

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At this juncture it is not easy to stateclearly how this new
information will fit into the marketing planning processes. Further-
more, marketing as a discipline has been slow in joining the social
information movement. For example, the more recent social infor-
mation explosion dates to the early.1960s, and publications on the
subject have been appearing since 1965 (as will be seen in chapter 3).
But only in 1971, at the San Francisco American Marketing Associa-
tion Conference, were papers presented speculating on the relevance
of the‘subject for marketing. 11 The recent First AMA Conference
on Social Indicators held in Washington, D. C. , 12 indicates a grow -
ing recognition of the relevance of the subject and the need to discuss
its marketing implications.

In this dissertation the choice to examine the impact of
social indicators and social reporting on corporate product strategy

seemed alogical one for several reasons.

1) Product strategy is an important aspect of marketing

strategy.

2) Despite serious doubts about some economic theory
assumptions, corporate decision making still primarily
is involved with the bundle of goods it sells. New ideological

developments and new social indicators may be implying that

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the bundle of goods should be different, should satisfy

different wants and needs, or should satisfy the same
wants and needs in different ways, but a bundle of goods

still is involved.

Product innovation and its basis, technology development,
have been a central issue in both economics and marketing.
Technological assessment is also a central issue in the

emerging new ideology of social concern.

In accordance with these considerations, this study has the

following objectives:

A.

To review the development of social indicators and social

reporting to date.

To assess. the impact of social indicators on:
1) the marketing planning process for product strategy, and

2) corporation evaluation of its own social performance.

To suggest topics for research and investigation.

Conceptual Framework

 

Policy refers to deliberate action taken by the various parts

 

of a government or corporation in pursuit of certain goals and in

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response to problems or opportunities. This action takes the form

 

 

of particular activity or activities which have definite effects in the

 

 

context of current forces. 13 Research on social indicators has not
yet reached the conclusive stage of stating clearly in what manner
they are to be measured and in what ways they are to be affected
by alternative policies, but it is progressing in this direction.
Most authors agree that indicators fall into several categories of
related and interdependent concerns.

Health and safety includes personal and environmental

 

health and public and environmental safety.

Education, skills, and income considers basic schooling

 

and higher education, skills and jobs, and the amount, adequacy,
and continuity of incomes.

Human habitat refers to housing, quality of neighborhood,

 

access to the area, recreational opportunities, and the quality of
larger environments.

Finer thing: includes goals for the arts and sciences and

 

aspects of nature and beauty.

Leisure and production deals with interrelationships

 

between economic growth and availability of discretionary time.

Freedom, justice, and harmony considers liberty, demo-

 

cratic values, and the quality of the social environment.

 

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These indicators, or similar ones, will have a strong
impact on corporate decision making in two ways. First, in a micro
sense, thevdata base provided by indicators will lead to a better
understanding of the trends in social change and, consequently, in
life styles and consumer value systems. The corporation will have
better clues for planning its adaptive strategy. Second, in a macro
sense, indicators will provide both evaluation of performance in
relation to national goals and redirection in the establishment of
goals and priorities. They will be used by decision makers in
setting national policies, including those that might affect corpora-
tions directly.

A basic premise of the conceptual framework is Nestor
Terleckyj' 3 statement:

Achievement of national goals is defined analytically in terms
of observable changes in a series of specific goals indicators,
such as life expectancy, crime rate, educational testing
scores, etc. which were selected to reflect the actual objects
of public concern.

. changes in goals output indicators are possible only
by means of specific combinations of events comprising new
types of public policies and private developments called
"activities" . . . defined to include . . . large aggregations

of public policies and private behavior patterns. 1

These concepts can be presented schematically:

 

 

18

I—-—-9 goals (social indicators-— criteria for performance)
policies (guidelines for action)
programs (activities--a-llocation and mobilizationof

resources)

performance evaluation (social indicators)

é——— flow of action

6—-—- —- flow of feedback

The same scheme can be applied either to the corporation or to the

corporation marketing system (micro level).

r—-> goals (economic and social indicators--balance
between economic maximization goal and
social considerations - - suboptimization
of goals)

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The relationship between the two schemes lies in the interface
betweenthe corporation' 3 marketing system and the governmental

system.

Methodology

 

This is an exploratory study. There is no attempt to set
hypotheses and test them statistically because the topic area is too
new. The concepts of social indicators and social reports are still
beingdiscussed and the methodology for measuring them has not
been well developed. On the corporation side, social indicators and
their implications are in the initial stages of being explored and the
procedures to factor them into the decision-making process have not
been institutionalized. The nature of the inquiry is, essentially, to
explore areas for further research and to formulate propositions
which could be tested by empirical research.

Certain assumptions and propositions have been formulated.
Although these have not been tested statistically, the study has
provided the insight to re—examine them. Some were maintained,
others were restated. These final propositions might be used as
hypotheses for subsequent work.

The ‘methodology used was threefold. First, a review was

made of secondary datafrom both'private and governmental sources,

 

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20

to summarize the contributions of studies on social indicators and
social reporting and to indicate general conclusions on which
scholars agree. Second, these conclusions were analyzed and
several hypothetical influences on corporate decision making were
developed by deduction. Third, case studies‘were examined to
investigate the awareness and perception of corporation executives
of the impact of social indicators and social reporting on product
strategy decisions.

The automobile industry was chosen for the case studies
for three reasons. First, it is the largest industry in the country.
Second, it is an industry whose impact on the quality of life has
gained high visibility. Third, it leads the list of consumer com-
plaints and shares with a few other industries, such as foods, drugs,
soaps, and detergents, the close attention of consumer leaders and

government officers regarding safety and pollution control. 17

Sampling

A. judgment sample of executives to be interviewed was
selected. Although this sample has the shortcoming of not allowing
generalization of conclusions, it does have the advantage of including
the "right" people. Their comments gave valuable insights for the

restatement of the initial conceptual framework and propositions.

21

Selecting thesamplewas a two -step procedure. First, 18 persons
in 3 of the 4 corporations of the automobile industry were inter—
viewed. The purpose of the study, the conceptual framework, and
the kinds of questions to be asked were explained to them. Then
their suggestions for the names of persons to be interviewed in
their corporations were requested; 14 names in the 3 corporations
resulted. When contacted by telephone, the 14 agreed to a personal

interview .

The Interview

Despite the length of the interviews (each took from two and
one -half to three hours), the subjects were cooperative. Once the
purpose of the study was understood, they all seemedvery interested
in the topics discussed and gave them great attention. All the inter-
views were conducted by the writer between 23 February 1972 and

7 April 1972..

The Subjects

The 14 interviewees were distributed among the following
general functional areas: (1) product planning and related functions:
3; (2) corporate planning: 3; (3) research, marketing research, and

marketing analysis: 5; and (4) engineering, safety and pollution

 

..
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22

control: 3. All have had a long experience in the automobile
industry (from 10 to more than30 years). Most have had a variety
of experience, having worked in several different functional areas
within their'corporation. A few had had previous working experi-
ences outside the automobile industry. Two subjects characterized
their positions as beingline positions, 9 as staff, and 3 as being
both staff andline. If thechairman of the board is designated as
the first level of theorganizational structure, most of the subjects

fall in levels 3 to 6.

The Interview Guide

An interview guidewith both Open- ended and closed- ended
questions was used. There were 5 major sets of questions and each
question in a set was designed to elicit the information needed to
explore the initial 5 sets of propositions. (A copy of the interview
guide is presented in the Appendix.)

The guide was pretested in three interviews to determine
whether the wording was clearly understood and to determine the
length of time needed .for a complete interview. (The data obtained
in the pretest are not included in the findings of the study. These
refer only to the 14 interviews of the persons included in the

sample . )

 

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23

An initial difficulty was the definition of social indicators.

 

Since there was no way of clearly and concisely defining the term,
an explanation, consistent with the conceptual framework, was read
to the subjects. To reduce bias in the answers to question 1, the
explanation‘was read only after replies were received to said ques-
tion. The newness of the topic presented an additional difficulty.
All the basic assumptions of thetstudy had to be clearly stated to and
understood by the subjects before they were able to answer the

questions .

Analysis of the Findings

The subjects' answers and comments to the questions were
content analyzed. An attempt was made to summarize their view -
points and detect trends. Wherever pertinent, interviewees'
comments are reproduced to illustrate their perceptions. The
findings were compared to the initial conceptual framework and
propositions and, according to the insight gained, these either were

maintained or restated.

Limitations of the Study

 

Because this is an exploratory study it has some inherent
limitations. There is no complete agreement in the literature about

the concept of social indicators, about the classification of areas of

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24

concern, about how and by whom the data should be collected and
made public, or about the uses of the data. The author had to make
choices and assumptions throughout the development of this study
about each of these points. Whether the choices and assumptions
were the correct ones can only be speculated upon -at this juncture.
It is to be hoped that further research on conceptualization, mea-
surement, and uses of social indicators will show which assumptions

stand and which do not.

Limitations Regarding the Sample

It should be re- emphasized that the choice of a judgment
sampling procedure eliminates the possibility of generalizing the
conclusions; these are valid only for the group of 14 executives
interviewed. . It is to be hoped that the two- step sampling procedure
ensured that they were the "right" people. But it should be realized
that the names suggested in the first stage of the sampling pro-
cedure may have been proposed because of the decision-making
positions of those executives and because it was believed that they
would be willing to be interviewed. The intrinsic limitations of
such a sample for a study which tries to draw conclusions about
perceptions has. to be recognized. It cannot be known whether these

14 executives are representative of executives in the automobile

 

 

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:«;5

25

industry. However, the cooperative attitude of these executives
and the candor with which they answered the questions did provide
valuable insight for the exploration of the propositions.

Limitations Regarding the Interview Guide
and Methodology

The interview guide was satisfactory, but it was hardly
the perfect one. First, because of the newness of the topic, the
basic assumptions orienting the study had to be stated as intro-
ductory explanations preceding sets of questions; therefore, the
questions had meaning only within the context of those assumptions.
This may have hampered understanding, but observation indicates
that the subjects did comprehend both the assumptions and questions,
although it may have required some effort. Exceptions are ques-
tions 31 and 32 which referred to government's and corporations'
relative share in research and development. Several subjects
did not understand the meaning of relative share, and their answers
indicate that they were talking about absolute dollar figures.

Second, the interview guide was too long. Again this is
due to the exploratory nature of the study and the attempt to lay the
groundwork for further research. Unfortunately, the length of the

guide coupled with the fact that some executives took a long time

 

CS
it we

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1....

 

 

 

26

answering, made the interviews so lengthy in time that exploration
in depth of all topics was precluded.

Third, it was impossible to record all the comments. In
the first stage of the sampling process the author was advised not to
use tape recorders because this might inhibit the subjects. The
comments were annotated and it is possible that some information
may have been lost in the process. However, great care was taken

to reproduce the comments literally.

Format

Some of the basic ideas introduced here under the heading
"Importance of Topic" are further developed in chapter 2. Specif-
ically an analysis is made of why traditional economic and marketing
theories have not provided an adequate framework for evaluating the
quality of life in its new conceptualization. The results of this
analysis are related to the movement for social indicators that
might lead to this evaluation.

In chapter 3 an historical analysis of the development and
evolution of the'social information explosion is presented. It is
followed by a review of the literature which summarizes the main
contributions of the area, the present state of the art, and the
main areas of social concern to which public policy might be directed

in the future.

. _o
1:: Chapter :2

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27

In chapter 4 theconceptual framework is presented. It
deals with the viewpoint from which the study was undertaken, the
main assumptions, and the formulation of propositions. The latter
are logically deducted both from the review in chapter 3 and from
the conceptual framework.

Chapter 5 presents the main findings. Chapter 6 is a
summary of the conclusions, and suggestions for further research

are also presented.

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28

Chapter 1 Footnotes

 

1The following discussion on ideology and values is based
on my unpublished paper, "The New Ideology and Marketing Organi-
zation, " prepared for Marketing Seminar 911, Michigan State Uni-
versity, Winter 1970.

2For example, see "From the 1960' s to the 1970' s"
("sixties--the decade of dissent and discovery"), Time, 19 Decem-
ber 1969, pp. 20-25. See also "Business Faces a Decade of Change, "
Business Week, 6 December 1969, p. 214.

 

3Pitrim A. Sorokin, Tendéncias Basicas de Nossa Epoca,
trans. Alvaro Cabral (Rio de Janeiro: Zahar Editores, 1966f

 

4Daniel J. Boorstin, ”Tradition of Self - Liquidating Ideals, "
Wall Street Journal, 18 February 1970, p. 18.

 

5Jose Ortega y Gasset, El Tema de Nuestro Tiempo [The
Modern Theme], trans. James Cleugh (New York: Harper and
Row, 1961).

 

 

6Ibid. , p. 63.

7Karl Deutsch, lecture given in S. Paulo, Brazil, published
in Folha de Sao Paulo, 1 September 1968, p. 18.

 

8Daniel Bell, "Knowledge and Technology, " in Elizabeth B.
Sheldon and Wilbert E. Moore, eds. , Indicators of Social Change
(New York: Russell Sage Foundation, 1968), p. 153.

 

9George Brown, speech given at the First Annual Social
Indicators Conference, American Marketing Association, Washing-
ton, D.C. , 17 February 1972.

10Daniel P. Moynihan, "Urban Conditions in General, "
Annals of the American Academy of Political and Social Science
371 (May 1967): 102.

11Harry A. Lipson, "Social Goals: A New Tool for Market-
ing Management?"; Robert S. Raymond, "Social Indicators and
Marketing Decisions"; and William D. Lee, "The Responsibility of

 

 

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r. . C n. r. o 1 x
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A c In .5 . . . . 3 . C. I; 2. ; ... .
at. a: v . . ..‘c w.» r a c O P. .1 tr. 1.“ S“ B. o s
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. 4 9 .. A... . \ . .. . . 2
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c u . nu“ n. d . ... .... . u‘ . ‘ ~ \
git? ..Nww.j.lldl.4.lfl.l.:
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29

Government for Creating a Sound Marketing Environment, " all three
papers presented at the American Marketing Association International
Congress, San Francisco, California, 13-14 April 1971.

2First Annual Social Indicators Conference: Social Indi-
cators in the Changing Business Environment, American Marketing
Association, Washington, D. C. , 17-18 February 1972.

3This concept is an adaptation of the one presented in a book
proposal by Stanley C. Hollander and Jean Boddewyn, "Public Policy
Towards Retailing: Development, Evolution and Prospects in
Selected Countries, " p. 4.

14Nestor E. Terleckyj, "Measuring Possibilities of Social
Change, " Looking Ahead 18, No. 6 (August 1970): 1-10.

 

15Nestor E. Terleckyj, ”The Role of Efficiency in Achieving
National Goals, " paper presented at the Annual Meeting of the
AmericangMarketing Association for the Advancement of Science,
Chicago, Illinois, 29 December 1970, pp. 1-2.

16Lawrence J. White, The Automobile Industry Since 1945
(Cambridge, Mass. : ' Harvard University Press, 1971); ”1971 Auto-
mobile Facts and Figures" (Detroit, Michigan: Automobile Manu-
facturers Association, Inc. , 1971).

 

17Peter Vanderwicken, "GM: The Price of Being Respon-
sible," Fortune 85, No. 1 (January 1972): 99. See also Louis R.
Ross, "The Changing Consumer andHis Effect on the Automotive
Industry, " unpublished paper prepared for the Advanced Manage-
ment Program, Michigan State University, 1972, p. 14.

(

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CHAPTER 2

AN ASSESSMENT OF THE CONTRIBUTIONS OF
ECONOMIC AND MARKETING THEORIES
TO THE EVALUATION OF

QUALITY OF LIFE

This chapter has two objectives: to provide an economic
theory perspective on the quality of life, and to present the
marketing theory concepts that orient the evaluation of marketing

performance and its contribution to the quality of life.

Economic Theory Perspectives

 

In economic theory, welfare has meant economic welfare.
Naturally, this definition is based on the value system that
influences the economists' choice of concepts. The evaluation of
a system' 3 performance in economic terms, that is, the consistency
between its economic goals and economic achievements, indicates
the level of welfare of the society. Economic theory has not dealt
with the current problem of the quality of life, which includes not

only economic factors, but also social and ecological considerations.

30

i I

e ,. 2 e

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31

Do purely economic measurements indicate whether the
system has improved the quality of life and insured the interest of
all? What the economic indicators of the national accounts system
actually measure is the result of production: for example, GNP,
per capita income, and per capita consumption. But as Jan
Drewnowski so clearly points out, 1 national accounting of consump-
tion represents the monetary value of resources available for the
satisfaction of human needs. What is created with those resources
really should be expressed in terms of social indicators which
express the conditions in which people actually live. In other words,
the analysis of the economic problem of producing goods and services,
although necessary, is not sufficient to assess the welfare of society.
To do so one must also consider the social problem of using those
resources in such a way as to improve the welfare of all.

The following are major reasons why economic indicators

alone are inadequate to measure the quality of life.

1) Welfare is influenced not only by how much is produced,
but also by what is produced, that is, by the composition

of national output.

2) Welfare also is influenced by how total output is distributed

within the society.

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32

3) Waste at the production, marketing, or consumption stage
may mean products registered in the national output do not

grant equivalent satisfaction on the consumption side.

4) Some aspects of welfare are not reflected in the national

a ccounting at all.

Underlying these restrictions are doubts about some of the very basic

assumptions of economic theory.

Human Wants Assumptions

Economic theory assumes that economic activity is directed
to and by human wants and needs. These are assumed to be varied
and, in the aggregate, over time, insatiable. How is the level of
want or need satisfaction measured in a society? Ordinarily, it is
expressed in terms of per capita income , which is a very unsatis-

factory measurement for several reasons.

1) This average may be misleading if there is a great dis—

pe rs ion around it.

2) A satisfactory level of income is relative to the historical

time under consideration and the geographic area.

h.‘

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33

3) A satisfactory level of income does not provide a good
assessment of the efficiency of the economy. Its perfor-
mance would be better judged on the basis of whether or
not it provides the highest standard of living compatible

with available resources and techniques.

An even more basic question raised by some authors is
whether consumer satisfaction as a meaning for all economic
activity is a satisfactory guide. John Kenneth Galbraith offers the
view that as society becomes more affluent, wants are increasingly
dependent on the process by which they are satisfied, a phenomenon
he calls "the dependence effect. "

Because the society sets great store by its ability to produce
a high living standard, it evaluates people by the products
they possess. The urge to consume is fathered by the value

system which emphasizes the ability of the society to produce.
The more that is produced the more that must be owned in

order to maintain the appropriate prestige . . . the produc-
tion of goods creates the wants that the goods are presumed
to satisfy.

Granting that his arguments may be one sided, as several of his
critics point out, 5 it is difficult to refute Galbraith's idea that
catering to insatiable wants may lead to improper allocation of
resources. Demand is diverted away from more socially impera -
tive objectives, such as housing, education, and medical care, and

toward expenditures which contribute little to the welfare of the

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34

people who consume them, hence "the contrast between private wealth

and public poverty. ”

Economic Organization Efficiency Assumptions

Economic organization is the social machinery used to
accomplish distinct economic functions. There are five main
economic functions, 6 of which two are basic: production and dis-
tribution. The others are corollaries to these two. Production
involves the allocation of the resources available to the society and
the coordination of their use to produce the optimum results. Dis-
tribution involves the control of production to ensure that the goods
and services produced are, in fact, the desired ones. It should
provide incentives to optimize allocation of resources in production.

The other functions are: (1) the fixing of standards, or the
establishment of what the society considers to be desirable goods
and services and the determination of the measures of value by
which the efficiency of production and distribution are to be evalu-
ated; (2) economic maintenance and progress, which enables
society not only to maintain its standard of living but also to achieve
even higher levels; and (3) the adjustment of consumption to pro -
duction within very short periods of time. It is this last function

that frequently makes the evaluation of the performance of any

w

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35

current economic system so difficult. Are observed deficiencies
symptoms of a fundamental shortcoming of the system, or are they
unavoidable, temporary conditions until the long -run equilibrium is
established?

Economic theory assumes that economic organization leads
to efficiency. Consistent with the idea of social contract is the
assumption that, given the available resources and the state of
technology, an organized economic effort enables a social group to
produce more want and need satisfaction than could be produced by
its members working separately.

The functions of organizing production (what to produce and
how much) and of organizing distribution (what to produce for whom,
or the payment to the factors of production) can be distinguished but
not separated. They can, however, be viewed and evaluated from
the standpoint of the different institutional forms by which they are
administered. This evaluation is made, generally, by contrasting
two ideological extremes, free enterprise and a centrally directed

economy.

The Capitalistic Economic System Assumptions

In the capitalistic economic system, the ownership of

resources, the production, distribution, and exchange of goods, and

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36

the Operation of the system itself are affected by private enterprise
and control under competitive conditions. Every productive resource
or agent, including labor, typically belongs to some person who is
free within the legal conditions of the market to obtain what he can
from its use. 7 . The free enterprise system is based on individual
economic freedom. It stresses private economic decisions both by
individuals and firms; it operates without an overall central plan.
The basic idea is to let men, on their own, make economic decisions
and allow them to reap the rewards or suffer the lack of rewards.

In a free enterprise economy, cooperation among indi-
viduals is achieved primarily by the voluntary exchange of services
and goods for money and vice versa. The main organizing force is

the price system. Economic decisions are made in the market

 

where the economic forces of supply and demand operate to determine
prices. 9 When one tries to analyze these assumptions in a real
world situation, one observes that no country has a ‘pure free enter-
prise system. Market decisions are influenced or modified by
governmental decisions in the attempt to reach certain predetermined
goals. This is necessary because, despite the dynamics and control
force of competition, free enterprise is not self -sufficient.
Government intervention has been necessary for three

reasons. First, it must regulate and coordinate, to some extent,

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the activities of private individuals and firms. It does so through
enforcing, for example, laws of property, contract, methods of
settling disputes, and antitrust laws, or through public regulatory
agencies. Second, it must supplement efforts in those neglected
areas of public need which seem economically unprofitable ventures
for private persons or institutions (such as schools and highways)
or which require larger amounts of capital than the private sector
could or would be willing to provide (for example, for research and
development). Third, government must determine the fiscal and
monetary policies necessary to achieve price stability and to main-
tain adequate levels of employment.

Aside from these government constraints, certain social
constraints also interfere with the individual' s free decisions in
the marketplace (for example, unemployment and job discrimination).
Furthermore, some of these decisions may be delegated, such as wage
bargaining, which is delegated to unions.

In sum, economic theory assumes a "good, " ”fair, "
"free" functioning of market forces. In the real world, however,
there are so many distortions of this theoretical model that one
wonders whether the general conclusions can be held to be valid.
A recent and striking example is the wage -price freeze, accompanied

by the creation of the Cost of Living Council that includes the Pay

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Board and Price Commission. 10 In economic theory terms the
price system is the main organizing force, but the freeze means
prices will not be determined freely in the marketplace by the
economic forces of supply and demand as the theory assumes, but
will be controlled or regulated to some extent. Even if there is
no intervention in the price mechanisms, "price theory assumes a
stable economy--free from major fluctuations up or down-~and
reasonably full employment of resources, "11 which, of course, is
not the case.

It is also debatable whether the free enterprise system has
shown enough internal self -control, concern for general welfare,
and social responsibility. Despite de facto regulations and controls,
a philosophy of free initiative and free enterprise has prevailed and
may have been responsible, according to some critics, for the con-
centration and abuse of economic power. Big business may be
replacing the market as the controlling power in the economy: "far
from being controlled by the market, the firm, to the best of its
ability, has made the market subordinate to the goals of its planning.
Prices, costs, production and resulting revenues are established
not by the market but, within broad limits . .' . by the planning
decisions of the firm. "12 Similar concerns are shared by Charles

Reich. 13 The American corporate state, as he defines it, consists

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of large industrial organizations, plus nonprofit institutions
(foundations and the educational system) and the government itself.
The state, which is perfectly rational and logical, is guided by one
single value, the value of technology: organization, efficiency, and
progress. "The State, and not the market or the people or any
abstract economic laws, determines what shall be produced, what
shall be consumed, and how it should be allocated. "14

Ecologists argue that some of the shortcomings of the per-
formance of the free enterprise system also can be demonstrated by
the lack of concern for the environment. Since Rachel Carson' s
warnings in 1962, 15 the environmental quality issue has evolved
into an area of major national concern. 16 This will be discussed
in more detail later in this chapter, but it should be emphasized
that the subject also may be viewed within the same context of
enterprise self -control and responsibility.

Modern Theory of
Consumer Behavior Assumptions

The main assumption of the modern economic theory of
consumer behavior is that the consumer attempts to allocate his
limited money. income among available goods and services so as
to maximize his satisfaction. Underlying this basic statement are

. 17 .
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full knowledge of all information relevant to his consumption
decisions. That is, he has knowledge of the goods and services
available and of their technical capacity to satisfy his wants, of
market prices, and of his money income. Second, each consumer
has a preference function and prefers some goods and services to
others. Third, each consumer has some money to make these
preferences significant in the market. Fourth, each individual' 3
preferences are independent of others' preferences.

These assumptions stress the importance of information.
Preferences also depend on knowledge; people can prefer only
things they know. Two main questions arise. Does the consumer
have full or adequate knowledge? and does the consumer have free
choice? Both knowledge and selection become more difficult as the
complexity of products and the number of alternatives increase.
Income and time are scarce resources to be allocated among an
increasing number of choices. The whole process of choice and
consumption has become more complex. 18

Another source of doubts is the process by which the
preferences are made known in the marketplace. According to
Milton Friedman,

the existence of alternative ends implies that there must be
some way of rating ends and reconciling conflicting evaluation

of these ends by. individuals within the society. In a free -
enterprise exchange economy this task is accomplished

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essentially through voting, voting in the market place with
dollars. One advantage of this type of decision -making* is
that it allows for a system of proportional representation in
the market place, so that minority groups in the society can
also make their wishes felt. The votes of the members of
a free enterprise exchange economy are manifested through
prices which, in turn, reveal the standards of the society. 19
Critics cannot help but conclude that individuals with more income
have more significant preferences and that their voice in the
economic processes has more influence. Furthermore, the
assumption of preference independence does not stand upwhen
analyzed in the setting of a social system. Individual' s attitudes
and behavior are influenced by other individuals or groups. Con-

sumer behavior studies on cultural, reference group, and family

2
influences emphasize this point.

Maxim ization Assumptions

It is further assumed that if the economy were one of pure
competition and-if the "static" assumptions were fulfilled, the
attainment of general equilibrium would maximize aggregate utility.
But, inthe real world, various deviations from pure competiton in
both product and resource markets prevent the free enterprise
system from allocating its resources perfectly among different
uses. Several reasons, as have been noted, account for this: lack

of information, activities of government or private institutions,

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psychological make -up, or social influence on particular economic
units. Deviations inherent in the state of modern technological
developments and some rigidity in the price system may be added.

In the real world, dynamic not static situations prevail, with changes
occurring constantly in such basic factors as consumer tastes and
preferences, technological developments, and kinds and quantities

of available resources. All of these prevent the attainment of the
general equilibrium position as viewed in static economics.

The conclusions of static equilibrium do not provide a
suitable frame of reference for understanding (and, even less,
appraising) a truly dynamic economy and for visualizing the role
played by marketing. The shortcomings of this approach are analyzed
by Wroe Alderson. 21 Firms and households solve their problems
not in the simplistic way suggested by static equilibrium analysis,
but by resolution of conflicts in all levels of interaction in the
marketplace. Only by departing from an economic organization
model that is relevant to the real world could a theory of marketing

behavior be developed. 2

General Equilibrium and Welfare Assumptions

Welfare generally is analyzed in terms of Pareto optimality.

An organization is Pareto optimal if, and only if, there is no change

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that will makesomeone better off without making some other
individual worse off. It is assumed that the functioning of the price
system in perfectly competitive markets guarantees the attainment
of maximum social welfare. Because of the maximizing behavior of
producers and consumers, given market determined prices, each
individual in pursuing his own self -interest is led by an "invisible
hand" to a course of action that promotes the general welfare of
all. 24
Several comments seem pertinent at this point. Regarding

the Pareto optimal organization, could it not be worthwhile to make
some worse off to improvethe situation of others? If so, who
could and should make these value judgments? The main problem
from a general welfare viewpoint arises exactly from the basic
assumption that if each'resource is paid market determined prices
and each individual and firm adopt a maximizing behavior, then
welfare maximization will be attained. Even if we assume perfect
and fair functioning of the market, the original endowment of
resources -- the command over resources-- is not equal .for all.
This problem has not yet been considered by traditional economic
theory.

The traditional theory. of distribution is concerned exclusively

with the pricing of factors of production--the distribution of
income among cooperating resources classified by their

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productive function. It has little to say about the distribution

of income among the individual members of the society, and

there is no corresponding body of theory that does. This

absence of a satisfactory theory of the personal distribution of

income and of a theoretical bridge connecting the functional

distribution of income with the personal distribution, is a

major gap in modern economic theory.
Besides, there is no evidence that a perfectly competitive, free
enterprise system exists. Nor is there any evidence that the pur—
suit of own self-interest has led to the general welfare of all. One
possible explanation for this failure is the existence of conflicts
between interests of individual producers or consumers and the
society as a whole. 26 Even economists recognize that rather con-
straining assumptions are necessary to hold welfare analysis con-
clusions true. For instance, the Pareto efficiency requirements
are a necessary, but an insufficient, condition for a welfare maxi-
mum; for this an explicit welfare function is required. 27 One cannot
help wondering about the ethical evaluations underlying the configu-
ration of this welfare function.

Maximum welfare may not be achieved, even if perfect
competition existed in all markets. C. E. Ferguson clearly explains
2 .

the marketfailure. 8 According .to marginal analysis, maxunum
social welfare is obtained when marginal social costs equal marginal

social benefits, or when the price consumers are willing to pay

exactly equals the cost society must incur to secure an additional

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unit of output. In some cases, however, marginal private cost does
not equal marginal social cost.

It is in the context of divergence between private and social
costs andfthe existence of externalities that the problem of pollution
and environmental quality should be seen. Allen Kneese, Robert
Ayres, ‘and Ralph D' Arge call attention to the special and important
externalities associated with the disposal of residuals resulting
from consumption and production;29 they, as does Wassily Leontief, 30
consider these a normal part of the process. Their economic sig-
nificance tends to increase as societies grow in material wealth and
as the ability of the natural environment to receive and assimilate
them decreases. 31 The authors suggest that economic theory may
have failed to recognize these facts because it views production
and consumptionin a way somewhat at variance with the fundamental
physical law of conservation of mass.

In the context of Pareto optimality, if the capacity of the
environment to assimilate residuals is a scarce resource, the
market exchange process could only be free of uncompensated
technological external diseconomies under two conditions: (1) if all
inputs were entirely converted into wantedioutputs, with no unde-
sired material and energy residuals resulting or if any such residu-

als could be confined to the producer' 3 premises; or (2) if property

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rights were so arranged. that all relevant environmental attributes
were in private ownership and these rights were exchanged in
competitive markets. The problem is that neither of these con-
ditions prevails in the present economic system.

The law of conservation of mass ("one cannot get rid of
matter”) still holds. The means of disposal of undesired residuals
which maximizes internal return of households or firms is by, dis -
charge into the environment, mainly water and the atmosphere.
Water and air, the traditional examples of free goods of economic
theory, are becoming scarce common property resources. This
introduces important and difficult allocation problems that the
market mechanism has not yet shown itself capable of solving.

The analysis of pollution reductionor elimination is not
conceptually impossible. If the reduction is considered a part of
production and consumption processes, then its cost should be
incorporated into the input-output economic analysis. But, both
in theory and practice, there are difficult problems, such as setting
acceptable standards for pollution, determining the costs, and
establishing institutional arrangements to set the standards, assess
the costs, and enforce the controls.

Assuming that such standards could be set, costs assessed,

and the institutional arrangements arrived at without too much

 

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disagreement (difficult problems in themselves), a basic decision
remains to be made. -How should the costs of heat, smoke, noise,
dirty water, and sewage be apportioned? Among the firms produc-
ing them? Among the consumers buying the products of which they
are by -products? Among the public in general? Several alternatives
have been proposed, including environmental taxes or subsidies,

or a price on pollution established by a Pollution Control Board and
enforced by the state. 34 But in any solution, it is difficult to avoid
the need for some centralized, institutional arrangement to set
standards and prices and to enforce control of individual behavior
for social benefit. 35 Be it a governmental regulatory body, or a
representative political body, or any other form, the regulating
agency probably would not conform to the idea of decentralized
decision units that the free enterprise philosophy postulates.

The conclusion is that economic theory has not provided
and cannot provide a framework for evaluation of the state of the
society in terms of quality of life. Because of the constraining
conditions that theory requires, the conclusions are very limited
in scope. When the assumptions which do not prevail in the real
world are removed, one is left with no validicontext that could be
operationalized .for evaluation of the system' 8 performance. At

best one is left with an incompleteset of statements that require

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further explanations for operational purposes. Thus economic
theory also has failed to provide an adequate framework for the
evaluation of marketing performance.

Marketing Theory Perspectives
on the Quality of Life

 

 

Has marketing theory provided the models and constructs
to treat the problem of the quality of life and to analyze marketing' 3
performance in this respect? From a micro -marketing approach,
that is, from the individual firm (or industry) viewpoint, goals and
standards for performance have been expressed in some form of
maximization (profit, return on investment, sales volume). Implied
in these, however, are the long -term goals of survival and growth. 36
Even for the individual firm, an accurate evaluation of performance
is complex. The determination of the level of actual performance
always involves some idea of productivity, 37 or the determination
of a ratio between inputs and outputs. The inputs are the resources
the firm mobilizes and commits to the marketing program; the
outputs include product, and service, distribution, and communica—
tions mixes, all coordinated and integrated into a marketing program
to obtain and service customer demand. 38 This approach assumes

that all outputs are good, desirable, and positive. But also included

in the outputs are externalities not taken into account heretofore:

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pollution, planned obsolescence, misuse of resources, and so
forth. These imply social costs not computed in the traditional
input ~output analysis.

The practice has been to adopt cost figures as measure-
ments for inputs and sales figures for final outputs. 39 Sales
volume figures also are basic to the calculatiOn of the other goal
figures (profit, return on investment). Furthermore, sales
volume has been assumed to be a good proxy for the actual outputs
of marketing programs. This reflects the basic economic assump-
tion already analyzed that the consumer votes in the marketplace
with dollars. Thus, sales volume would reflect the extent of con-
sumer want satisfaction, but the limitations of this assumption
already have been discussed.

Even if these limitations are ignored for the moment and
one accepts that for each firm, in terms of its economic goals,
costs reflect inputs and sales volume does reflect the final output,
the problem of evaluating actual performance is not entirely solved.
First, some inputs are intangible and are not easily quantified (such
as time and quality of effort). Second, some inputs (advertising,
sales effort) have "carry-over" effects. 40 Third, the successive
marketing programs themselves have a cumulative effect. Market-

ing activities are not self -generating. Each activity absorbs input

 

 

 

   

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values and produces output values that are either consumed or
channeled as inputs to other activity cycles. 41 Because the market-
ing program is coordinated and integrated, each marketing activity
is both influenced by and influences other activities. Because
marketing is a continuous process, each time period is at the same
time influenced by past periods and influencing future ones. This
means that each input -output ratio involves cumulative not net input
and output values, which are needed for a productivity evaluation of
performance.

The utility of cost-revenue analysis and productivity ratios
is not to be disregarded, but there are problems and limitations in
using them to evaluate a firm' s performance, even in a strictly
economic sense. Furthermore, in attempting to evaluate the contri-
bution of the individual firm to the enhancement of the quality of life,
traditional analysis is inadequate. The difficulty of the evaluation
is compounded when a macro marketing approach is adopted or an
attempt is made to try to evaluate the performance of marketing as
a social process.

As Stanley Hollander points out, 43 criticisms have long
been made. These historically have centered upon the role of mid-

dlemen and the cost of marketi_ng. But there have been only a few

 

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Often quoted studies of this sort are those of P. W. Steward
44 45 .
and G. F. Dewhurst, Harold Barger, and Reav1s Cox and asso-
ciates. 46 These contributions, 47 interesting and valuable as they
may be, do not provide a framework for analyzing in a systematic

way the social performance of marketing.

Marketing Performance As sumptions

It has been assumed that since society has acquired a high
standard of living (relatively, and in material terms), and that since
marketing is a vital part of the economic system, then marketing
must have made a positive contribution. It has been accepted that
marketing has guided the economy, indicating what is wanted or
needed, and has played a significant role in the diffusion of innova-
tion. It is partly through marketing that new inventions gain appli-
cability, and that new products and services are introduced into the
market and are incorporated into consumption patterns. The
cumulative effect of marketing activities is believed to have induced,
over a period of time, a readiness to accept change, a favorable
reaction to innovation, and a rise in the level of aspirations. Authors
have spoken of marketing "delivering a standard of living" and con-

" It is in this sense that it is

tributing to the "American dream.
believed marketing must have had a positive influence on the quality

of life.

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It has been assumed that since the marketing concept
implies catering to consumer needs and wants, 48 then the firm
from a micro viewpoint, and the marketing system from a macro
viewpoint, must have been successful in catering to them or the
consumer would have exercised his veto power. 49 The concept
asserts, in marketing terms, the basic economic assumption that
economic activities are directed to and by human wants. 50 More
specifically, the concept involves: (1) awareness and appreciation
of the consumer' 8 needs and wants, (2) a profit orientation, or
satisfaction of these needs and wants at a profit for the firm, and
(3) the idea of mobilization of total corporate resources to focus on
theconsumer and the organizational rearrangements necessary to
implement the concept.

Very few studies actually have been conducted to determine
whether firms have undertaken programs of marketing concept
implementation, or the degree to which they have succeeded in doing
so where attempted. . When undertaken, these surveys usually have
approached the study from the viewpoint of internal institutional
arrangements. In particular, they have investigated the organiza-
tional structuring of the several marketing activities, for example,
the position of the chief marketing executive in the organizational
structure, or whether or not there is a marketing research depart-

ment.

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It seems apparent that although consumer orientation is
the basic idea underlying the marketing concept the literature does
not offer any research‘evidence that consumer want and need satis -
faction has been achieved. At best, surveysoffer an evaluation of
the inputs for the implementation of the concept, that is, what the
company has done and how it has organized itself for implementa -
tion. The outputs of the implementation have yet to be studied from
the consumer side. Is the consumer satisfied? How does he or-she
evaluate marketing performance? Despite all the progress made in
the studies of consumer behavior and the methodological refinements
for measurement of attitudes, opinions, and beliefs, very little is
known about how the consumer feels.

The literature, when it recognizes that this evaluation is
or should be made, returns to economic theory for an explanation. 53
It assumes the evaluation is made in the marketplace and that
people' s choices among alternatives are an indication (and thus
possible indicators) of their preference. Therefore, prices and
market votes would indicate people' 3 preferences and satisfaction
or dissatisfaction. This approach assumes the existence of alter-
native choices; free, fair, functioning of the market; people' 3
knowledge of the alternatives; and people' s ability to evaluate them.
The first two representtheconstraints of the system; the latter

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As was seen in the analysis of the basic economic
conditions, these four factors may not prevail in some cases.
Therefore, market indicators alone are not a clear expression of
people' 8 satisfaction or dissatisfaction and, hence, are not a good
evaluation of marketing performance. Increasingly it is being

recognized that there may be some negative as well as positive

marketing outputs.

Positive and Negative Outputs of Marketing

It can be said that product mix decisions have fostered product
innovation. Bringing out different products to satisfy various needs
and wants has allowed a wider selection and choice and has increased
consumer satisfaction. It also can be said that this multiplicity has
favored product obsolescence and waste or misapplication of

resources and has complicated the process of choice.

Promotional mix is credited with the creation of a mass
market and with the provision of information about product and
service availability and use. It is argued that it does increase
consumer satisfaction and, through subsidization of the media,
provides recreation. Among its negative aspects are the imper-
sonalization of the market, the ethical implications of persuasion
and manipulation of the consumer, the increase of consumer dis-

satisfaction, and the waste or misuse of resources.

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Distribution mix makes the mass market possible and
creates place and time utility. It also contributes to the impe‘r-
sonalization of the mass market and to a negative impact on the
environment in the form of congestion, noise, pollution, and
destruction of natural beauty.

To summarize the evaluations, it seems that Stephen
Greyser' 3 comments on advertising can be very appropriately
extended to marketing as a whole: "The bulk of the positive com-
mentary on advertising has its foundations in its economic accom—
plishments, while the bulk of the criticism of advertising has been
based on its social impacts. "54 Granting that the negative outputs
of marketing have not been any better proved or measured than the
positive ones, they still raise some doubts about the positive evalua-
tion of marketing performance. They provide a glimpse of the
complex problem of trying to evaluate marketing performance from
a social viewpoint. Several questions come to mind. First, some
of the negative outputs are very clearly by -products of the positive
ones. , How, then, can we disassociate them for measurement?
Second, how can we eliminate the negative outputs and still preserve
the positive? Third, some of the negativecan be isolated and could
be avoided. If they have not been, why? These questions raise

some doubt about the marketing concept as a basis for corporate

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decision making. If the concept is valid, and if it has been
implemented, how can the negative outputs of marketing performance
be explained? Several possibilities might be hypothesized. It is
difficult for the manufacturer (and other decision makers throughout
the marketing network) to identify consumer needs and wants and to
cater to them. In other words, the marketing concept has not been
fully implemented. Decision makers may be ignorant of the full
impact of technolgical developments or marketing practices. Finally,
outright dishonesty or a lack of social concern or social responsi—
bility may be to blame.

These explanations may be incomplete and no single one
could account for the unsatisfactory situation. However, it is
interesting to note that criticisms of the distributive sector are old
and that there are historical precedents for consumers' overt mani-
festations of discontent. 55 Paradoxically, it was during the 1950s
and especially the 1960s, when the marketing concept supposedly
was gaining increasing acceptance, that a new wave of criticism
of marketing' 3 impact on society began. It is also. interesting that
these criticisms had to come from outside marketing circles. Those
in marketing seemed to feel justified in accepting the marketing con-

cept without re -evaluation of the long —established basic assumptions.

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57

Criticisms of Marketing and Consumerism

A review of the literature since 1959 reveals many writers'
concern about marketing. For example, since that year Vance Pack-
ard, 56 in a popular journalistic style, has been criticizing the effects
of advertising and the wastes produced by the marketing system.
Rachel Carson and Jessica Mitford also have criticized marketing
practices and their social impact. 57 Arnold Toynbee has been a con-
stant critic of marketing, especially of advertising. He argues that
advertising does have an effect on consumption (or advertising ex-
penses could not be justified), and-he casts doubts on the validity of
the economy of abundance as a goal. 58 Galbraith contends that the
economy' 3 major goal of want satisfaction is a poor orientation of
priorities.

Other publications express not only a social criticism of
marketing but lay the basis for a new consumer movement. These are
exemplified by the activities of Ralph Nader and his Raiders and by the
Consumers' Protection and Interest Program. Nader' 5 book, 60
speeches, and lectures have had an influence on the government' 3
actions toimpose stricter safety standards on automobile and tire
manufacturers. The Consumers' Protection and Interest Program is
mostly known for its recognition of the consumer' 8 rights: the right
to safety; the right to be informed; the right to choose; and the right

to be heard. 61 It spurredlegislation for consumer protection.

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The main issues in present consumerism seem to center
around these four basic consumer rights, protection against them-
selves and other consumers, and protection against abuses and
deceptions. These issues delineate the concerns of the consumer' 3
rights activists, but there is disagreement among consumer organi-
zations, legislators, and in the literature as to the extent of the
problem and of the actual involvement of the consumer. The basic
question is what consumerism as a movement concerns itself with.
In other words, is consumerism the result of consumers' general
feelings of dissatisfaction with marketing practices? Does con-
sumerism involve the idea of activist participation of a large number
of people, some-consensus on issues, goals, and programs of action,
and leadership?

So far there are no indications of the active involvement of
a large number of consumers. There is agitation about some
issues, at both the state and federal level, which is magnified by the
mass media and recognized by political leaders as deserving of
interest. Political pressure has been responsible for extensive
legislation on consumer protection and stricter controls being
delegated to agencies. like the FTC and FDA.

The present consumer movement is aimed at protecting
and helping consumers via pressure applied on business outside

marketing channels. 63

 

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Several causes for the present consumer movement could

be hypothesized:

1)

2)

3)

4)

5)

inflation and recession;

concern-with overpopulation, affluence, rising educational

levels, and rising expectations;

discontent with products, in particular, their rising com-
plexity, declining quality, inadequate product information,

planned obsolescence, and assessment of technology;

the impersonalization of society in general and of business

and retailingin particular; and

general discontent with the performance of the market
directed economy, particularly regarding ecology and

civil rights matters.

George Day and David Acker stress the political aspect of

the present consumer movement. 64 The dissatisfied customer

can find anumber of formal and informal institutions upon which

he can focus discontent to create political pressure. For Robert

65 . . . . .
Herrmann, consumer unrest 18 explained by rising prices,

slumps in the economy, consumer' s rising sophistication and

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60

expectations, and the complexity of comparison and choice. Richard
Buskirk and James Rothe write of consumerism as an "organized
effort" of consumers dissatisfied with products that do not conform
to expectations. 66 Charles Leathers proposes that consumerism is
an immature phase of countervailing power: "The consumerism
movement represents the natural tendency for organizations to arise
in cases of social power vacuums to act as countervailing forces.
The responsiveness of government action (or simply the threat of
such action) provides the movement with the thrust of real power
that it needs to succeed. "6.7

All these authors (and many others) are trying to find an
explanation for the baffling occurrence of consumerism exactly
at a period when affluence shouldgenerate satisfaction and not dis -
satisfaction. What complicates the problem is the difficulty
inisolating from the complex interrelationships between the indi-
vidual' s multiple needs and wants (or "interests" as Bertram calls
themes) those which. are being gratified and thosewhich are not.
Activities seen as relating to one type of need, want, or interest
may, in fact, serve as substitutes. Two questions seem pertinent:
Are people really dissatisfied? If yes, with or about what?

Any explanation of consumerism must begin with the notion

of dissatisfaction, overt or latent. The consumer'who files a

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61

complaint about a product or service to a business, governmental
office, or an outside agency is actively voicing his dissatisfaction.
There may be many others, equally dissatisfied, who do not take
any direct steps, but who nevertheless provide the audience and

the votes for the mass media and politicians voicing their griev-
ance. Even in the case of the active consumer, it is difficult to
determine whether the dissatisfaction is a function of the product or
service, or is representative of what the individual dislikes in
American society, the business community, or in the quality of

his life.

Theindividual' 3. basic levels of need or want in all these
respects depend upon his expectations. These are based upon his
past and present learning (information or experience), and whether
they are realistic is, at least partially, a function of that informa -
tion and experience. These considerations lead to some intriguing
speculations. Consumerism may simply be evidence of general
dissatisfaction with the market economy, and maybe related to other
issues and concerns (such as ecology, minority rights, and poverty)
that reflect criticism of the capitalistic ideology and practices.
Low income and socially disadvantaged consumers have been the
object of several studies. Some authors stress that they are really

more susceptible to fraud, high prices, usury, and poor quality and

 

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services. 69 Some of these findings are accepted reservedly by
others. 70 But the conclusion that marketing discrimination exists
is supportedby the report prepared by the Office of Economic
Opportunity. 71 Slum and ghetto residents have-less commodity
choice, and products available to them usually are inferior. 72

Perhaps consumerism is a result of marketing activity
itself. The combined complexity and. impersonalization of modern
retailing, marketing' 3 failure to satisfy the needs for individuali-
zation and differentiation, and the dissatisfaction generated by
marketing' 3 inability to fulfill high expectations may have given
rise to doubts and criticisms being voiced particularly by the more
educated, concerned, and activist generation.

If consumerism is an expression of consumer dissatisfac-
tion and if it can be attributed, at least partially, to marketing
activities themselves, then doubt is cast on the marketing concept
itself. Is the concept invalid? Or, is it valid, but has been
improperly implemented?

To recapitulate, the research of institutional or organi-
zational arrangements which supposedly demonstrate the imple-
mentation of the marketing concept may reveal awareness of the
concept and/ or a desire to implement it, but it does not get to
the basic issue. To answer the question of whether customer

orientation has been successful would require some measurement

 

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63

of the consumer' 8 degree of satisfaction or dissatisfaction with
marketing' 3 offerings-and practices.

Although there is no evidence of active involvement of a
large number of people in the consumerism movement, the fact that
consumer issues are gaining relevance indicates that there must be
some underlying dissatisfaction to which they appeal- A better
understanding of present consumerism is needed. Research is

indicated in the following areas:

1) the extent of the problem--how diffuse is dissatisfaction

among the population?

2) the intensity of feeling, or the degree of consumer dis—

satisfaction;

3) the specific sources of dissatisfaction--the quality of life,

the systems, the products, or the services, and so forth;

4) the existing channels through which consumers voice their
grievances within and outside business channels, and the

extent to which they are used.

Furthermore, the marketing concept should be re -evaluated

to include a consideration of the consumers' perception of their

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64

own level of satisfaction and dissatisfaction with products, services,
and the quality. of their lives. This, in turn, would lead to a better
evaluation of marketing performance, both from the economic and
social standpoint. Indeed, this idea is beginning to gain acceptance

in the literature. 73

New Approaches to the Evaluation of
Marketing Performance

George Fisk suggests new criteria for measuring per-
formance.

A criterionis a standard of judgment for evaluating per-
formance. It is articulated in the formulation of a value model

‘ of system worth measured by cost of effectiveness, cost
benefit, or more subjective measures of personal utility. To
design a value model, a planner must identify the constituencies
whose goals he is to serve and the order in which they are to
be served. He has to specify the organization of activities
needed to attain the goals desired, and the consequences of "
these activities (spillovers, externalities).for people who do
not receive the direct benefits produced by the system. The
value model thus consists of a set of elements, only one of
which is the-set of criteria used laterin evaluating social
performance. . . . alternative marketing programs are
designed and tested by simulations, experiments, or pilot
opera-tions . . .. to produce outcomes which can be measured
by effectiveness or efficiency indicators. The act of evaluation
consists of measuring the difference between the criterion and
the performance of the system.

The proposed new criteria for the evaluation of the social
performance of marketing are: (1) biological survival or environ-

mental habitability; (2) consumer sovereignty; (3) business interest;

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and (4) governmentysThese criteria consider the major publics
whose goals must be served. The ordering of goals reflects basic
assumptions on the hierarchy of values. For example, the ranking
proposed reflects the environmentalist' s assumption that biological
survival is the most important end.
Eugene Kelley proposes the "consumer-citizen concept":
Market segmentation based on consumers' societal orientation
is emerging; markets will be evaluated according to the degree
to which consumers accept the consumer-citizen concept and
buy as individuals concerned not only with their personal satis-
factions, but also with societal well -being. . . . '

Profits will continue to be essential and basic to corporate
survival, but the major challenge to business today may be to
meet the societal needs of a changing environment.

Arguing that traditional measures of business performance are

no longer adequate, Kelley suggests that to the traditional monetary
measurement of performance two new dimensions should be added:
legalistic -political and social purpose. New concepts and measure-
ments are required. Because business thinking and planning have

to be related to national goals, social indicators should be integrated

into business planning. The following benefits would accrue:
1) a corporation social accomplishment statement;

2) identification of areas or problems that require corporation
attention and correction for accomplishment of the social

goals;

 

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66

3) evaluation of social progress over time;

4) identification of present markets, products, and appeals
to socio -market segments (purchase motivation and pur-

chase behavior); and

5) identification of future societally segmented market oppor-

tunitie s .

Kelley proposes the Socio —Marketing Performance Audit as a con-
ceptual framework for evaluating marketing outputs. It would
consider areas such as the following:77 ( 1) environmental quality;
(2) consumer-citizen welfare (income and poverty, health and ill-
ness, public order and safety); (3) socio -marketing product (infor-
mation, services, warranties, obsolescence); (4) personnel policies;
(5) military contracting; and (6) social influence.

Kelley acknowledges that the current state of the arts is
immature. The methodology by which firms can evaluate societal
impact is not yet fully developed. Efforts should be made and are
being made to developthe concepts and measurements that will

make the evaluation of societal impact possible.

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Some Closing Remarks

There are a large number of outstanding questions
concerning re-evaluation of some of the basic assumptions of
economic and marketing theories. The few available answers are
insufficient to provide a framework for understanding (much less
measuring) the contribution of the economic and marketing systems
to the quality of life. These re - evaluations are not isolated
phenomena. They are part of a larger context, namely, the overall
concern with social re-evaluation that finds its more recent expres-
sion in the growing movement for the development of social indi-
cators and social reporting. From these re -evaluations, new
concepts are beginning to emerge that may have great relevance

for marketing planning. 7

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68

Chapter‘ 2 Footnotes

1Jan Drewnowski, "The Political Significance of Social
Information, ” Annals of the American Academy of Political Science
393 (January 1971): p. 84.

2Ibid. See also Arthur M. Okum, "Should GNP Measure
Social Welfare?" Brookigs Bulletin 8, no. 3 (Summer 1971): 4-5.

 

3RichardH. Leftwich, The Price System and Resource
Allocation, 3d ed“. (New York: Holt, Rinehart and Winston, 1966),

pp. 3-4.

4John K. Galbraith, The Affluent Socieg (New York: The
New American Library, 1958), p. 126.

5See for example, Jean Boddewyn, "Galbraith' s Wicked
Wants, " in Robert J. Lavidge and Robert J. Holloway, eds. ,
Marketigg and Society: the Challenge (Homewood, 111.: Richard
D. Irwin, 1969), p. 120; and F.A.V. Hayek, "The Non-Sequitur
of the Dependence Effect, " in Hiram C. Barksdale, ed. , Marketing
in Pgfl-essnPatterns and Potentials (New York: Holt, Rinehart and
Win8ton,1nc., 1964), p. 30.

6FrankH. Knight, "Social Economic Organization,“ in
William Breit and Harold M. Hockman, eds. , Readings in Micro-
economics (New York: Holt, Rinehart and Winston, Inc., 1968),

pp. 3 -19.

 

7‘Ibid., p. 8.

8This underlying idea still accepts the precept of classical
political economy: "The belief in a natural order of society and with
it of production and distribution as the counterpart of a natural order of
the universe. . Adam Smith took it for grantedthat the system of
natural liberty would operate within a framework of reason and moral
law. The principle of self -interest of which his Wealth of Nations
speaks must not be confused with. selfishness. " K. William Ka-pp and
Lore L. Kapp, eds. , History of Economic Thought (New York:
Barnes 8: Noble, Inc. , 1960), pp. 63-64.

9Milton Friedman, Price Theory-PA Provisional Text
(Chicago, 111.: 'Aldine, 1962), p. 8. '

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69

10For a detailed exposition of the organization and functions
of the Cost of Living Council see Time, 18 October 1971, pp. 12 -17.

11Leftwich, The Price System, p. 8.

12John K. Galbraith, The New Industrial State (New York:
The New American Library, Inc. , 1967), p. 121. For a more
complete analysis of the issues involved, see also the reviews and
discussion of Galbraith' s book: Robert M. Sollow, "The New
Industrial State or Son of Affluence, " Public Interest 9 (Fall 1967):
100-108; John Kenneth Galbraith, "A Review of a Review, " ibid. :
109-118; Robert M. Sollow, "A Rejoinder, " ibid.: 118-119; Robin
Marris, "The Truth About Corporations, " Public Interest 11 (Spring
1968): 34-45; Robert M. Sollow, "The Truth Further Refined: A
Comment on Marris, " ibid. : 47 -52. See also: John Kenneth Gal-
braith, Walter Adams, Willard F. Mueller, and Donald F. Turner,
"Are Planning and Regulations Replacing Competition in the New
Industrial State?" U‘.S., Senate, Hearings before the Subcommittee
of the Select Committee on Small Business, 90th Cong. , lst sess. ,
29 June 1969 (Washington, D. C. : U. S. Government Printing Office,
1969) and its analysis by Louis W. Stern, "Perspective on Public
Policy: Comments on the Great Debate, " Journal of Marketing 33,

no. 1 (January 1969): 32-39.

13Charles A. Reich, The Greening of America (New York:
Bantam Books, 1970).

14Ibid., p. 93.

15Rachel Carson, The Silent Spring_ (Boston: . Houghton
Mifflin Co. , 1962).

16See, for example, the State of the Union Message for
1970: "The great question of the' 70s is: Shall we surrender to
our surroundings orshall we make our peace-with nature and begin
to make reparations for the damage we have done to our air, to our
land and to our water. " See also: ”The Environment: A National
Mission for the Seventies,_" a Special Issue, Fortune 81, February
1970; ”Fighting to Save the Earth from Man, " Time, 2 February
1970, pp. 56 -62; Miller B. Spangler, "Growing Problems: Pollu-
tion and Environmental Degradation, " Looting Ahead 18, no. 3
(April 1970): 5-8; and ”The Issue of the Year: The Environment, "

Time, 4January 1971, pp. 21-22.

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70

17C. E. Ferguson, Microeconomic Theory, rev. ed.
(Homewood, 111.: Richard D. Irwin, Inc., 1964), p. 14.

 

8For an analysis of choice in consumption, see M. Moss,
"Consumption: A Report on Contemporary Issues, " in E. B. Sheldon
and-W. E. Moore, eds. , Indicators of Social Change--Concepts and
Measurements (New York: Russell Sage Foundatgn, 1968), pp. 449-
523.

 

9Friedman, Price Theory, p. 9.

 

20See James F. Engel, David T. Kollatt, and Roger D.
Blackwell, Consumer Behavior (New York: Holt, Rinehart and
Winston, Inc. , 1968), part 4, "Group Influences in Marketing, "
pp. 231 -343; Thomas A. Staudt and Donald A. Taylor, A Managerial
Introduction toMarketing, 2d ed. (Englewood Cliffs, N.J.: Prentice ,
Hall, 1970); and William- Lazer, Marketing Management--A systems
Perspective (New York: John Wiley 8: 5033, In: 1971).

 

 

 

21Wroe Alderson, Marketing Behavior and Executive Action
(Homewood, Ill. : Richard D." Irwin, 1957).

22Alderson' s approach, functionalism, is exactly such an
attempt.

23Allen V. Kneese, Robert U. Ayres, and Ralph C. D'Arge,
Economics and the Environment--A Materials Balance Approach
(Washington, D. C.: Resources for the Future, Inc. , 1970), p. 5;
and Ferguson, Microeconomic Theory, pp. 445 -46.

 

4Ferguson, Microeconomic Theory, pp. 447 -54.

 

2
5Friedman, Price Theory, p. 226.

. 26Perhapsthe problem, and its solution, lies in the concept
of own self-interest pursuit. We should broaden it to include con-
cerns for environment, for'social justice, and so forth. With the
appropriate value hierarchy, these also could be considered part of

. own self -interest pursuit.

 

”Ferguson, Microeconomic Theory, p. 456.

281mm, p. 461.

 

 

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71

9
Kneese et a1. , Economics, p. 4.

 

30Wassily Leontief has said: "Pollution and environment
disruption are connected with the operation of the economic system,
with the complex processes of production and consumption of goods. "
Lecture at Michigan State University, 27 February 1971. See also
Lawrence P. Feldman, "Societal Adaptation: A New Challenge .for
Marketing," Journal of Marketing 35, no. 3 (July 1971): 55.

 

1For a somewhat different vieWpoint, see Larry E. Ruff,
”The Economic Good Sense of Pollution, " Public Interest 19 (Spring
1970): 69-85.

2Kneese et a1. , Economics, p. 5.

 

33Ibid, ,’ pp. 102 -107.

34Ruff, "The Economic Good, " pp. 75-82.

35See Thomas C. Schelling, "On the Ecology of Micromotives,‘
Discussion Paper No. 2, October 1970, Public Policy Program,
Kennedy School of Government, Harvard University.

36William J. Baumol, Business Behavior--Value and
Growth (New York: — Macmillan, 1953); Alderson, Marketing Behavior;
and-Wroe Alderson, "A Normative Theory of Marketing Systems,” in
Reavis Cox, Wroe Alderson, and Stanley J. Shapiro, eds. , Theory
in Markeligg (Homewood, 111.: Richard D. Irwin, 1964), pp. 92-108.

 

37George Fisk, Marketing Systems--An Introductory
Analysis (New York: Harper andeow, 1967), pp. 713-33. The
author presents an analysis of the difference between productivity-—
output per unit of input of a single productive factor--and efficiency
that. expresses the idea of intellectual effort, in mobilizing all
necessary resources to achieve some goal.

8For a comprehensive analysis of the marketing system
see: Staudt and Taylor, Managerial Introduction; William
Lazer,. Marketing Management; and Richard J. Lewis and 'Leo G.
Erickson, "Marketing Functions and Marketing Systems: A
Synthesis," Journal of Marketing 33, no. 3 (July 1969): 10-14.

 

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72

39For a distribution cost analysis see Richard J. Lewis,
A Logistical Information System for Marketingénalysis (Cincinnati,
Ohio: Southwestern Publishing Co. , 1970); Bruce E.‘ Mallen and
Stephen D. Silver, "Modern Marketing and the Accountant, " in
Bruce E. Mallen, ed. , The Marketing Channel--A Conceptual
Viewpoint (New York: John Wiley andSons, Inc. , 1957), pp. 222-
29. See also Theodore N. Beckman and William Davidson, Market-
ing, 8th ed. (New York: The Ronald Press Co. , 1967), chaps. 29
and 30.

40Donald S. Tull, "The Carry -over Effect of Advertising, "
Journal of Marketigg29, no. 2 (April 1965): 46 -53.

 

1Polia Lerner Hamburger, "Produtividade das Atividades
de Mercadizacao, " Revista de Administragao de Emprésas 26 (May-
August 1967): 89-108.

42Staudt and Taylor, Managerial Introduction, chap. 1;
Lazer, Marketing Management, chaps. 21 and 22; Robert Bartels,
"Marketing, Technology: Tasks, and Relationships, " Journal of
Marketing 29, no. 1 (January 1965): 45 -48; Robert Bartels, "The
General Theory of Marketing, " Journal of Marketiigg 32, no. 1
(January 1968): 29-32. For a review of the latter, see Shelby D.
. Hunt, "The Morphology of Theory and General Theory of Market-
ing, " Journal of Marketing 35, no. 2 (April 1971): 65-68. See
also Beckman and DavidscTn, Marketing, chap. 31.

43Stanley C.. Hollander, "Measuring the Cost and Value
of Marketing," Business Topics 9, no. 3 (Summer 1961): 17-27;
and Richard N. Farmer, "Would You Want Your Daughter to Marry
a Marketing Man?" Journal of Marketing 31, no. 1 (January 1967):
1 -3.

 

 

 

 

 

44Stewart's and Dewhurst' 3 stated purpose was to "describe
and measure these costs of distribution and to find out, if possible,
the reasons for the spread between the cost of production and the
price the consumer pays. " P. W. Stewart and G. F. Dewhurst,
Does Distribution Cost Too Much? (New York: Twentieth Century

Fund, 1938), p. 3.

According to their analyses, the costs of distribution
(including selling costs, clerical expenses, expenses of the sales
force, costs of physical handling, selling and promotion expenses,
and other indirect costs such as financing, and risks and losses

 

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arising from spoilage and obsolescence) for the manufacturer,
wholesale, and retail trade amounted to 59¢ of every consumption
dollar spent on goods. Stewart and Dewhurst concluded that distribu-
tion does cost too much, even when the costs are evaluated in terms
of the functions performed by distribution. The three sources of
high cost are competition, services, and inefficiency.

5For Barger, "cost of distribution is the gross spread,
or the difference between the value of commodities leaving the dis-
tributive system and their value when they entered the system. "
Harold Barger, Distribution' 8 Place in the American Economy
Since 1869 (Princeton: Princeton University Press, 1955), p. 55.

 

 

Distribution includes, then, wholesale, retail, and transport expenses.
These were calculated to be 36. 6c of the retail dollar value in 1929,
37.3¢ in 1939, and 37. 4c in 1948 (very little change, then). He con-
cluded also that productivity in the commodity industries rose more
rapidly in the period since 1909 than in the previous forty years and
that a similar acceleration did not seem to have occurred in mer-
chandising, where output per person engaged in distribution rose

much less rapidly in the second than in the first half of the period.

46Cox and his associates estimated that out of each dollar
spent by final purchasers for goods, 41. 79‘ were for marketing and
58. So for production. Substituting gross margins for value added,
to enable comparison with Converse and associates, the cents
attributable to distribution activities would increase from 41. 7 to
48. 8 for 1947, 45. 3 for 1954, and 46. 3 for 1958. Converse and
associates had estimated distribution costs to be 49, 293 of the con-
sumer dollar in 1929, 50. 5c in 1939, and 48. 1c in 1948. See Reavis
Cox, Charles S. Goodman, and Thomas C. Fichandler. Distribution
in a High Level Economy (Englewood Cliffs, N. J. : Prentice Hall,
Inc. , 1965), pp. 149, 158.

 

 

Cox and his associates conclude that "the proportionate
part played by distribution in delivering values to the ultimate users
of goods seems to have become stabilized or have diminished slightly"
(p. 161).

They. also analyzed the three basic tests in the evaluation
of distribution: (1) the test of efficiency (comparison of input and
output); (2) the test of fairness (allocation of the economy' 3 product among
the people); and (3) the test of consumer orientation (conformity or
nonconformity to the basic assumption that the economy is consumer
oriented). It is increasingly difficult to make evaluations and obtain
measurements, as we move from the first to the last question.

 

 

   

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74

7See also Louis P. Bucklin, “National Income Accounting
and Distributive Trade Cost, " Journal of Marketing 34, no. 2
(April 1970): 14-22. More recently Bucklin stresses the need for
current information on trends in distribution costs and suggests
that national income accounting data can be used to determine the
marketing costs for the distributive trade, wholesale, and retail
establishments only. . He proposes a trade -cost ratio. Analyzing
the data for the'years between 1929 and 1965 he concludes that the
ratio results in a statistic that fairly reflects observable trends
relative to the distributive trade. For him, this statistic is of
value for insights into three categories of social and economic per-
formance of the distributive sector: the character of competition
in the trade sector; the expanding role of the sector; and the dis-
parate trends in wholesaling and retailing.

48

 

Although it is generally acknowledged that the marketing
concept clearly evolved in the early 19505, its basic ideas had been
expressed long before, both in economic theory and in marketing
theory itself. But it is agreed that it was from the 19503 on that
marketing publications and conferences, both in academic and
business circles, became effective in generating interest in, and
concern with, the marketing concept.

See Robert Bartels, The Development of Marketing Thougl'_1_
(Homewood, 11.:1 Richard D. Irwin, 1962), p, 213. For a histori-
cal view of the subject see Robert L. King, "An Inquiry Into the
Relevance of the Marketing Guide to Mobilization of Corporate
Effort," unpubl. Ph.D. diss. , Michigan State University, 1960.

See also, Bernard J. Lalonde and Edward J. Morrison, "Market-
ing Management. Concepts Yesterday and Today, " Journal of
Marketing 31, no. 1 (January 1967): 9- 13 and some quotes in
Bartels, Marketing Thoug_l_1_t, p. 188, that contradict his own con-
clusion that the marketing__ concept is an evolution of the 19503.

49

 

 

Staudt and Taylor, Managerial Introduction, p. 22.

 

50Blaine M. Cook, "The Concept Is the Actuality, " in
Robert M. Kaplan, ed. , The Marketing Concept in Action (Chicago,
111: :American Marketing Associationjtl964), p. 480: "The market-
ing: concept is no more than an up -to -date restatement of the ancient
and honored idea of consumer sovereignty, an idea seldom expressed
better than it was by Adam Smith some 200 years ago. "

 

 

 

 

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51SeeKing, "An Inquiry, " pp. 221 -22, and Robert E.
Sessions, "TheMarketing Concept in Action, " in Robert M. Kaplan,
ed. ,- Marketing Concept, pp. 3-17.

 

2See .for example, Richard T- Hise, "Have Manufacturing
Firms Adopted the Marketing Concept? ”‘ Journal of Marketigg 29,
no. 3 (July 1965): 9-12. Hise, with a sample of 273 manufacturing
firms, surveyed: (1) customer orientation by asking whether the
firms had marketing research departments to determine specifically
what customer needs and wants were; (2) profit orientation asking
whether firms examined profitability of products, customers, sales-
men, and territories; (3) the organizational structure of the marketing
department--the status of the chief marketing executive.

 

He concluded that, to a large extent, bothlarge and medium
manufacturing firms have adopted the marketing concept. The
greatest degree of acceptance was found in the customer orientation
of marketing programs and in the organizational structure of the
marketing department, particularly in the status provided therchief
marketing executive. Large firms were more fully committed to the
marketing concept than medium ones. Although the difference was
only slight in some respects, a distinct pattern was shown to exist.

See also: James V. McNeal, "Consumer Satisfaction: The
Measure of Marketing Effectiveness, " Business Topics 17, no. 3
(Summer 1969): 31 -35. McNeal reports an exploratory study under-
taken to determine if and how major producers of consumer goods
and services ascertain the extent .to which they are satisfying con-
sumers. "Of the 128 contacted fifty -eight responded. Five were
discarded because they replied that there was no way to measure
consumer satisfaction. One reply was discarded because the
respondent apparently did not understand the question” (p. 33).
These are the very significant data reported. The author, analyzing
the 52 useful replies, found that a major portion of these firms
(65. 2 percent) conducted periodic consumer research to ascertain
consumer satisfaction, but that the frequency. of consumer satisfac—
tion studies was not divulged.

 

See also Hiram G. Barksdale and William Darden, "Mar-
keter' s Attitudes Toward the Marketing Concept, " Journal of
Marketig 35, no. 4 (October 1971): 29-36. They report interest-
ing results of a survey to measure current attitudes of executives
and educators toward the marketing concept, .its operational adequacy,

 

  

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and its contributions to. business and consumers. The majority of
executives and educators believe that the marketing concept has
influenced management philosophy and thought, but have reservations
about its implementation. Significant variations were. found in the
response patterns of different classes of respondents. The major
differences are:

--Business executives express greater belief in the marketing con-
cept than do marketing educators.

--Top management express greater optimism about the concept than
do marketing executives.

--Executives from consumer product companies express more posi-
tive attitudes than do those from industrial product companies.

--Academicians with more education and those with more business
experience express less confidence in the marketing concept than
do those with less training and experience.

The authors conclude that after 20 years of experience the issues of
the validity of the concept and its operation on a day —to -day basis
should be better known and explored.

3For an interesting article on the relationships between
economic theory and marketing see Charles K. Ramond, "Marketing
Science: Step -Child of Economics, " in Robert M. Kaplan, ed. ,
Marketing Concept, pp. 662 -673.

54Stephen A. Greyser, "Advertising: Attacks and Counters, ”
Harvard Business Review 50, no. 2 (March -April 1972): 22.

55Carl H. Madden, "Consumerism and Business: The Old
and New Perspective, " in Neil H. Borden, Jr. , and Christopher
Gale, eds. , Chagging Marketing and Marketinnghange, Abstract of
Papers (Chicago, 111.: American Marketing Association, 1970),
p. 34.

 

 

 

56Vance Packard, The Hidden Persuaders (New York:
Pocket Books, 1958); The Status Seekers (New York: David McKay
Co. , 1959); The Waste Makers (New York: David McKay Co. ,
1960).

 

 

 

57Carson, Silent Spring; Jessica Mitford, The American
Way of Death (New York: Simon and Schuster, Inc. , 1963).

 

 

 

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77

58Arnold Toynbee, "Is It Immoral to Stimulate Buying?"
Printers Ink, 11 May 1962, p. 43 ; Arnold Toynbee and William
Berenbach, "Is Advertising Morally Defensible?" Yale Daily News,
Special Issue, 1963, p. 2.

 

 

59Galbraith, Industrial State.

60Ralph Nader, Unsafe at Any Speed (New York: Bossman
Publishers, Inc. , 1965). See also "The U. S. ' s Toughest Customer, "
Time, 12 December 1969, pp. 89-98.

61John F. Kennedy, "Message from the President of the
United States Relative to Consumers' Protection and Interest Pro-
gram, " Document No. 364, House of Representatives, 87th Cong. ,
2d. sess. , 15 March 1962.

 

 

2For examples of these bills see Louis L. Stern, "Con-
sumer Protection Via Increased Information, " Journal of Marketing
31, no. 2 (April 1967): 48 -52; and "Consumer Protection Via SelfT
Regulation," Journal of Marketing 35, no. 4 (October 1971): 21-28.

 

 

3 . .
Pressure also may be apphed to government agenc1es
(for example: Nader' s criticisms of the ICC and FTC).

64George S. Day and David A. Acker, ”A Guide to Con-
sumerism, " Journal of Marketing 34, no. 3 (July 1970): 12-19.

 

6
5Robert O. Herrmann, "Consumerism: Its Goals, Organi-
zations and Future," Journal of Marketing 34, no. 4 (October 1970):
55-60.

 

66Richard H. Buskirk and James T. Rothe, "Consumerism:
An Interpretation, " Journal of Marketinfig 34, no. 4 (October 1970):
61 -65.

 

67Charles G. Leathers, "New Dimensions of Countervailing
Power: Consumerism and Environmentalism," Business Topics
20, no. 1 (Winter 1972): 67-72, 69.

68Bertram M. Gross, The Managing of Organizations (New
York: Free Press, 1964), pp. 320-41; ‘523-37.

 

 

 

 

69

 

Dz.

Free Press a

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78

69David Caplovitz, The Poor Pay More (New York: The
Free Press of Glencoe, 1963); Louise J. Richards, ”Consumer
Practices of the Poor, " in Lola M. Irelans,» ed. , Low Income Life
Stiles (Washington, D.C.: U. S. Government Printing Office, 1966),
pp. 67, 84; Lewis Schnapper, ”Consumer Legislation and the Poor, "
The Yale Law Journal 76 (1967); and Gerald Lewivank, ed. , The
Consumer (New York: Washington Square Press, 1970). A

 

 

 

70Charles S. Goodman, "Do the Poor Pay More?" Journal
of Marketing 32, no. 1 (January 1968): 18-24. Donald Sexton, Jr. ,
analyzed 15 price -comparison studies on the cost of food to blacks
and whites. He-concludes that it appears inner city residents do not
pay more. Because of methodological reservations, the findings
are not unequivocal. The studies, in his opinion, are narrowly
focused and typically fail to consider the reasons for price differ-
ences and shopping patterns. Donald E. Sexton, Jr. , "Comparing
the Cost of Food to Blacks and to~Whites--A Survey, " Journal of
Marketing 35, no. 3 (July 1971): 40-46.

71U. 8., Office of Economic Opportunity, Green Power:
Consumer Action for the Poor, Community Action Program (Wash-
ington, D. C. : U. S. Government Printing Office, 1969).

 

72As an alleviating effort, the Office of Economic Oppor-
tunity has suggested an eight -point program including financial,
legal and family services, consumer education, and methods of
organization to create the conditions in which poor consumers can
work together toward a solution of their common economic problems.

3For example, the entire issue of the Journal of Marketing
35, no. 3 (July 1971) is dedicated to marketing' 3 changing social '—
environmental role. See also, for an example of the new considera-
tions, Martin L. Bell and C. William Emory, "The Faltering
Marketing Concept, " Journal of Marketing 35, no. 4 (October 1971):
37 -42. .

 

Bell and Emory state that the marketing concept has three
basic elements: customer orientation, integrated firm effort, and
profit direction. They conclude that the marketing concept has been
an operational concept, not a philosophical one. Providing customer
satisfaction has been a means to achieving the company' s profit
objective and does not necessarily imply that the con-
sumer' 3 well -being has been considered. They, offer the conclusion

 

 

 

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79

that in a revised marketing concept the main objective for the
company is to be more responsible for consumer welfare and that
profit should be the reward for doing this. The most effective way
to handle the conflict of the social and profit goals would be to
establish explicit company criteria of social responsibility.

7‘JtGeorge Fisk, "New Criteria for Evaluating the Social
Performance of Marketing, " in George Fisk, ed. , New Essays in
Marketig Theory (Boston, Mass.: Allyn and Bacon, 1971), pp. 440-
41.

7
51bid., pp. 444 -45.

76Eugene J. Kelley, "Marketing' s Changing Social/
Environmental Role, " Journal of Marketing 35, no. 3 (July 1971): l.

 

77Eugene J. Kelley, "Management Use of Economic and/
or Social Indicators in Planning Models, " paper presented to the
First AMA Annual Social Indicators Conference, Washington, D. C. ,
18 February 1972.

78See also Harry A. Lipson, "Management Use of Economic
and/or Social Indicators in the Marketing Planning Process, " working
paper presented at the First AMA Annual Social Indicators Con-
ference, Washington, D. C. , 18 February 1972.

CHAPTER 3

HISTORICAL DEVELOPMENT OF
SOCIAL INDICATORS AND PRESENT STATE
OF THE ART: A REVIEW

OF THE LITERATURE

Introduction

This chapter presents an historical view of the development
of social. indicators and a review of the literature, summarizing its
main contributions. The review poses some peculiar problems.
Because of the variety of approaches and subjects chosen by authors
of different backgrounds, . it is difficult to organize the material into
clear-cut, mutually exclusive groupings.

Most of the materials are papers. Even when published in
book form and edited by one or two authors, a main line or con-
sistent direction seems to be lacking. The only concern shared by
all is the need for and importance of social indicators. A great

number also share a feeling for the methodological difficulties

80

 

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81

involved in obtaining operational definitions and measurements for
social indicators.

Some authors have emphasized the need for a broad frame-
work, a general approach. Others have concentrated on specific
areas of interest such as health, education, and the environment.
Here too the approaches differ greatly. Some concentrate on a
descriptive approach, an analysis of existing statistical data and
inference from them of possible conclusions, with or without
methodological reservations. Others emphasize the methodological
approach with strong normative overtones: what conceptualizations
should be developed or 'what data collection methods should be used,
and so forth. Still others combine the two approaches.

To compound the problem, there is considerable overlap-
ping in-specific areas suggested for study, for example, science,
technology, and education, and education and social mobility.
Because of all these difficulties, regardless of the criteria explic-
itly stated to organize this vast array of materials, conclusions
imply primarily subjective judgments. Thus they. are open to
argument.

To reconcile the desire to give the reader a feeling for
the diversity of approaches with the need to keep this section within

manageable proportions, the review will be concentrated and

 

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82

organized as follows: a brief historical review, a synthesis of main

contributions, and some conclusions about the present state of the

art.

Social Indicators:
A Brief Historical View

 

Considering the long history of the movement to establish
social indicators, it is surprising that society has taken so long to
make a systematic effort to define the variables to be measured and
the manner of measurement. According to Daniel Bell the idea of
social indicators may have arisen from several sources.

They may have been the earliest reflections on the con-
sequences of private economic activities. In particular, the concept
may have sprung from the recognition of the divergence between the
private costs borne by a firm or individual entrepreneur and the
costs to others, or to the community, which entrepreneurs generate
but do not bear. 1

A second source may have been William F. Ogburn' 3
concern with the measurement of the rates of social change. (His

book, Recent Social Trends, published in 1933, was an outgrowth

 

of President Hoover' 8 Research Committee on Social Trends,
established in 1929 under the chairmanship of Wesley Clair Mitchell.)

A third could be the emergence of a new ideology which emphasizes

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83

social considerations in addition to economic ones for the evaluation
of the actual state of society's welfare. This has led to the "infor -.
mation explosion in social indicators, "2 which was accelerated by:

(l) the great growth of social sciences during the first two -thirds of
this century and the adoption of the quantitative approach; (2) the
increasing number of intellectuals, professionals, modern managers,
technologists, and natural and social scientists in political positions;
(3) the continuing efforts to provide more rational bases for both
corporate and political decision making; and (4) the development of
other statistical series.

Among the latter are the World Social Situation published
periodically since 1952 by the United Nations, 3 and HEW' s Indicators,
concerning health, education, and welfare, which was published
regularly from 1959 to 1966. The discontinuance of this series was

followed by HEW Trends, an annual supplement. 4 More important,

 

however, is the economic statistics series. The Employment Act
of 1947 resulted in the establishment of the Council of Economic
Advisors, the President' 3 Annual Economic Report, the Report of
the President' 8 Council of Economic Advisors, and the Council' 3
monthy Economic Indicators, published by the Joint Economic
Committee of Congress. These materials provide well-organized

economic charts and tables. They have become the source of factual

  

 

 

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84

information on economic trends and potential, and provide the data
base for both private and public decision making.

These developments led to the question: Why not a similar
statistical series of. social indicators? In Spring 1962' Raymond A.
Bauer posed this question to an informal group of scholars. The
President' 3 Science Advisory Committee had the same concern
when, at about the same time, it called for the "systematic collec-
tion of basic behavioral data for the U. S. . . . data that are
comparable, systematic and periodically gathered. "6 With the
sponsorship of the American Academy of Arts and. Sciences, Ray-
-mond Bauer, Bertram Gross, Albert Biderman, Robert Rosenthal,
and Robert Weiss worked on various sections of Social Indicators.
This book and Gross' 3 chapter, "The State of the Nation: Social
Systems Accounting, "8 were to become landmarks, and have been
quoted by authors subsequently writing on social indicators.

In 1965 Gross wrote an article advocating that the solution
for the "new Philistinism" that expresses national goals and per-
formance in dollar-sign figures was to counter -balance the
economic data with noneconomic data. . He proposed an annual
Social Reportof the President should be prepared which would make
Americans more conscious of the factors involved in enriching the

quality of life. 9 Bertram M. Gross, S. Douglas Carter, and

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85

Wilbur J. Cohen discussed the need for social information;10
these discussions eventually led to President Johnson' 3 Message
on Health and Education in March 1966. 1 1

With the cooperation of John W. Gardner, then Secretary
of Health, Education, and Welfare, and William Gorham, Assistant
Secretary of HEW for Program Coordination, plans were laid for
the development of social indicators that would be required to
produce a social report. HEW was given the mission because of
its political support and respect within the government and the
academic community. Furthermore, it had also taken the lead in
organizing the available social data and developing new programs
of data collection. These efforts resulted in the publication of a
report in thefinal hours of the Johnson administration. 12 Acknowl-
edging the time constraints on andlimitations of the document, 13

the authors called it Toward a Social Report. It deals with seven

 

majortopics: health and illness; social mobility; physical environ-
ment; income and poverty; public order and safety; learning,
science, and art; and participation and alienation.

During this same period Eleanor B. Sheldon and Gilbert
Moore of the Russell Sage Foundation prepared a major paper for
the American Statistical Association as part of the foundation' 5

Monitoring Change Project. Dealing with quantitative measures of

{it-‘1“

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86

"large -scale structural transformation, " this work led to the
commissioning of 13 papers by 16 different social scientists. In
1968 the efforts were published in a book under five major headings:
"Monitoring Social Change in America, " ”Demographic Base, "
"Structural Features," "Distributive Features," and "Aggregative
Features. ”14 This book also became a landmark in the field.

In the fall of 1965 the Commission on the Year 2000, under
the chairmanship of Daniel Bell, began investigation of the nature
of society in the future and the implications of possible social
changes. Their conclusions called attention to the interaction of
social, economic, and cultural forces. 15 In addition, they noted
that the most important considerations about the year 2000 concern
appropriate social arrangements for dealing adequately with the
problems society will confront. Also in the fall of 1965, the Bureau
of Budget launched its new Planning Programming Budgeting System
(PPBS), an effort to analyze the outputs of alternative programs and
projects. But PPBS' 3 full implementation required adequate social
data, then scarce, which emphasized the need for its systematic
collection.

In January of 1966 the National Commission on Technology,
Automation, and Economic Progress called for some system of
social accounts to assess the utilization of human resources in four

16
areas:

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socia

87

l) the measurement of social costs and net returns of

innova tion ;

2) the measurement of social ills (for example, crime and

family disruption);

3) the creation of performance budgets "in areas of defined
social needs" (for example, housing, education, and wel-

fare); and
4) indicators of economic opportunity and social mobility.

All these combined efforts have resulted in considerable
progress. Simultaneously with the development of interest in social
indicators came the recognition that the formulation of goals for
the society and the production of acceptable statistical indicators
about where the nation stands in relation to those goals are neces-
sarily complementary.

In a study of the report presented by President Dwight
Eisenhower' s Commission on National Goals, 17 Biderman found
that the members agreed on 82 explicit statements of specific goals
in each of 11 domestic areas. Examining the two most complete
handbooks of statistical data issued by the federal government for

relevant indicators, he found that only 59 percent of the goal

‘3' "M I'm”“."¥‘o '1‘"

   
  
 
 

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:czsic'er itself as ha‘
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are] objects of
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:E‘I'EIOpment. 21

88

statements had any pertinent indicator data. These findings showed
that new kinds of data needed to be developed. 18 In 1969, President
Richard Nixon created within the White House the National Goals
Research Staff. 19 As stated in their report, 20 the staff did not
consider itself as having goal setting or planning functions. Their
objective was to analyze policy alternatives that could aid in the
decision process. They selected the following areas of debate:
population, environment, education, basic natural science, tech-
nology assessment, and consumerism.

More recently, the National Planning Association, in its
National Priorities Study, has been concerned with the development
of a methodology to assess the range of opportunities for achieve-
ment of goals. Achievement of national goals is defined in terms of
observable changes in a series of specific goal indicators (such as
life expectancy, crime rate, and so forth) selected to reflect the
actual objects of public concern. Changes in goal output indicators
are possible only by means of activities, that is, specific combina-
tions of events comprising new types of public policies and private
development. 2 1

Recently, the project to develop a system of social indi-
cators was moved from the Department of Health, Education, and

Welfare to the Bureau of the Budget. A social statistical publication

 

89

is now being prepared by the Office of Statistical Policy of the Office
of Management and Budget, which, it is hoped, will be issued

periodically. It will be concerned only with the objective dimensions

 

of individual well -being. Work. is proceeding on the determination
of the data available, selection and adaptation of available series,
experimentation with various presentations of the data, and research
22
into the means of resolving data difficiencies and gaps. The sta—
tistics will be arranged by such areas of social concern as health,
education, employment, income, housing and the physical environ-
23
ment, public safety and legal justice, and leisure and recreation.
Social indicators also have been introduced in the studies
of developing countries. Authors argue that the term development
should imply not only economic considerations, but also other social
2
dimensions. 4 This concern has been reflected since 1954 in the
United Nation's definition and measurements of standard of living.
It takes the
position that, for several reasons, including difficulties of
determining purchasing power parties and converting cur-
rencies, no type of monetary index such as the per capita
national income or average personal income could be recom-
mended as a general measure of levels of living for inter-
national or comparative purposes. Instead, an approach was
recommended in terms of "components" of levels of living
and "indicators" of these components.

3‘ The concern with the components of the quality of life has

,A/ ,L
been expanded to include a global perspective. Using systems

 

 

 

 

Mali..- .,

90

dynamics as the basic approach, 26 a group of multinational,
nonpolitical business leaders, scientists, humanists, economists,
and educators (the Club of Rome) has become interested in the
problems of population, resources, industrialization, pollution,
and world -wide disparities in the standard of living. 27 A model
of world interactions has been proposed which is now being vali—
dated at MIT under the direction of Dennis L. Meadows. 28 If
validated, the model could serve as a basis for world planning
policy recommendations.

Social Indicators:
Synthesis of the Main Contributions

 

The General Approach

Several contributions in thevliterature have adopted what
can be called a general approach to social indicators. They treat
the subject from a global, inclusive viewpoint (as contrasted to
studying a specific area of concern only, such as health or environ-
ment). Among these are the contributions of Bauer, 29 Gross, 30
Biderman, 31 Sheldon and Moore , 32 the Stanford Research

Institute, 33 Etzioni, 34 and Etzioni and Lehman;35 the reports,

Toward a Social Report, 36 Toward Balanced Growth: Quantity and

 

Quality; 37 and Terleckyj' 3 studies for the National Planning Asso-

. . 38
c1atlon.

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if areas of socia
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91

The general approach is concerned with the desirability of
social indicators; the concern with societal goals; the identification
of areas of social concern, for which social indicators are needed;
the problems of conceptualization and measurement; and the uses
of social indicators and the normative implications. Underlying all
these is the concern with the development of a conceptual model for
society and for suggesting indicators that can describe or measure
the state or conditions of that society.

Significantly new in these recent contributions is the idea
of relating social change, and the practical implications of trying to
influence its direction (always of concern to sociologists and political
scientists), to a model of society. This necessarily involves the
development of indicators to monitor social change.

The various definitions of social indicators reflect this.
Bauer defines social indicators as ”statistics, statistical series and
all other forms of evidence-—that enable us to assess where we stand
and are going with respect to our values and goals, and to evaluate
specific programs and determine their impact. "39 He calls atten—
tion to the fact that innovations, particularly technical ones, have
consequences beyond what was intended or anticipated. If planning
and guidance of large -scale programs (such as space exploration)

demand that these impacts be evaluated, the assumption is that such

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impacts can be detected and measured. This calls for better data
about the state of society, but this data will not necessarily establish
the causal relationships between a program and the phenomenon ob -
served. . In some. cases, an impact may be identified, but not measured.
For Bauer the purpose of social indicators is primarily to provide
the basis of planning for future policies. Such planning should take
into account the important consequences of these policies.

For Sheldon and Moore, "[social] indicators would give a
reading both on the current state of some segment of the social uni-
verse and on past and future trends, whether progressive or regres-
sive, according to some normative criteria. ”40 Stressing that their
book focuses on large -scale structural change, they suggest that the
basic question is: "What is changing?" Any answer must rely on
some model of society. They point out some of the changes in
American society which have created social strains: growth and
urbanization of population, increasing technicality and bureaucrati-
zation of work, rising standards of living, the spread and level of
education, self-awareness, and the rise of minority groups. At the
same-time, national concern for society has added to economic
considerations others such as civil rights legislation, large -scale
support of education, programs to alleviate inequalities, medicare,

and many other efforts.

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In Toward a Social Report a social indicator is defined as

 

a "statistic of direct normative interest which facilitates concise,
comprehensive and balanced judgments about the condition of major
aspects of society. It is in all cases a direct measure of welfare
and is subject to the interpretation that, if it changes to the 'right'
direction, while other things remain equal, things have gotten better
or people are better of . "41 For the Stanford Research Institute
study, "social indicators . . . are ideally measures of social out-
put, that is, they measure the attainment of a goal. . . . Since
indicators are measures of output, they necessarily are related to
the attainment of goals. The definition of indicator concepts, then,
amount to a definition of goals. "42

Although these works share a common basis, they differ on
how they choose to tackle the problem and on the aspects they empha-
size. Gross and the Stanford Research Institute have proposed a

"model —of-society approach. ” Toward a Social Report, Toward

 

Balanced Growth: Quantity and Quality, and the National Planning

 

Association studies emphasize goal determination and evaluation.
Biderman, Sheldon and Moore, and Etzioni and Lehman have stressed
the measurement problems. Each of these approaches will be
examined, and a review of some of the normative implications of

the different approaches will be made.

 

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Etcss'S Model

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94

The Model of Society Approach

 

Gross' 5 Model

Bertram Gross offers the view that a more meaningful
appraisal of the state of the nation can be obtained through a system
of national social accounting that integrates relevant multidisciplin—
ary concepts. 43 Using a systems approach, he introduces a model
of a social system at the national level. He incorporates the major
concepts traditionally used in national economic accounting, but
proposes to broaden them from a set of purely economic to a set of
social indicators. A system of national social accounting should
supply the concepts needed to structure information about the past
or present, formulate goals (desired future system states toward
whichcommittments are made), and establish evaluation criteria.

According to Gross' 5 model, the state of any nation can
be analyzed in terms of system structure and performance. Struc—
ture refers to the internal relations among the system' 5 parts.
Performance refers to the acquisition of inputs and their transfor-
mation into outputs. Both involve a relationship with the external
environment.

Seven multidimensional elements comprise system struc-
ture: "The structure of any social system consists of (1) people and

(2) non -human resources (3) grouped together into sub -systems that

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95

(4) interrelate among themselves and (5) with the external
environment, and are subject to (6) certain values and (7) a central
guidance system that may help provide the capacity for future per—
formance. "44 Similarly, there are seven multidimensional elements
of system performance:
The performance of any social system consists of activities
(1) to satisfy the interests of various ”interested" by (2) pro-
ducing various kinds, qualities, and quantities of output,
(3) investing in the system' 5 capacity for future output,
(4) using inputs efficiently, (5) acquiring inputs, and doing all
the above in a manner that conforms with (6) various codes of
behavior and (7) varying conceptions of technical and admin-
istrative (or guidance) rationality.
The third element, "investing in the system' 5 capacity, " is very
important because it is the determinant of the future capacity of the
system to perform.

Gross analyzes each of the structure and performance
elements and then makes specific practical proposals for the develop-
ment of social indicators. He calls attention to the fact that the
process of collecting new and broader kinds of information on social
systems is in itself an aspect of system performance. There is
resistance to this kind of data collecting, certain resources are
needed, and interest conflicts may arise.

The key problem in a system of social indicators is that

the variables cannot be measured directly; rather, surrogates must

be selected. Table 1 shows the grand and intermediate abstractions

\éTIOXAL 1

 

 

 

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96

TABLE 1

NATIONAL PERFORMANCE ABSTRACTION: GRAND AND INTERMEDIATE

 

 

Grand Abstractions

Intermediate Abstractions

 

Satisfying interests

Producing output

Investing in system

Using inputs
efficiently

Acquiring resources

Observing codes

Behaving rationally

Peace, security, liberty,
autonomy, self-determination,
equality

Tolerance, dignity, honor,
prestige, pride

Progress, culture, beauty, the
arts, self-development

Abundance

Expansion, unity, national con-
sciousness

Saving free enterprise, building
socialism or a new or great
society

Economic independence or self-
sufficiency

Justice, equity
Democracy

Order, duty

Obedience to God or gods

Reason
Wisdom

Full employment

Fair employment

Equitable income distribution
Higher living standards

Growth in national output

Output of specific services or
goods

Price stability

Investment in hard goods

Investment in people or institu-
tions

Conservation and development

Productivity ratios
Balanced budget

External assistance

Economic independence or
self ~sufficiency

Favorable balance of payments

Law enforcement
Due process
Fair procedures

Scientific or technological
progress

Good government or adminis-
tration

 

Source:

Bertram M. Gross, "The State of the Nation: Social Systems Accounting," in

Raymond A. Bauer, ed., Social Indicators (Cambridge, Mass.: The MIT Press,
1966), p. 264.

 

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2:? Figure 1 shows

 

 

tension like abu
ically be observe

, 46
zessurement.

Wealth

97

and Figure 1 shows what happens as one goes from a grand
abstraction like abundance down to some event or object that can
actually be observed, recorded, and lends itself much better to

46
measurement.

Grand Abstraction

Abundance (plenty)

Intermediate Abstractions

 

Wealth Distribution of output Appropriation
or wealth (or expropriation)

Output (or production)

Quantitative Indicator Concepts

 

Output types Output quantity Output quality
Services or goods End or intermediate products Gross or net
Physical or Time periods Indices Aggregate,
monetary units average, or
marginal
Current or Type base

stable prices

FIGURE 1
AN ABSTRACTION SPECIFICITY LADDER

Source: Bertram M. Gross, "The State of the Nation: Social
Systems Accounting, " in Raymond A. Bauer, ed. , Social
Indicators (Cambridge, Mass.: The MIT Press, 1966),
p. 265.

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98

However, Gross points out, in descending the ladder greater
precision can be attained but any indicator becomes decreasingly
relevant.

Gross does not make the establishment of a national system
of social accounting appear simple. He. clearly states the progress
will be slow and that the maturation of social accounting concepts
will take many decades.

The Stanford Research
Institute Model

The Stanford Research Institute (SR1) model is conceptually
simpler than Gross' s model. 47 It accepts Gross' s viewpoint that
indicator concepts can be thought of as hierarchical, depending on
their degree of abstraction, and it also notes that the highest abstrac-
tions can achieve a high degree of consensus. But specific goals,
because they usually imply the means by which the more general
goals are to be attained, are more controversial. The development
of a set of goals implies valuechoices— -"a qualitative ordering of
possible sets of conditions. "48

The Stanford model (see Figure 2) structures two sets of
attainment levels. One describes the social system and the other
the dimension of the individual living within the social system.

There are several levels to the model, descending from the general

99

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100

to the specific. At each point there are goals and a measurement
scale specifying attainment levels, such as a minimum, a standard,
and an optimum.
Level I. of the model represents the most global measure,
"the general good. " Although the possibility of such a measure
seems remote, the SRI group argues that it might be measured in
terms of the fraction of the social system and the individual' 5
psychological environment perceived as hostile, inauthentic, or
alien. 49 Level II is intended to provide a general quality assessment
in terms of each of the two parts of the system. Level III deals with the

major indicator areas (similar to the ones discussed in Towards a Social

Report: environment, health and life, public safety, the standard of

living, race relations, opportunity, learning, science, and culture).
Comparing the SRI and Gross' 3 models, Adrian Ryans
concludes that ”from a theoretical standpoint, Gross' model is more
comprehensive, but also more abstract, making it very difficult to
use with the current state of the art. The SRI model is less compre-

. . . 0
hensive, but it 18 more useful at this time. "5

Goal Determination and
Evaluation Approach

 

 

The goal determination and evaluation approach is char—

acterized by relating social information to improved policy making.

 

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101

Social data should be used to evaluate the implementation of goals;
for planning, controlling, and evaluating governmental activities;
and for establishing programs, budget choices, and priorities.
Governmental publications and the National Planning Association' 3

studies have adopted this approach.

HEW' s Toward a Social Report

 

Reflecting this orientation is Toward a Social Report. 51

 

In the Introduction and Summary the question is asked: "Why a
social report or a set of social indicators?" The answer given is
that such an instrument not only could indicate how well society is
doing but also couldimprove policy making in at least two ways.
First, it could give social problems more visibility and thus make
possible more informed judgments about national priorities. Second,
it could provide insight into how different measures of national well-
being are changing, which ultimately might enable a better evaluation
of what public programs are accomplishing.

Toward a Social Report recognizes that the task is not easy;

 

major social problems are influenced by many things besides govern-
mental action, and it is difficult to separate the various effects of
these causal factors. In the long run, however, evaluation of the
effectiveness of public programs will be improved if we have social

indicators to tell us how social conditions are changing.

 

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102

The report states that it is an attempt on the part of social
scientists to look at several important areas and summarize what is
known about progress toward generally accepted goals. The areas
dealt with are health, social mobility, the condition of the physical
environment, income and poverty, public order and safety, and
learning, science, and art. A chapter on participation in social
institutions is included, but, because of the lack of measures, it
only discusses the important questions in this area.

Noting that good decisions must be based on a careful
evaluation of facts, the report expresses the hope that the study of
social indicators and their methodology and the collection of new and
more socially relevant data will continue. If abalanced, organized,
and concise set of measures of the condition of our society were
available, we would have the information needed to identify emerging
problems and to make knowledgeable decisions about national pri-
orities. Once theconditions have been exposed, the logical process
of policy formation is to choose the most efficient program to deal
with them. 52 Inorder to make this choice, information on benefits
and costs of alternative programs is needed.

The output of a program can be determined only by the
identification of the changes in the social indicators which result

from the expenditures of the program. Social indicators alone do

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103

not provide all of the quantitativeinformation needed for effective
decision making. This requires relating social indicators to program
inputs, audit is suggested that they should be integrated into policy
accounts so that any changes could be estimated. The report con-
siders that social indicators could be developed in the near future,
but that "a complete set of policy accounts is a utopian goal at
present. "53

National Goals Research Staff' 3

Toward Balanced Growth:
Quantity with Quality

 

 

The relationship between social information and public

policy also is expressed in the report Toward Balanced Growth:

 

Quantity with Quality. 54 Noting that we are moving from program

 

to policy oriented government, the following distinction is made:

”A program is an activity of some kind authorized or required by

statute. . . . In terms of the social system, programs represent
'inputs. ' . . . Policy is primarily concerned with the 'outputs of a
given system' . . . the objective of a policy is to guide government

activities in accordance with the properties of a system. "55 The
report emphasizes the importance of adequate social data to evaluate
the actual results, or outputs, of government programs, to choose
national goals, or to evaluate the implementation of those goals

already chosen.

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104

Taking notice of the marked social changes of the 1960s,
the report states that one aspect of these changes is the search for
a "growth policy" to guide that change. The areas in which the
problem of growthis debated are population growth and distribution,
environment, education, basic science, technology assessment, and
consumerism. "In general, these topical areas do not correspond
to the major social problems with which we are presently concerned,
including those of our cities, campus unrest, the Vietnam War, and
race relations. These represent dissatisfactions over our per-
formance according to our established priorities. "56

Calling attention to the fact that for the first time the goal
of economic growth, as opposed to that of quality, is in doubt, the
report emphasizes that the new qualitative goals being proposed them—
selves require economic growth. The question, then, should not
be quantity versus quality, but quantity with quality. Since resources,
although numerous and growing, are finite, the main issue is the
setting of priorities.

National Planning
Association Studies

The concern with goals and priorities also is reflected in
the efforts of the National Planning Association. The 1966 study

coordinated by Leonard Lecht translated the statements of goals

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105

into more specific targets and activities and set a pricetag on those
goals. 57 These studies have continued with the research objective
of developing a systematic analytical framework for examining rela -
tionships between goals, and the means of achieving them, in a
variety of areas of national concern. The preliminary results of the
program, which is oriented toward the progress achievable in

national goals over a ten -year period, were published in 1970. 58

The system proposed is characterized by six elements. 59

1) Concern with national goals, including levels of govern-
ment and the private sector, with respect to both goal

achievement and the cost involved.

2) Quantitative definitions of goal outputs by the use of social
indicators, or specific indicators of social change to

measure the achievement of national goals.

3) Estimates of total future output possibilities that are
technically feasible within a period of ten years as a result
of "activities, " that is, specific modes by which the desir-

able social changes can be made.

4) Distinction between new activities and the much less flexible
"base activities" that represent the existing systems related

to the same goals.

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106

5) Estimates of the range of alternative future outputs that

are compatible with available resources.

6) Clear'recognition of the lead -time required for imple-
menting activities and the explicit distinction between

their private and social costs.

Nester Terleckyj emphasizes the need for consensus:
"The quantitative indicators [that represent goals] were selected
to represent the important aspects of . . . concerns and to be
normatively meaningful, i.e., to command a high degree of con-

sensus as to their importance and the desirable direction of their

change. "60

The following categories of goals of related and inter-

dependent concerns were selected.

Health and safety: personal environmental health; public and

environmental safety.

Human habitat: housing, quality of neighborhood, access to the
area, recreational opportunities, and the quality of the

larger environment.

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Education,
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Leisure ar

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Freedom,

and t}

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107

Education, (skills, and income: basic schooling and higher

education, skills and jobs, and the amount, adequacy, and

continuity of income.

Finer things: goals related to the arts and sciences and

nature and beauty.

Leisure and production: the interrelationships between economic

growth andavailability of discretionary time.

Freedom, justice, and harmony: liberty, democratic values,

and the quality of the social environment.

The attainment of these goals is measured by a series of
indicators at two levels: approximately 20 primary indicators
represent the mostimportant aspects of the goals, and a larger set
attempts to evaluate additional dimensions. The proposed analysis
is illustrated by Table 2. which shows the effects of activities on goal
output indicators. Because resource constraints limit what can be
effectively undertaken, choices must be made throughout the process
among different types of goals, among the means .for pursuing the
goals, and between the new and base activities topursue the goals.
Terleckyj suggests that these choices are determined by techno-

logical, economic, and institutional conditions, and that the choice

 

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maker can be helped by a system of analysis which emphasizes goal
quantification and the alternatives, for a certain time period, for
achieving different goals.

This model is further expanded to include the concept of
efficiency. 61 Some new activities selected may be more or-less
productive than others in achieving the desired outputs. Assuming
efficient use of resources, several possibilities in indicator improve-
ment are exemplified. They are derived from linear programming
calculations which provide least-cost estimates and imply the choice
of activities which are most effective for the given set of output
requirements .

Assuming the efficient use of resources, the output also
will be dependent on the amount of resources. These resources are
subject to three conditions: the rate of economic growth; the share
of total resources which is directed toward the social concerns; and
the amount of resources which is directed toward the social con-
cerns, but which already is allocated to ongoing activities.

Summarizing, Terleckyj states that

the‘range of possibilities includes two types of efficient out-
comes. One efficient outcome is, with given availability of
resources, an efficient allocation of discretionary resources
among activities such as to maximize the proportion of the
outputs chosen as the objects of goals. The second type of

efficient outcome is productivity improvement in the base
whichecan release very substantial resources which would

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.. 110

make feasible achievement of more substantial 6groportionof
possibilities for attainment of desirable goals.

He also analyzes "inefficient allocations. " Terleckyj concludes that
great progress can be made by 1980 in achieving domestic social
goals, but only if efficient, innovative approaches are adopted and if
the efficiency of the ongoing base systems is improved in order to
release additional resources.

A later paper on measurement of output of governmental
activities concludes that

measurement of government output is relative to its purpose,
and that when viewed in a broader context, the output of govern-
ment activities can most usefully be seen as dependent on other
activities (private or public) and response patterns. This sug-
gests that the measurement of government output is a schedule,
or function, rather than a single quantity.

The state of the art for measuring governmental output is
very underdeveloped . . . this suggests a need for multiple and
flexible simultaneous azpproaches relating definitions to the
purposes of analysis. 6

The Concepts and
Measurement—Approa ch

 

 

Biderman

For Albert Biderman, 64 "social indicators" refer to quan-
titative data that serve as indexes to socially important conditions
of the society. . His concern is primarily with noneconomic "social"
statistics. He proposes an empirical, analytical approach coupled

with a sociological assessment. To be useful, each indicator must

:e's:e to a con«
:plicit theory

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111

relate to a concept about the society that is a part of an explicit or
implicit theory of thesociety.

Biderman examines existing social indicators from the
point of view of their relationship to the national goals which have
beenvstated, and he analyzes the ways in which such statistical
series originate and the multiple uses .to which they are put. From
his analysis of the actual availability and use of social statistics in
areas of public policy (see pages 87 - 88), he concludes that data
will be collected when there is reasonable consensus on the follow-
ing three issues: importance of the problem; there is some informa-
tion which, if available, would be useful; and the relevant phenomena
can be measured. 65 .

He believes the obstacles to consensual evaluation of the
state and trends of the society as a whole arise from technical
problems: (1) invalidity, of available indicators as indexes of the
social conditions they propose to measure; (2) inaccuracy due to
errors of measurement, sampling, and enumeration; (3) conflicting
indicators obtained from different sources; (4) lack of usable sta-
tistical data; (5) incompatible models, or different abstract conceptual
systems which attach different significance to the various elements
of the system, aggregate phenomena differently in the form of concepts

.O

or explain differently the relationships between elements; and (6) lack

Whfl‘h ._——-

if value consenS
and ralues limit
ridicaiors about
Even W

certain phenom
Tzere are othe
ll? meesureme
naecurate me
estisncal scie
serial pro ce 5:
:eesureznem
heard the ob
isms are 'u
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difficult}

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112

of value consensus, or the fact that differences in standards, tastes,
and values limit the agreement that can be gleaned from social
indicators about the conditions of society.

Even‘ where consensus does exist about the significance of
certain phenomena, these may not be reflected by available indexes.
There are other factors determining the availability of indicators:
(1) measurement technology, or the susceptibility of the phenomenon
to accurate measurement, given the current state and resources of
statistical science; (2) social observability: Are or are not the
social processes involved organized consciously to permit such
measurement? and (3) data —agency perspective, or the perspective
toward the phenomena to be studied. Biderman believes all these
factors are important in evaluating the present state of social indi-
cators and their role in society.

Biderman doubts the possibility of introducing any complete
scheme of social accounting (as proposed by Gross), not because of
the difficulty of measuring the newer, "softer" phenomena, but
because of the social and political forces that have shaped the exist-

ing system of statistical series.

Sheldon and Moore

Eleanor Sheldon and Wilbert Moore call attention to the

Problems of measuring social change, 66 the first of which is the

A. {““E‘

 

relation betxe er
smerure or :
...:l the set
dragging quant:
Sits-ugh these
lacs both relie

probability m;

The

113

relationbetween numbers and meanings. No item of information,

no measure or series of measures is self -explanatory. They point

out that the several papers in the book are concerned with the

changing quantities (and implicitly the qualities) of Americanlife.

Althoughthese papers deal with quantitative demonstrations, they

lack both reliable quantitative data to test leads and lags and a grand

probability matrix of sequential changes.

1i

2)

3)

The following problems are discussed:

Statistical systems. There is a great flow of numbers
from many sources, but many of these have been collected

for reasons other than the observer' 3.

Additivity. The problem of adding unlike quantities may
lead to simplifyingreduction of an observed series to a
more limited number of indicators. Sheldon and Moore
caution that "in the current state of the theory and art of
social diagnosis, it would appear that such. simplifying
indicators must be established by inductive generalization,

not by deductive derivation from established laws. "68

Frequency. , Because we lackthe knowledge of the rates

of change and their shape over various periods of time,

 

[kH'

there is

oiobse

2:103: and Let.

Anetta
i1: measureml
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114

there is no a priori basis for determining the frequency

. of observation of any aspect of social behavior or function.

Etz ioni and Lehman

Amitai Etzioni and Edward Lehman analyze conceptualization
and measurement problems in a paper on the "dysfunctions" that

social measurements may have for social planning. 69 (Dysfunctions

 

are negative consequences of a particular social item for specified
part[s] of a specified social system.)

A major part of their analysis is the question of internal
validity. "Internal validity refers to the extent of correspondence
between a social science concept and its operational definition. "70
Three problem areasassociated with questions-of internal validity
are identified: the more general one of fractional measurement, the
related one of indirect measurement, and that of formalistic aggre-
gative measurement of collective attributes.

The fractional measurement problem arises from the dif—
ficulty in arriving at an operational definition that covers the rami-
fications and dimensions of a concept. Social accounting also gives
rise to two other kinds of problems. The first, indirect measure-
ment, stems from the often used expedient of measuring societal

concepts by'using data originally collected for other purposes.

Li-vr—n-Imjva'u . Fl

Tie second is
sanctions r
of social systé
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115

The secondis one of formalistic, aggregative measurement, or
dysfunctions resulting from imprecise measurements of the states
of social systems. This derives from the tendency to confuse real
social units with formal social units and from aggregate data being
used to measure a collective property when a global measure would
be more appropriate.

Because of the problem of fractional measurement, the
adequate measurement of a social science concept frequently
requires the use of more than one indicator. If the researchsitua-
tion calls for a unified scoring system, then the multiple indicators
may. be‘combined into an overall index. Indexing implies two
decisions about weighing: the relative importance of the various
dimensions and indicators, and the statistical procedures to be
applied to represent the relative value of the various dimensions
and indicators.

Etzioni and Lehman caution against over -reliance on
quantitative dimensions. They suggest that index building for social
concepts should take into account whether or not there are qualita-
tive dimensions of the concept to be considered. 71 They also add a
caution about goal measures. Becausethe means used by social
units to attain their goals often are more easily measured than the

goals themselves, there may be a tendency to substitute the

 

 

:easurements
the goals ar
source of dys:
bier systemi

:idel insteac

ll." arriving ;

ETIOHEOUS pc

:ticaiors o:
.- 72
on.

(I)
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V

i”.-
x“-

116

measurements of means for the measurement of goals, especially
if the goals are intangible. Taking goals into account can itself be a
source of dysfunctional problems if the result is failure to consider
other systemic elements, hence the advantage of relying on a system
model instead of on a goal model.

Two broad classes of dysfunctions then can be identified:
(1) arriving at invalid conclusions which become the basis for
erroneous policy decisions; and (2) ignoring those dimensions and
indicators ofa conceptthat are most susceptible to social manipula-

tion. 72

TheNormative Implications of
the Different Approaches

 

 

These different approaches andideas reflect some of the
perplexing questions. What is a social indicator? How are social
indicators to be measured? How is the knowledge about social
indicators to be associated with the process of policy formulation?
There seems to beagreement that social indicators should be thought
of as measures of social output. Hence they are related to the
definition of attainment goals (the definition of goals implies value
choices, that is, choices of the goals and of their priority ordering).

The concept of social indicators also has led to the idea of

social accounting, that being the analytical tool by which one can

uate the i!

1
e
a
a.

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I

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117

evaluate the-implementationtoward the chosen set of social goals
as aresult of the programs undertaken. If monetary values can be
assigned to the attainment of each of the goals and to the costs of
each program, one is thenable to calculate the total value of the
costs andbenefits of the program. This is why social indicators
can be so relevant to the process of policy formulation and to the
choice of programs.

Michael Springer has made an analysis of the questions
mentioned. 73 >He-compares the several approaches and concentrates
his comparisons on the most often referred to (and seemingly better

known) contributions: those of Gross and Toward a Social Report.

 

He points out that, to many scholars and public officials, proposals
for systems of social indicators and accounts and annual presidential
social reports can be viewed as an ultimate instrument of societal
management. These eventually would provide an assessment of the
current and future state and performance of the social order, along
withan indication of control mechanisms and guidelines for the pro-
ductionof social knowledge. If developed and applied to the manage-
ment of organizations, these approaches could be expanded to the
ultimate application of managerial rationality--the overall guidance

of the-social order. ' .

 

Springer
:srpome plannir
”fixthE an}
sidress itself to
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22ers and fine

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118

Springer calls the direct analogy often made between
corporate planning practices andsocial accounting and reporting
"deceptive": any. ultimate instrument of government planning must
address itself to much more elusive questions (such as crime and
social breakdown). Furthermore, the number of decision -making
centers and the range of conflicting values are far greater within
government than‘within corporations.

He quotes the following five functions as roughly reflecting

what this new instrumentality of rational control is expected to do:

1) assessment of the state of the society--economic and

sociological information;

2) assessment of the performance of the society--how well
the society is achieving a specific set of goals, whether a
certain situationis desirable, and whether "progress" is

being achieved;

3) anticipation of the future--an orientation toward the future;

4) indication of control mechanisms-—the kinds of government
and private actions called for to ameliorate a condition,

achieve a particular goal, or secure a desired future; and

 

5) guide.
and 1
com
tion

COU

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119

5) guidance of social knowledge-~a system of social accounts
andregular reporting by the president is required to over-
come the deficiencies of the present base of social informa-
tion. Through this process, some degree of central control

could be achieved in the federal statistical establishment.

These five functions are the ultimate application. of managerial
rationality. It would draw upon the techniques of social trend
analysis, the analysis of national goals, futurism, systems theory,
and the "new political economy" (a multidisciplinary field of political
choice involving various scarce public goods).

The studies reviewed explicitly or implicitly accept the
idea of a rationally managed social order, but Gross and Toward a

Social Report differ in their notion of what that order would be.

 

Springer believes Toward a Social Report is framed in the context

 

of the new political economy. Pushed to its logical limits, it
implicitly argues that the management of society is only rational
when there is a complete consensus on national goals and when
knowledge about how to achieve these goals is relatively complete.
(The same idea is implicit in the Stanford Research Institute Model,
the National Planning Association-studies, and, to some extent, in
Biderman' s notion of consensual validation.) The notion. is rooted

in the conceptual scheme which guided the preparation of the

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120

document. Fundamental to this scheme is its definition of a social

indicator (see page 93).

The Appendix of the report sketches out an approach for the

development of awmore rigorous set of social indicators. It suggests

that:

1)

2)

3)

O

in many areas of direct normative concern, aggregative

indices would provide useful measures of social progress;

an impressive set of social indicators,. based on such
aggregative indices, could be developed at a modest cost

in the near future; and

the next. step would be the development of a system of
policy accounts for determining the most "efficient" way

of increasing a social indicator. Social indicators would

 

measure social outputs, and policy accounts would measure

public and private activities' impact upon costs and to a

 

particular indicator.

According to Springer this "macroscopic causal model is

along way off, " even though the report believes it ultimately will be

required for "rational" decision making. The report assumes that

the management of society can be guided, in the near future, by

 

tese notic
political p
:éicators

car. be de:

1!) COQCGH

- ‘ l '
"1.3135311

(I)
, I

121

clear standards of desirability, but will be restricted by limited
knowledge of cause -effect relationships. Springer states that behind
these notions is the optimization model of welfare economics:
political processes will provide relative weights to a set of social
indicators, and the cost-constraint analysis and resource allocation
can be determined by the product accounts.

Gross' s approachrejects, for the present, the causal

modeling impliediin Toward a Social Report: ”My strategy has been

 

to concentrate upon description and thereby prepare a foundation of
explanation. This was meant studiously resisting the temptation to
leap precipitately, into premature use of the proposed accounting
system for the purpose of prediction or control. ”74 His general
systems model, as described earlier in this chapter, takes into
aCcount a multiplicity. of conflicting goals: "Rationality consists

of society's managers being able to work out compromises between
conflicting goals-wandto act on the basis of sketchy knowledge of
cause -effect relationships. In effect, Gross equates 'rationality'

with the political process. "75 For Toward a Social Report a con-

 

sensus (hence removed from social conflict) has to beachieved so
that the desired social goals can be secured in an orderly fashion.
Springer' s doubts are concerned not so much with the

possibility, of a managed society as withits moral and political

 

aspects. A
resorting a
:plemert

that in the

secial acc
Thlcz'l jus

7316 ' 0b 4|,

122

aspects. As he sees it, proponents of social accounting and social
reportingare inspired by two motives: the desire to bring about the
implementation of some long—overdue social reforms, and the hope
that inthe process of bringing about these reforms they will become
a new political elite of technocratic managers. "Such developments
would also justify bringing the intellectual and scholar even closer
to the-centers of national policy-formulation. The literature of
social accounting can thus be viewed as presenting an ideology
which justifies the emergence of a new ruling class that will pro-
vide 'objective,' 'scientific,' and 'nonideological' advice to the

. 'rulers' of society. ".76

Mancur Olson, 77 who is mainly responsible for Toward a

Social Report, defendswhis approach. He argues that the kind of

 

analysis and data needed fora social report andthe information
that social indicators can provide could provevery useful in making
strategic. presidential decisions about socio -economic strategy.

The National Goals Research Staff established in the White House
might serve this strategic function of gainingvisibility and influence
through the issuance of annual social reports. .The difficulty that
Olson envisages is the lack of a satisfactory. intellectual framework
or theory for the analysis of social problems. . He mentions two

main acceptable frameworks: the problem solving approach, which

-—- ‘ov-

 

'Qiables that

515 Of the (it):

E merent in
smemral fun:
sciences. Tm
dearly in the
each chapter c

ieal’hnwhne

0150:
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123

is inherent in economic theory and operations research, and
structural functional analysis, which is common in several social
sciences. The contrast between the two approaches came out

clearly. in the work on Toward a Social Report. In its final format,

 

each chapter-of the report refers to a general goal--better housing,
health--whilethestructural-functionalist advisors preferred the
analysis organized around structures such as family and social
class. The advisers criticized the chosen approach because it
introduced value judgments on the choice of goals. 78

Olson argues that structural -functional analysis is an
incomplete version of the problem solving approach. Its main
limitations are that it begins with a regular pattern of behavior
rather than‘with the purpose(s) which that pattern of behavior is
intended to serve, andthat its tendency is to ask whether the
structure that has beenidentified is functional or dysfunctional
(in terms of survival, stability, or expansion of an institution
rather than on the basis of profits per 'se). He also criticizes the
problem solving approach because it should be used with more con-
cern about suboptimization and with more interest in the "softer"
variables that structural analysis considers. . He proposes a synthe-

sis of the two approaches: "complex system analysis. "

 

 

-—-———._——-
_———————

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ta: 31131 a "31
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124

The General Approach --
Some Closing Remarks

 

The differences in the general approaches reflect more
than just a variance in intellectual posture about methods and
measurement. Underlying the differences and the controversy is
the awareness of what social indicators can mean for policy making
and social guidance. If social indicators and social reporting are
going to guide policy, then the issues of how to conceptualize and
measure indicators have more than mere methodological implica-
tions; there are political implications as well.

Theeproduction and use of social indicators in an organized,
systematic way could have a broad impact on the entire life of
society. In addition to assessing how accurately indicators reflect
the reality they intend to measure, it is necessary to assess the
extent and manner in which indicators may be used by policy makers.
The concern-withthe nonscientific uses .to which indicators may be
put is derived from the fact that many people‘will assume that sta —
tistics have, inherent scientificvalue. "They are the rolesdata play
as (1) the bases of claims against resources according to allocative
devices established by law or custom; (2) as ammunition forthe
various parties to the adversary procedures of intraorganizational

and interorganizational politics; (3) as the cohesion of organizational

 

 

aliances; l
new ground

0‘.
that the rc

the: shoul

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who and

and also '1

125

alliances; (4) as symbols for the persuasion of publics, and (5) as
new grounds for national and institutional needs. "79

Obvious questions arise about who should collect the data,
what the-role of the executive branch and Congress should be, and
what should be done about conflicting data and. interpretation. Most
government publications argue for data collection by federal agencies
centralizedunder the Office of Management and Budget, but several
authors have defended theideaof multiplicity of data sources, both
public and private. 80 These concerns are reflected in the literature
and alsoin the proposed legislation.

The‘legislation necessary to enact the development of a
social report was first presented in 1967 by Senator Walter Mondale.
The bill called for the publication of an annual social report, the
establishment of a Council of Social Advisors, and the creation of a
Joint Congressional Committee on the Social Report. Since then,
the role of theexecutive andlegislative branches and whether there
should «bea separate Council of Social Advisors or an extension of
the existing Council of Economic Advisors have been under discus -
sion. 81 In 1970, the Senate passedethe bill sponsored by Senator
Mondale. The Full Opportunity and National Goals and Priorities
Act provides for the creation of a Council of Social Advisors in

the Executive-Office of the President and an Office of Goals and

E

ongres
U

t.,

\11

Reoreser

nonne

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126

(Priorities Analysis in the Congress. The bill died in the House of
Representatives in.1970, but has been reintroduced in the 92nd
Congress. The proposed council would advise the-president in the
preparationtof aneannual social report and would be a social moni-
toring and data gathering agency comparable to the Council of
Economic Advisors.

In conclusion, the review of the literature reveals that the
authors who chose a general approachadopted several different
frameworks. These reflect various positions both as to the ‘con-
ceptualization of indicators and social accounts and to the normative
questions of how the data should be collected, by whom, and for
what uses. There also is some divergence in the literature as to
the main areas for which indicators should be developed.

Table 3 is an attempt to summarize the main areas of con?
cern as suggested by the sources. Gross clearly indicated four
areas, "a few of the more important and feasible, "82 but they do not
match the more comprehensive listing in Table 1, page 96, suggested
by the‘elements of system performance. Perhaps Gross' 8 list was
not meant to be complete, but was designed to offer examples only.

7 His main concern was with establishing the basic conceptual frame -
work for-analysis and not with carrying it through‘to the final choice

of indicators. The mainareas mentioned by Sheldon and Moore are

127

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

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128

derived from the 13 papers in the book they edited. Presumably
they, also reflect Sheldon and Moore' s opinion. Other sources'
areas of concern are clearly stated. Table 3 reveals the lack of
agreement among the various sources as to the main areas of con-
cern for which indicators should be developed and the taxonomic
difficulties involved in the classification and labeling of categories
that should be (but are not) mutually exclusive and exhaustive.
Despite these divergences, it safely can be concluded from the _
literature review that there is agreement about the need for social
indicators, the need for improved methodology, and some agree-
ment about some areas of concern (for example, education and

health).

The Specific Area Approach

Several contributions in the literature on social indicators
adopt what can be called a specific area approach: they view the
problem from a specific area of concern like health, environment,
and so forth. The papers contributed to Sheldon and Moore' 8 book, 83

and most of the articles in the several issues of the Annals, 84 have

adopted this approach. In some sense, Toward a Social Report, 85

 

and Toward Balanced Growth: Quantity and Quality, 86 tend toward

 

this approach when they move from general considerations to the

analysis of each specific area of concern.

. b

 

.
‘ A
‘3‘»“2'7-3"? 3. '=

 

[\3
v

rn

129
The approach .is characteriz ed by:

1) descriptive analysis, that is, assessing progress and
problems in the various social areas, mainly through the

use of the available time -series data;

2) critical analysis of the existing data, showing its limita-

tions; and
3) suggestions for new indicators needed.

Not all authors have emphasized the three aspects equally, and some
have added a fourth dimension, the major policy problems involved.
These factors compound the problem of making a systematic and
balanced review for all the areas of concern.

The specific areas chosen for review here, based on
Table 3, will reflect two criteria: (1) those that reflect some con-
Vf-‘I‘gencevin the several studies; and (2) those that are reflected in
governmental agency studies, or studies oriented toward government
goals and policies (such as the National Planning Association' 3).
It Will be assumed that they reflect the way the official data will be
or ganized and published and those areas that are of interest for
Public policy in the near future. . No attempt will be made to repro-
duce the statistics car-statistical analyses; these can be found in

the sources mentioned.

I- n . I 'l.‘."'
‘ ~_v v—u"
n-Ll-

 

2)

di
he

do

1)

2)

3)

130
The-review for each topic will focus on three areas:
the main issues as mentioned by the reviewed authors;

measurements, that is, the limitations of existing data
and/ or proposed methodology and suggestedindicators

for each area; and

major policy problems when these are mentioned by the

authors.

A review of the literature will center on the following:

1)

2)

3)

demographic factors: population growth and distribution,

the family;

structural factors: economic growth, labor force and
employment, knowledge, technology, and science, the

arts, environment and urban conditions;

distributive factors: income and consumption, leisure,

health and safety, schooling and education, equality, free-

dom, justice and participation.

 

 

 

f‘."
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131

The Demggraphic Factors:
Population Growth and
fiistributionu The Family
The issues. -- Two basic transformations in the nation' 8
population have been growth and urbanization. 87
The questionof population size also invOlves the issue of
whether a technologically advanced and industrially prosperous
nation wants, or can continue, to pay the price of congestion and

contamination stemming from overall affluence. Population might
be limited by the inability of the environment to absorb the wastes
that result from economicsuccess. 88

Another serious issue is population distribution. Because
People increasingly have been concentrating in cities, and in a few
rather large urban masses, the quality of life has lowered both in
urban and rural areas. Projection of migration patterns is a dis-
tribution policy issue since that policy might affect such decisions

as industrial plant location and other types of investment which

would make increasing concentration of population a self —fulfilling

PrOphecy. 89

Measurement. "Demography, is the object of continuous
analysis and interpretation. There is a variety of data, but not all

data are; pertinent to the development of social indicators.

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Conrad Taueber, 90 noting that family structure and family
relations areeintimately. related to demographic events, analyzes the
deficiencies of demographic data and points out that there is little
information on the interrelationships among economic, social, and
demographic factors. . He also suggests that more attention should
be given to data already collected but improperly analyzed and inter-
preted before planning new surveys and collections.

— William Goode shares these views. 91 He maintains that
data. on family change are very deficient for long -term charting and
even more so for causal interpretations. Goode has noted some of
the major problems, in the measurement of family changes: (1) ideals
in contrast to behavior; (2) class, sex, and generational perspectives;
(3) absence of data on the process of building larger kinship units; and
(4)! low literacy.

. He also suggests some of the important variables that seem
‘ t0 justify charting, both because of theoretical significance, and
their uses in social bookkeeping. These are: time and money
budgets; variations in family patterns; sexual behavior; changes in

the employment of women; functioning of kinship networks; sociali-
zation practices; and social costs of the family system.

Data collection on these variables would be useful in

uncovering problems, or the lack of them, in family behavior, and

would on

:0ng wt

133

would provide approximate evaluation as to how well the nation is
coping with family problems. If used carefully, these data could
give some "crude" predictions of the immediate future. . He cautions

against simple extrapolations from a present trend in the absence

of a sound theory.

Major policy problems. --It has been suggested that a
viable option for dealing with the problem of population distribution
is to encourage growth in centers other than the large urban masses,

coupled with a complementary effort to develop new towns. 92

lhe Structural Factors

Economic Growth

The issues. —-The main concern in the area of economic
growth or welfare is its measurement. The national income and
Product accounts are adequate to measure the current economic
State of the nation, but changes intGNP over long periods of time
are not a‘good measure of economic growth or welfare. Since

"structural change is the essence of secular change, it must be

accounted for. ”93

Another important issue is the analysis of the relationship
betweenbalanced growth and economic policy. 94 The search for a

policy of balanced growth has major implications for the allocation

134

of economicresources and is dependent upon economic growth.
Conventional economic policy goals include full employment, an
acceptable rate of growth, price stability, and a satisfactory
balance of payments. To these must now be added a. set of goals

under the label (not yet clearly defined) of the quality of life.

Measurement- --A. W. Sametz proposes a method for the
comparison of data on economic growth. 95 The gross national
product should be adjusted upward to allow for the increase in the
quality: of output and11eisure and downward to allow for the effects
of the commercialization of domestic activities and the social costs
of urban industrial society. . He notes that this ”net output index"
canspecify only the measurable part of economicwelfare. . It is
possible, however, that it may have even less significance for
future levels of social welfare. Social welfare, or happiness, may
not be increased by increases in output per capita even if shared
proportionally; beyond certain levels of real per capita output (and
income) the additional satisfaction may be more psychological than
Physiological and may be more dependent on relative than absolute
. living-levels and on collective rather than on private decisions.

Sametz offers the personal judgment that in the future it
may be morereasonable to infer social welfare from increases in

the output indicator. This is because theeadvance of knowledgewill

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more than offset the-external diseconomies faced today; the
increasing: role of government in economic affairs will introduce
representative social decision making, while still preserving a-lloca -

tion‘efficiency; and there will be increasing equality of income and

opportunity.

Major policy problems. -- The setting of new goals for
economic policyand the establishment of priorities among them are
matters of social choice to bemade by the people and expressed
through their private institutions and governments. The key choices
are among competing ends. Economic analysis can aid understand-
ingof some central aspects of these choices and it can contribute
toward the meeting of these ends once they are chosen. An economic
policy of sustained growth also can make it possible for more of
these ends to beachieved.

Labor Force and
Employment Trends

The issues. -- The concern with full employment, optimum

 

economic growth, andoptimum allocation of resources in the con-
text of social needs are inseparable objectives and do not involve

Pragmaticdifferentiation. For-example, attacks upon unemployment

and poverty are closely related.

 

 

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136

Another concern is the impact of the changes in American
society and Americans on the pattern of labor supply and use, and
vice -versa. Stanley Lebergott argues that family income goals are
determinative in shaping labor supply. 98 He analyzes the contribu-
tions of the major components in the labor supply and some conse-
quential changes in the labor market. As the nation' 3 work force
moved from predominantly farming to manufacturing to service
occupations, there was a .decline in the role of the entrepreneur,
the traditional creator of opportunities and inventions, and small-
scale business enterprise, and an increase in the bureaucratization
of work.

' Lebergott also shows that productivity .gains have been
taken mostly in money rather than leisure. Scheduled factory and
business hours have declined, but hours worked by. individuals
have not decreased (since the mid-19303)‘because of overtime work
and people holding two or more jobs. In addition, there is increas-
ing participation of women and other members of the family in the
Working force. Furthermore, study of labor marketing stability
reveals that job loyalty and stability are decreasing. There is
sOme questionwhether this would not affect the efficiency and satis-
faction of thelabor force. On the other hand, since perhaps half

of the, job changes made by the average American worker’are

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137

voluntary, it may be inferred that they expect the change to be for

the better (even if they are disappointed later).

Measurement. -- Lebergott argues for better data develop-

 

ment to orient government policies. Since in some sense the
government is committed to guarantee the performance of the
whole economy, it must acquire the complex knowledge of how the
economy. interacts. When its goals include providing better jobs
for the socially disadvantaged, measuring the labor market conse-
quences of many types of federal policies is very important.

Lebergott also stresses the importance of maintaining consistencj

 

between the labor data and other measures usually used by the
White-House and the Council of Economic Advisors to evaluate the
state of the economy.

,He advocates data consistency between employment and
labor force statistics and those on output, capital consumption,
sales, andinvestments; greater utilization of the Bureau of Labor
Statistics wage rate~surveys; more information on reports to the
Internal Revenue Service; a connection between household and
establishment reporting; and more research onthe various psycho-
logical and social factors (intelligence, background, and so forth)

that influence income differentials.

refers 1

 

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138

Major policy problems. -- The main policy question discussed

 

refers to the level of employment to be maintained. Leon Keyserling
suggests that the main focus of economic and related social policies
should be upon federally guaranteed full employment (with a com-
pensation adequate to assure for all workers at least a minimum
standard of living). 99 He also advocates a federally initiated nation-
wide system of guaranteed income for those who cannot be brought
within the employment force. Keyserling proposes that full-time
unemployment should be reduced to 2 percent and the true level of
unemployment to about 3 percent.

Knowledge and Technology- -
Science

The issues. --The issue of science and technology as major

 

change agencies is an important one. The narrowing interval
between scientific discovery, technological implementation, and
social use has increased the general rate of change. But the moni-
toring and accounting procedures for the differential rates of such
changes in various sectors of society, and for their short-term
and long -term consequences, are presently inadequate. 100

It has been proposed that the measurement of knowledge

and technology must be viewed within the context of the shift from

an agricultural to an industrial to a postindustrial economy and

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society. 101 The rapid expansion of a professional and technical
class in the postindustrial society suggests two new dimensions in
social affairs. First, there is a decreasing dependence on money
and an increasing dependence on "human capital, " and, second,
policies relating to the institutions concerned with knowledge and
technology will become the central political questions for society.

Daniel Bell defines knowledge as: "a set of organized
statements, setting forth a reasoned judgment or an experimental
result, which is transmitted to others through some communication
medium in some systematic form. . . . it (is part of the social
overhead investment of society. "102 Education will become a con-
tinuing process for the professional and technical person and it is
already becoming the major determinant of the social stratification
system ("meritocracy").

The question is also raised that an important source of
knowledge-~research in basic natural science--not only is experi-
encinga cut in financial support, but also is being subjected to a
growing questioning of its role insociety, particularly its relevance
to contemporary. social problems. 103 Historically, federal funding,
themain source of basic scientific research, hasbeen large rela-
tive to the scientific resources available. In the recent past, the

supply of funds has leveled off and the scientific establishment has

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140

continued-to grow; the previous relationship, in effect, has been
reversed.

Scientists andtheir work also have begun to suffer
criticisms because of. their associations with the military and
with industrial technology, which has polluted the environment.
In addition, there has been a shift in priorities to social issues.

The result is a serious strain on scientific institutions.

Measurement. --The available indicators in the areas of

 

science and technology tend to be quantitative rather than qualitative.
The major indicators of scientific activity which are generally

available may be classified into three main groups.

1) Labor force: Measurement includes the numbers and types
of scientists and engineers, by field; distribution of such
personnel in various sectors of industry. government, and
education; number of scientists and engineers added
annually, for example, the types and numbers of certifica-

tions and degrees awarded.

2) Output: This is measured by the volume of communications
such as reports and papers and by the number-of discover-

ies and inventions .

 

 

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3) Inputs (expenditures): These are indicated by the
distribution of various funds for education, research,
and development by source and allocation; and further
breakdown by regional and social sector, for example,

by state and by type of institution or industry.

But other indicators are needed to provide more positive measures
of social progress and to warn of the social and environmental
effects of new scientific -technical developments. such extended and
qualitative indicators will require further integration and interpre -
tationinto a comprehensive system of social accounting. 104

Concerning the measurement of knowledge, Bell points out
that the generally accepted statement (based on numbers of books
inlibraries, numbers of publications, journals, and so forth) that
the amount of knowledge is increasing at an exponential rate obscures
a more significant fact. The more typical pattern is not just growth
of a field, but the creation of new and numerous subdivisions or
specialties within fields. 105

Bell also discusses the problems of conceptualizing and
measuring technological change in an economic sense and concludes
that, "even thoughait is difficult to demonstrate that the 'rate' of

technological change has leaped ahead substantially in the past

decades, it is undeniable that something substantially new about

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106

technology has beenintroduced into economic and social history. "

His suggested indicators for the evaluation of the postindustrial

knowledge society are:

1)

2)

3)

4)

5)

dimensions of the knowledge class: number of scientists,

engineers, and technicians;

distribution of scientific personnel by sector (industry,
government, university), by function (production, research

teaching), and by discipline;

forecasting of future college enrollments;

institutional structure (the striking facts about the intel-
lectual institutions of the society are their dependence on
the polity and the degree of concentration of resources--
students and research money-- in a relatively small

number of universities); and

the allocation of resources--the financial measure of the

growth of science and technology-~the expenditures on

research and development and its distribution by sector.

(The federal government supplies most of the funds, while
the work is performed principally by industry, universities

and nonprofit organizations).

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143

Major policy problems. --Because the postindustrial

 

society, will require more expertise and more social guidance, and
because choices will become more conscious and the decision
centers more visible, more politics than ever before will be involved.
It will have to confront several crucial decisions. (1) By whom,
for whom, and how will higher education be financed? (2) How and
by whom should the results of research be evaluated? How will the
priority decisions be made? (3) Are the best conditions of creativity
based on individual efforts or social cooperation? (4) How will
technology be transferred from the laboratory into prototypes and
production? (5) What is the pace of knowledge and how can teaching
keeptabreast of it? (6) How should the strains of change be handled?
Among these changes are the inclusion of disadvantaged groups into
the society; the growth of interdependence and the creation of
national societies; the increasing substitution of political for market
decision making; the increase of urbanization and the decline of
agriculture population; and the introduction of technological items.
All of these stress the need for more consistentmonitoring of social
change.107

Themajor policy problems related to technology assessment

108
are:

 

 

 

 

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1)

2)

3)

4)

5)

6)

144

establishing the criteria for deciding which among all of
the new technologies emerging shall be selected for

assessment;
how inspections, standards and controls shall be established;

the extent to which technology assessment shall become an
established procedure with increased consideration of
second order consequences of technology through all strata

of decision making, both private and public;

how to reconcile the impact of the possibility of technology' 8
negative consequences with the demand for new technology
to ensure economic development. Among other things, 1
this may require acceleration of efforts to develop new
technologies and to correct the harmful impact of older

te chnologies;

the level of support to be furnished basic science in the

future; and

the types of research priorities selected often are short-
term ones resulting from a more rapid expansion of the
basic pool of knowledge by permitting science to pursue

the internal logic of its own development.

145

In summary, what is needed, and what may in fact be developing,
is a forum inwhich the partially conflicting needs for maintaining
the integrity of the core of basic research and the practical needs

of society are resolved.

The Arts

The issues. -- The transition to postindustrialism is marked

 

by increasing political concern for the quality of life. The arts,
an important determinant of that quality, are affected by this transi-
tion in the following ways: growth of mass participation in cultural
activities; elaboration of the institutional framework of the arts
(such as arts councils, art centers, and the culture industry);
formation of a culture lobby; and politicalization. 109

Due to modern technologies of communication and trans-
portation, society has easier access to art today. But some forms
of art, those involving live performance, are not increasing in
proportion to the growth of population and the economy; in some
cases they may even be declining absolutely. This can be a serious
public problem, both from the viewpoints of art appreciation and
practicing art, especially in those cases where a large number of
live performances are needed to insure the training and develop-

1 1
ment of artists. 0

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146

'Measurement. --A cultural data: system is needed to contain

 

and accelerate the rate of change, to provide information for
rational policy making in the cultural field, and to assist those out-
side the field-in understanding their impact on it. A tentative model
is proposedto facilitate the monitoring of qualitative as well as
quantitative changes in the arts in contemporary society.

Underlying this model is a "restrictive definition of the
arts . . . to refer to classical music, opera, dance, theater, the
visual arts and literary. output. "1 11 Several variables are suggested
by Alvin Toffler. Taken together, these comprise an index of the
health of a nation' 8 culture, and methods are proposed for statisti-
cally measuring changes in the following variables: (1) copious
cultural output; (2) richly varied cultural output; (3) technically
outstanding cultural output; (4) excellence in cultural output;

(5) contemporaryscreative work as distinguished from the perfor-
mance or reproductionof past works; (6) complexity of output;

(7) sophisticatedaudiences, growing in size; (8) a vast amateur
movement providing a training ground for both artists and audiences;
(9) decentralized. institutions of art (museums, theaters, and art
centers); (10) artists held in high esteem and-well remunerated; and
(11) artists of undoubted genius consistently applauded in other

countries around the globe.

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Environment and
Urban Conditions

The issues. -,-In the United States the problem of a sufficient

 

quantity of raw materials has been superseded by the qualitative
(aesthetic, social, and even ethical) aspects of man' s use of the

natural environment. 112 Toward Balanced Growth also notes that

 

until recently man' 8 relationship to the environment has beenone of
exploration. Concern for the environment generally, was limited to
whether or not humanity was exhausting its new inheritance of
sources of food, energy, and materials.

The current interest in the environment has two new
aspects: (1) concern that the limitations the environment places
on our activities maynot be on the input side (sources of food,
energy, and materials), but on the output side (a place .to dispose. of
wastes); and (2) the environment is a complex ecological system in
which intervention of an apparently minor sort can, and often does,
have far -reaching consequences through a chain of unsuspected

113

reactions .

Physical environmental considerations include the quality

of air andwater, housing,. landscaping, and transportation and

urban patterns that determine the spatial dimensions of life. 114

Daniel Moynihan points out that urban crisis is a characteristic of

our times and that it isa concern that tends to increase. 115

148

-Measurement: The physical environment. --Joseph Fisher

 

notes that quantitative physical and economic indicators are available
for measuringphysical environment. However, goals and indicators
with-respect to the quality of the natural environment are difficult to
conceive and aremoredifficult towork with, forseveral reasons:
Qualitative matters are highly subjective; major elements of the
natural environment such as land, water, and air serve a variety of
uses and satisfactions, leading frequently to conflicts among differ-
ent users. Compromises and trade -offs have to be made among
them; it is not easy to determine from the human or social point
of view exactly where to measure environmental quality; quality
questions involveinterpersonal, intertemporal, and interregional
comparisons. Thus, it is difficult to findgeneral indicators and
goals that will hold steady over time; and, finally, services desired
from raw materials and the natural environment frequently are
jointly produced. 1 16
Despite all these difficulties, there is the need .to know the
state of the natural environment. There is no single overall indi-
cator of natural environmental quality in sight. Fisher suggests the
basic indicator for social welfare probably shouldbe the net social

benefits that would result from various selected measures to deal

with a specific problem. . Where such estimates seem impossible,

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the second-best objective would be the minimization of social costs

of selected measures. Because of the interrelatedness of environ-

mental pollution problems, the author proposes the concept of the

”environmental problem shed" to take into account the various

physical and social problems and indicators within a given area.

1)

2)

.3)

He concludes with the following summary points:

Environmental quality indicators now being used are almost
entirely indicators of physical condition and are not as
directly relevant or meaningful for social welfare as one

would like or as most people seem to think.

Probably the basic indicator for social welfare should be
one dealing with net social benefits that would result from
selected interrelated measures to achieve acceptable levels

of air or water quality.

The processes by which decisions relating to environmental
quality standards and programs are reached need to be given
careful attention and should be measured satisfactorily in
engineering or economic terms. Furthermore, typically

there will be alternatives from which choices have to be

-made.

4)

5)

150

Althoughthe qualitative aspects of the natural environment
seem more closely related to social welfare, one should
not lose sight. of the basic importance of quantities of
resource products and services for the "good life" in a

great society.

Much research and development will be needed, not only on
environmental pollution, but also on creating and improving
the indicators of the-trends in such pollution and its effect

on people. This is a multidisciplinary task.

Measurement: Urbanindicators. --According to Daniel

 

Moynihan, urban indicators should report on conditions in three

categories:

1)

2)

3)

117

People as individuals: numbers, distribution and density,
mobility, employment and income, antisocial behavior
(crime data), health, and participation in social institu-

tions;

Families: unemployment and welfare statistics correla-

tions and poverty neighborhood studies; and

Institutions: public service and voluntary organizations,

business, mass media, education, and urban ecology.

151

To these, Ross Stagner adds psychological indicators. 118

He focuses on the city as a system and argues that objective indi-
cators are~limited; inherent factors in the situation demand that
subjective-data from those affected by social planning be considered.
Stagner hypothesizes that frustrations of desires for status, security,
recognition, and self -expression contribute substantially to the
hostility and violence found in cities today. Research is required to
validate this assertion.

A set of psychological urban indicators would focus on the
frequency and intensity of satisfaction (or dissatisfaction) with
aspects of urban life. The satisfaction and frustration of individuals
with urban planning, urban renewal, urban schools, urban trans-
portation, hospitals, and police security systems must be measured.
Effective use of these indicators will require that they be analyzed
in relation to the objective-data already available. If data are
sorted'by census tracts or similar'units, it should be feasible to
test some hypotheses about urban planning by introducing a change
in a restricted areaand measuring any changes in perception and

satisfaction which ensue.

Major policyproblems. --The following strategy of response

 

1 1 9
to environmental problems has been suggested: (1) expand our

152

inadequate knowledge of ecological systems; (2) consider our current
technological and economic alternatives in the light of long -range
ecological balance; and (3) resolve conflicts between our demands
for products and services and. the depletion and pollutiongenerated
by them. The market mechanism can and should be used as one of
the devices for regulating these demands. Government should play

a role throughappropriate regulations, taxes, subsidies, and setting
of standards. Since environmental problems and their solution are
of a global nature, they require cooperation of nations throughout the

world.

The Distributive Factors

 

Income and Consumption

Theissues. "Although-overall income levels are high and

 

are rising, the distribution of income in the United States has
remained almost unchanged in the last 20 years. Income is a rough
but convenient measure of the goods and services--food, clothing,
entertainment, medical care, and so forth--available to a person,

2
a family, or a nation. 1 0

2
The analysis of_consumption focuses onthree broadissues. 1 1
First, America has reached a1 relatively high level of prosperity.

Consumption is considered a prime-goal of total economic effort.

153

The abundance has provided more for everyone, but not an equal
share for all: there is inequality in income, consumption and
assets. In terms of a fixed standard, that is, a given income for
a family of a given size, the incidence of poverty has declined. In
terms of the simplest of relative standards which relates the lowest
incomes to the middle incomes, there has not been such a decline.
Second, at any level of income, consumption involves
choice: choice of vocation, job location, size of family, selection
of goods of desirable quality and price, and choice of profitable
investments. The changes in society have affected the choices
processes in two ways. (1) The problem of personal choice has
been complicated by the increasing degree of specialized knowledge
and discretion needed to determine how a growing amount of time
and expenditures should be used. This is particularly relevant to
the growth, over a long period, in tangible possessions, in financial
investments, in the use of credit, in the decrease in working time,
in the lengthening of the life span, and in the rapidity with which
occupations may become obsolete during one' s working lifetime.
(2) There has been a decline in the latitude of individual discretion,
resulting mainly from the increase in size of government activity.
The proportion of personal income subject to individual discretion

has diminished somewhat because of increases in taxes and increases

"""EJE __

 

 

154

in the size of consumption collectively provided, while the area of
public choice has increased.

Third, the study of consumer behavior as it affects the
economy, especially. those facets of consumer demand that are
relevant for production, is important: changes in the timing of
consumer investment decisions, particularly for durable goods
such as an automobile, accentuate fluctuations in the economy.
The anticipation of changes in such decision patterns has become

an important area of research on consumer behavior.

Measurement. --Recognizing that all the above aspects of

 

consumption require much more information, particularly of a
longitudinal sort, Milton Moss cautions against the excess of

unselective, irrelevant data gathering 122

Major policy. issues. --At most income levels, and certainly

 

.as income levels rise higher, choices become an important issue of
personal, family, and social improvement. For the individual, these
choices involve the allocation of time and income for consumption
andinvestment, and therallocation of both among the various goods,
services, and investments. For the society as a whole the choices
involve the allocation of the total effort and resources between pri-

vate and public goods and services. Leisure, health, and education

155

involve both personal and public discretionary behavior. Each is
differentially distributed among the various social groupings of the

population .

Leisure

The issues. -- There are ambiguities involved in distin-

 

guishing leisure from other major categories of living and in classi-
fying and quantifying activities according to categories. To deal
with the first problem, distinghishing major categories, Philip
Ennis proposes a tripartite division: work, nurturance-maintenance,

and . leisure. 1 2 3

Measurement. -- For the problem of classifying and quanti-

 

fying leisure or other categories, Ennis proposes a modular strategy.
Three guidelines may help make these classifications more con—
sistent. First, the life cycle of the individual or family should be
considered (for example, educational activities for the young have
the same coercive connotation that work has for adults). Second,
natural distinctions of leisure "envelopes" should be maintained
where feasible. For example, the weekday, the weekend, the vaca-
tion, and retirement are each constrained by different forces and

have different meanings. Third, time, activity, or dollars devoted

to leisure should be recorded and reported in a detailed form when

156

practical. Leisure then could be seen inits complexity, the
components could be aggregatedin different ways for-different
purposes. These suggestions help to delimit the field, but do not
solve the problem of how to classify an activity. Ennis maintains
this must come from a consensus determined either by intuition or
empiricism. Present intuition should be clarified and refined by
periodic research that will provide a stronger empirical basis for
decision.

The following units could measure leisure output: (1) Time
measures (total amount of leisure available to the country and time
budgets of individuals); (2) money measures (aggregate of all con-
sumer expenditures for leisure and the dollar budget study of
persons or households); and (3) activity measures (study of the indi-
vidual' s interests and activities and study of leisure activities
themselves through their more or less organized forms). For the
measurement of leisure resources, Ennis suggests an assessment
of the supply trends in space (land area involved), the capital
invested, and the manpower utilized.

Ennis believes solution of the final question about the

quality. of leisure‘is the most difficult. Even if a precise evalua-

 

tion of that quality could be reached, it would not be enough; the

entire-life process-"work, maintenance, and leisure--in all its

157

social contexts, would have to be aggregated first for the individual
then for the society. Because all the attempts to find such a "cal-

culus of happiness" have failed, Ennis concludes that the ”quality of
society' 3 leisure rests on a subjective judgment as to how well our

values are being realized in a general way. "124

Health

Theissues. --The substantial reduction in the mortality

 

rate over the past 60 years (as measured by life expectancy at birth
and by death rates) suggests a great improvement in the health of
the general population. But the analysis of death rates also shows
that the significant decline has occurred primarily in the younger
groups, especially among infants. Although great progress has
been made in the prevention of death from infectious diseases, very
little has been accomplished in the reduction of mortality resulting
from chronic diseases. (Actually, an increase in mortality due .to

many chronic diseases has been recorded.) , Healthy life expectancy

 

(life free of disability and institutionalization) seems to have
improved somewhat since 1957, but not as greatly as the improve-
ment in medical knowledge and standards of living might warrant.
For example, citizens of at least 15 nations have longer life

expectancies thanAmericans, and Negro Americans have, on the

158

average, about 7 years'less expectancy of a healthy life than whites. 125

The reasons for this situation may be the style of life (lack of exer-
cise, smoking, stress), social and economic deprivation and uneven
distribution of medical care, and the nation' 3 system of financing
medical care (insurance plans included) and the underuse of pro-

phyla ctic care . 12 6

Measurement. --It is recognized that mortality data have

 

been useful in identifying certain public health problems and for
epidemiological studies, but their uses as an index of health can be
criticized except where the infectious diseases are concerned.

Several possible indicators of health have been suggested
by Iwao Moriyama: (1) those associated with the health status of
persons and populations in a given area (vital statistics, nutrition);
(2) those related to physical environmental conditions having a more
or less direct bearing on the health status of the area under review;
(3) those concerned with health services and activities directed to
the improvement of health conditions (availability and use of hos -
pitals, physicians, and other health personnel); and (4) biochemical
and other indicators of "healthiness. "127

If the availability of data is a prerequisite, then a health

index would have to include disease and disability; it should be

expressed in terms of the demographic characteristics of the

159

population; and it shouldindicate the causes of disability and should
be able to adjust to changes or differences in situations. Also needed
are clarification on the uses of the health index, and more studies

on conceptual problems, especially those relating to a definition of

health. None of the existing definitions, including that of the World

 

Health Organization ("a state of complete physical, mental and social
well being and not merely the absence of disease and infirmity") is
satisfactory for measurement purposes. In the spectrum of optimum
health at one extreme and death at the other, they do not specify any
criteria to determine where the state of health or disease begins or

ends.

Major policy problems. -- These issues regarding health

remainto be resolved:12 8

 

1) How much of our resources should be devoted to medical

research now and in the future?

2) ~ How can the nation provide health services to encourage
preventive care, and which will insure that all persons
have access to health services which are reasonably

comprehensive ?

160

3) How muchof the nation' 3 health'resources should be used

to serve-the various age groups?

4) Can new ways he found to solve the problems of sharp

increases in medical care costs?

5) How can public policy reconcile organizations' and indi—
viduals' freedom with a redirection of control practices
that are harmful to the environment and with an alteration

in harmful personal habits and life styles?

Education and Learning

_The issues. —-There is some evidence of progress toward

 

the goals of assuring the right to an education for all. An increase
in the learning force is demonstrated by the explosive increase in
school enrollment and in other vocational, technical, andprofes-
sional training activities outside the formal educational structure.
There also has been a great proliferation of other formal educa-
tional activities under a variety of sponsorships (business, libraries,
museums, churches, charity groups, and some more informal
activities such as those of neighborhoods or other small groups).
Other indications are the increasing number of teachers, rising

educational expenditures, changing methods of teaching, and the

161

increasingaverage number of years of schooling. 129 Learning and

education for the poor-show less encouraging results, and socially

and economically disadvantaged groups systematically. learn less.
Educationihas an important role in providing people with

the knowledge and skills necessary to manage change and complexity. 130

In the past, going to school was equated with education, and the-role

of schooling was to transmit information and traditional values.

Today' 8 society is changing so rapidly that a new orientation is

demanded of the-schools. They should be relevant to the needs of

theistudent, that is, they should treat him as anindividual and teach

him to deal with. contemporary problems, and institutions of higher

learning must help solvethe present problems of society.

Measurement. --An understanding of the. educational process

 

and how to evaluate it must be developed. It is further required that
an experimental posture toward innovation in education be developed
which will reflect the present basic uncertainty as to how to go about
solving the many problems which the educational system faces.
Several questions about education remain unanswered. New
indicators must bedeveloped which take into consideration the wide
variety of goals as well as the changes in definitions and emphasis

of those goals. There is need for both qualitative and quantitative

162

data. Although some quantitative indicators exist (educational
opportunities, quantity of education), the data disclose little about
the quality of the educational system or its products. New indicators
relating to educational opportunities, the quality of. education, funda -
mental human behavior, and political and economic behavior are
needed. The responsibility for developing them must be shared by
public and private interests-~government, business, educators,
labor unions, and» civic and community groups.

In addition to these, Beverly Duncan. suggests that future
top priority should be given to a better arrangement of data'collected
under existing programs,132 For example, data might be rearranged
to examine the progression. of successive peer groups through the
school system. The second priority would be the increase in size
of the sample surveyed periodically with : respect to enrollment

status and grades completed.

Equality, Freedom, and Justice

Under the general heading of equality, freedom, and justice
are included several topics on poverty, inequality and conflict,
discrimination, social mobility, social breakdown and crime, and

participation. 1

163

Ifoverty, discrimination, stratification, and mobility: The

 

issues. --It is argued that poverty in high -income societies is more
thanincome insufficiency: it refers to a relativedeprivation and to
the more disturbingissue of inequality. 134 The principal cause of
the decline in the number of people that have incomes below the
poverty line has been the increase in earnings. . But some of the
poor are unable to work because they are too young, too old, dis-
abled, or otherwise prevented from doing so. They would not,
therefore, be directly helped by increasedlevels of wages and
earnings in the economy as awhole. The patterns of present pro-
grams (social insurance, public assistance, minimum wage, and job
training programs) and a discussion of new proposals for solutions
to the welfare crisis have been analyzed in the literature. The con-
clusion reached is that there is no simple, single answer or a magic
solution .to the problems of poverty and economic security.

Closely related to the problem of poverty is the problem
of discrimination. Otis Duncan, proposing a- concept of discrimina-
tion, notes that what we really want is freedom from the-results of
discrimination, but since we can only measure, orinfer, some of
theseresults, the goal might be‘better stated as freedom. of full

participation. 1 3

164

The functions of. indicators to measure fullness of

participationof minorities in American society can be best under-

stood in relation to the socioeconomic life cycle. 136

 

Life chances

V

Farii‘ily background

 

 

 

 

Schooling >, Level of living
Job > Health, welfare
Income > Status, acceptance
Expenditures > Satisfaction, morale

This scheme assumes that the circumstances of the family orienta-
tion (size, structure, socioeconomic status, stability, and so forth)
provide a set of initial conditions whose effects are transmitted
through subsequent stages of attainment and achievement. Schooling,
job, income, and expenditures are the ”distributive variables. "
The term nonwhite includes a variety of minorities, but
because of the lack of comparable data on other groups, the author
limits his analysis to the Negro minority. Data for Negroes, in
particular, reveal the operation of two types of disadvantages:
those common to all. members of society subject to disadvantages
of background or misfortune, and those specific .to the minority
status. Negroes are also discriminated against in the job market.

Limitations on credit andless access to markets give those Negroes

165

at the same incomelevel as some whites less buying power. Even
if a Negro attains educational and occupational achievements and
levels of living and. welfare comparable to whites, his social status
is not the same.

Duncan also has studied the problems of stratification and
mobility in the United States. His conceptual orientation is that
"the degree of rigidity in the stratification system . . . refers to
the extent to which the level of status achievement depends upon the
social origin. If there is much intergenerational transmission of
status, a society is highly stratified, if there is little, the degree
of stratification is low. "137 Duncan' 3 analysis, although—limited by
the available data andits own shortcomings, provides a partial
answer to the question of the rigidity of the stratification system
in the United States. Since the relationship betweenfather' s and
son' 3 occupational status has remained positively related, then,
at least for white males, the data suggest that no change has
occurred .in therigidity of the stratification system between 1910
and 1950, and that the same probability would be valid through
1966.

Analysis of the available data also shows that Negroes have
muchless occupational mobility thanwhites. Their opportunity

seems .to be restricted to a very great extent by current race

166

discrimination andother factors specifically related to race. In
addition to the handicaps in background that arise out of past dis -
crimination and that limit opportunities, the Negro also continues
to obtain less reward for his qualifications than hetwould if he were

white. 138

Poverty, discrimination, stratification, and mobility:

 

Measurement. --Consistent with the conceptualization presented

 

above that poverty should be viewed as a social condition, and that

income alone is an inadequate indicator of the standard of living,

six dimensions are Proposed for the measurement of well -being:139

1) Income: its level, stability, and source;

2) Assets: housing, consumers' durables, savings, and

insurance;

3) Basic services: health, neighborhood amenities, trans-

 

portation, and legal and social services;

4) Education and social mobility: expenditure data, quality

 

of the output, and intergenerational social mobility rates;

5) Political position: voting, representation, quality of

 

treatment, rights and grievances, membership in

167

organizations and associations that represent the interests

of individuals, and feeling of powerlessness; and

6) . Status and satisfaction: occupational prestige, community

 

stratification, index of income stigma, degree of acceptance
of self, agreeability of self -image, satisfaction with life,
and individuals" perceptions of inequalities in each of these

six dimensions.

For the measurement of participation of minorities in the society,
it is proposed that a better evaluation of the two groups of handicaps
sta-ted in the conceptual orientation, "initial conditions" and "dis-
tributive variables, " is necessary if efficient methods of inducing
change are to be found, 140

Duncan suggests that any real change in the degree of
stratification or in correlations between variables implicated in the
process of stratification can be detected. However, the change
must be, large enough and there must be a rigorous standardization
of concepts, scales, and survey techniques. - He proposes replica-

tion of previous studies so as .to detect the changes, if any, in the

degree of stratification. Among these studies are Occupational

 

Changes in a Generation Survey, The phicago Six -Cities Survey of

Labor vMobilitr , replication and extension of Rogoff' 3 study for

 

168

Marion county, and-also recovering and recording schedules of ad
hoc measurements of intergenerational mobility that have been made

in connection with other studies. 141

Social breakdown and crime: The issues. --Some of the

 

present social problems have been analyzed and interpreted from
another perspective. Nathan Goldman points out that reports from
a variety of sources state that American society is breaking down
morally and socially. 142 Indicators of this are those forms of
behavior‘which deviate from the accepted norms of the Judaeo-
Christian culture (drug addition, alcoholism, prostitution, gambling,
divorce, venereal disease, illegitimacy, poverty, homosexuality,
crime, riots, racial discrimination, and so forth). I
Analyzing some of the statistics available, Goldman con-
cludes that it is difficult to indicate the extent of the problem or its
trend in relation to past periods. Lack of data, the unclear and
varying definitions of the indicators of socialbreakdown underlying
existing data, and the differential reporting at various levels explain
the difficulties. Furthermore, some of the problems seem to be
more or less socially sanctioned adjustments to strainsin the
social system rather than maladjustments in themselves. Many of

these strains result from restrictions, confusion, and inadequacy

169

in role performance. To attain the goal of maximizing the social
health of American society, we must consider these problems as
indicators of strain and focus our national resources on their
reduction.

One of the problems of social breakdown that has received
quite a lot of attentionin the literature is that of crime. Albert
Biderman uses crime to illustrate both the difficulties in obtaining
good operational definitions as a basis .for‘measurement and the
shortcomings of available'statistics. 143 According to Daniel
Glaser, 144 some general formulation of crime and delinquency
reduction goals is possible and sound estimates can be made as to
the progress toward these goals. His proposed procedure considers
the various types of offense under the label of crime (as will be seen
on page '171).

The burden of crime is uneven:145 it is concentrated
among the poor. Both criminals and victims are more likely to
be residents of the poverty areas of central cities than of suburbs
and rural areas. Many of those residents in the urban ghettoes
are Negroes. Negroes have much higher arrest rates than whites,
but it is less widely known that Negroes also have higher rates of
victimization than whites of any income group.

Youngpeople commit a disproportionate share of crimes.

Part of the recent increase in crime rates can be attributed to the

170

growing proportion of young people in the population, but the
propensity of youth to commit crimes appears to be increasing.
How could crime be prevented? Fear of apprehension and punish-
ment may deter some crime, and the crime rate in a neighborhood
drops with more intensive policing. But crime and disorder tend
to center among young peOple in ghetto areas, where the prospects
for legitimate and socially useful activity are poorest. It seems
unlikely that stronger punishment, a strengthening of public prose-
cutors, or more police can, by themselves, prevent either individual
crime or civil disorder. Opportunities for the poor and their
attitudes toward the police and the law also must change before the

problems can be solved.

Social breakdown and crime: Measurement. --Nathan

 

Goldman suggests the need to improve the collection of data on the
indicators of social strain and to devise new ones; these would
identify and locate situations which interfere with the ideal function-
ing of the social system. 146 A significant aspect of social break-
down is seen in the inability of the society to mobilize for an attack
on situations which it considers undesirable. Standard definitions
or criteria of social problems must be established; the scope and

accuracy. of data collection must be increased. Information -gathering

171

on the local or state level needs to be coordinated on a nation -wide

basis.

Glaser suggests that the procedure for measuring the

prevalence of crime should be based on the type of offense:147

1)

2)

3)

4)

predatory crime, or acts which have a definite and
intended victim. This type is most readily counted

because the victim generally reports the offense;

illegal service crimes are acts which involve a relation-
ship between a criminal and his customer (for example,
narcotics, gambling, prostitution). These are not
counted readily, because both parties share an interest

in not reporting the offense;

public disorder crimes also lack a specific victim in
most cases. These are crimes only when performed before
an audience that is offended or is likely to be offended

(drunkness, vagrancy, and so forth); and

crimes of negligence usually involve an unintended victim

(such as automobile driving infractions).

Each of these four types poses different problems in the specifica—

tion of goals and indicators. Further complication arises from the

172

tendency for crimes to be defined differently. In practice crimes
are defined according to the status of both the offender and his
victim, customer, or audience.

After analyzing each of the four types the author suggests
that the assessment of the effectiveness of police, court, and con-
ventional agency programs requires crime statistics different from
those collected to estimate the incidence of crime. Long -term
data on criminal careers, for example, would enable comparison
of the subsequent criminality of similar offenders who receive dif-
ferent kinds of correctional treatment. The formulationof crime
reduction goals also should consider the difficult problem of crime
definitions and the social costs of crime control actions. Because
of the multiplicity of the data sources and scope of perspective
necessary for suchdiversified measurements, the author recom-
mends that the primary responsibility should be inthe hands of a
single national agency. It would be assisted by the many other
agencies at the national, state, andlocal level now oriented to

segments of this task.

Participation: The issues. --Another topic that has inter-

 

ested the authors is that of politics and political participation.
Analyzing the topic from a broad viewpoint, Joyce and William

Mitchell view the political system "as a functional element of the

173

wider, more inclusive-society engaged in a variety of valued
activities. "148 They find it represents a paradox of stability and
change.

The United States has created and preserved one of the most
stable sets of political structure ever known: it has the oldest
operative written constitution, the oldest continuous two -party
system, and the oldest recurrent set of peaceful elections in world

history. The original Constitution still defines the basic structure

 

of the government, but 15 amendments and subsequent interpretation
and implementation have brought about important changes and
adaptations.

Political life has become both more centralized and
decentralized (greaterfederal and state activities) both in defining
problems and establishing public offices. The increasing-complexity
of governmental practices is exemplified by the proliferation of
more elective offices, administrative units, boards, and commis-
sions, across all levels and different geographic jurisdictions.
Public -private cooperation has become widespread.

As the polity has grown in size and complexity, official
functions have become more specialized and professionalized.
Political participation, as measured by voting, involves only two-

thirds of the eligible electorate. On the other hand, highly

174

organized associations or interests groups and political parties
and campaignorganizations increasingly have become the major
factors in political life. This bureaucratization of interests is a
primary political means of achieving policy and other public ends,
but not all segments. of society have‘been, or are, organized into
equally powerful organizations. (According to the Mitchells, the
most organized are business, labor, and professional interests,
in that order.) As a result of bureaucratization, groups have
become more impersonal and more distant from their membership.
Far from having decentralized decision units, the elites make the
choices. They, are constrained to please their constituents only to
the extent that they fear-losing their own positions.

The Mitchells point out that the exclusion, through willful-
ness or apathy, of about one -third of the electorate may be inter-
pretedas a symptom of division and alienation. Policy preferences
and demands of the citizenry still can be voiced, but rarely in the
direct fashionof personal participation. The American activists of
today do not seem to have given up entirely the right to protest, but
as the authors point out, their alternatives of political action (demon-
strations, sit-ins, rioting) are not new. However, the methods
and the extent of their usage in this country are new and still are
considered "marginal" by_the most conservative elements of the

society.

175

The Mitchells speculate on the future process of resolution
for the present conflicts and suggest the possibility of a cyclical
pattern of behavior: individual protest, accommodation or repres -
sion, increased agitation, increasing amounts of organized effort,
formation of formal organizations, negotiation and compromises
with more established private organizations and governments,
internal divisions and protests by members as the original move-
ments become establishment -oriented, and then routiniz ed bureau -
cratic participation in political life as success is taken for granted.

The authors contend that the government has an increasing
impact onthe lives of American citizens and that this can be sup-
ported by objective evidence (rather than the subjective feelings) of
the citizens. They illustrate this both by an analysis of the citizens'
role in supporting the system through taxation and subsidies and
of theregional share of government expenditures.

The issue of electoral participation was analyzed by
Richard Scammon, on the basis of the report of the Kennedy Com-
mission on Registration and Voter Participation, the 1964 Current
Population Survey of the Bureau of Census and other data. 149 He
notes that Americans participate less in national elections than do
the citizens of many 'other democratic states, and the voter turnout

varies greatly as measured by social class, geographic areas, sex,

age, and other criteria.

176

The. low turnout is explained by understanding two basic
groups of nonvoters. One is limited by such obstacles as citizen-
ship, registration and absentee voting requirements, racial and
religious inequalities, and administrative regulations for voting
times andlocations. The other group includes those who meet
legal and administrative requirements but "lack involvement. "
Women vote less than men; young people less than the middle -aged.
Socioeconomic status also affects lack of involvement, as does
importance of the election, closeness of the race, and competitive-
ness of the political atmosphere. Noting that voter participation
is a dubious goal, the author suggests that perhaps the effort
should be to increase access to the polls by elimination or changing
of the legal and administrative barriers to voluntary voting.

Participation has been studied in a broader context by

Sidney Verba. - He defines democratic participation as the "process

 

by which citizens influence or control those who make major
decisions affecting them. ”150 Participation is important because
it represents a general value in this society. Although it is often
thought of as a means to some other end, it is an end in itself
because it enhances the individual' s self -esteem and feeling as a
citizen. Furthermore, the more the government does in relation

to the life of a society, the higher the stakes of political participation.

177

The author discusses several problems of participation,
including the problems of scale (the individual' 3 participation in
relation to the size of the decisional unit); the problem of technical
complexity (consequent need for specialized agencies and technical

expertise); and the problem of inequalities in participation.

Participation: Measurement. -- For participation in gen-

 

eral, and political participation and electoral participation in

151

particular, the following topics are proposed for further research:
(1) membership in organizations; (2) more comprehensive analysis
of electoral behavior; (3) more systematic, continuous accounts of
"non ~legitimate" forms of political action (riots, evasions of or
resistance tolaws, brutality and violence between officials and
citizenry, and other such efforts at coercion, disruption, evasion
and pressure); (4) more research on political communication,
sources, channels, volume, and ultimate distribution or reception;
(5) more systematic surveys of citizen -government transactions
beyond electoral participation; and (6) a great deal more basic
conceptualization onmeasuringpolicy outputs of American govern-
ments. Further definitions and measures are needed for public
"goods" in the terms of their final goals or consequences, such as

security, welfare, benefits, burdens, and satisfactions.

178

Social Indicators:
The Present State of the Art

 

 

The review of the literature illustrates the "social
information explosion" noted by Gross. But reviewed as a whole,
the literature lacks consistency and integration. The general
approach makes a positive contribution to the problem of initial
conceptualizations, but the efforts are not translated into opera—
tional definitions facilitating measurement or into specific
measurement proposals. The specific areas approachconcentrates
mostly on the specific statistics needed, but very often lacks the
basic conceptual context within which these statistics gain meaning.
The lack of some common format in the several papers and articles
also is regrettable. The proposed three areas of review (issues,
measurement, and major policy problems) are not balanced because
they were not given equal consideration by the various authors.

The overall impression is one of the immaturity of the
stateof the art. The main problems seem to be in moving from
level .to level: (1) from the general formulation of a societal model
to the conceptualization of the specific areas of concern; (2) from
the conceptualization of the specific areas of concern to the opera-
tional definitions of the variables to be measured; (3) from the

operational definitions of the variables to the adequate choice of

179

measurements;152 and (4) from. the indicators to some process of

policy planning to which they are relevant. 153 Most of the authors

seem: well aware of these problems. Some of those using the specific

areas approach make methodological suggestions for those areas that

actually are measurement requirements of general applicability. 154
The suggested guidelines for a comprehensive study of

social indicators include conceptual framework, data, and policy

planning. The major elements of each is described below.

Conceptual Framework:

 

a. conceptual orientation that will lead to criteria for
-measurement,

b. standardization of categories,
0. specificity of categories, and
(1. complete categories embodying all variables and

elements that impinge upon the quality of life.

Data

 

a. location or'creation of data pertinent to the needs
of the conceptual framework,

b. disaggregation of data (data should be as specifically
local as resources permit, but also should allow
aggregation for a truly national set of indicators),

c. correlation of data (data should report the correla-
tion between phenomena: what unit, which people,
and how many of them are doing what under known
social conditions),

180

d. availability of comparable data for‘successive
periods of time so that intertemporal differences
can be taken to signify change rather than mere
fluctuations in errors of measurement or variation
in study design, and

e. inspectionof the intertemporal comparisons for

evidence of secular trends or other identifiable
temporal patterns.

Policy Planni_ng_:

 

a. the data should be relevant to some coherent
national process of policy planning, which is
necessary to establish the relationships of social
indicators to some national or societal objectives,
goals, and so forth, and

b. the use to which social indicators are put for
policy making is important in terms of inferring,
interpreting, analyzing, and evaluating (thus the
several suggestions for multiplicity of data source,
for apolitical or "panpolitical" data, and so forth).

The important conclusion from this review seems to be

that despite restrictionson both the conceptualization and measure-
ment of social indicators, and despite the relative'immaturity of
the present state of the art, social indicators soon will be part of
the information base for decision making.

As seenin the literature review, the authors have been

very critical of the methodological basis of existing data. Never-

theless, some of them have tried to apply better conceptual frame-

works to the analysis of that data and have reached many new

181

conclusions and raised many interesting questions. It is to be
expected that researchers' interest in pursuing studies of social
indicators with better methodological tools will be greatly stirnu-
lated. As a matter of fact, many private institutions and govern-
mental agencies already are involved in the investigation of social
indicators and social reporting.

Althoughinthe present state of the art there is no agree-
ment about what the indicators are, how they are to be measured,
and what activities lead to changes in these indicators, the review
implies that agreement may be possible in the future. The review
also indicates that what began with considerations for the quality of
life in terms "of hard or soft data, quantitative or qualitative data,
ordinal or cardinal, "155 is evolving more and more into the idea
of quantitative data of alongitudinal nature, eXpressed in statistical
series.

Furthermore, whether or not the best indicators, the best
conceptualization, or the best measurements are used, the emergence
of quantitative social indicators and a periodic social report will
have a broad impact. The final component of a social report is the
recommendation for national goals and policies. Implicit in the
idea of evaluating the quality of life is the idea of directing social

change through the sound choice of government policies. It is here

182

that the nexus between-informationfrom social indicators and .
corporationdecision making becomes clear: social indicators both
will reflect and guide government policies, and these, in turn, will
influence the corporation. This is the basic idea which underlies

this dissertation.

183

Chapter 3 Footnotes

 

1Daniel Bell, "The Idea of a Social Report, " Public Interest
15 (Spring 1969): 72 -84. Bell cites the work of J. C. L. Simonde
de Sismondi, New Principles of Political Economy, published in
1819; Arthur C- Pigou, Economics of Welfare, published in 1920,
and Karl W. Kapp, The Social Costs of Private Enterprise, pub-
lished in 1950.

 

 

 

 

ZBertram M. Gross and Michael Springer, "A New Orien-
tation in American Government, " Annals of the American Academy
of Political and Social Science 371 (May 1967), 1-19.

 

 

3Wilbur J. Cohen, "An Introductory Commentary, " preface
.to Toward a Social Report (Ann Arbor, Mich. : The University of
MichiganPress, 1970), p. v.

4

 

Cohen, "Commentary, " p. vi.

5Gross and Springer, "New Orientation, " p. 8.

6Ibid.

7Raymond A. Bauer, ed, Social Indicators (Cambridge,
Mass.: The M.I.T. Press, 1966).

 

8This was later published separately as a book withthe
same title, London Tavistock Publications, Ltd. , 1966.

9Bertram M. Gross, "The Social State of the Union, "
Trans-Action (November-December 1965), pp. 14-17. This article
led Thorsten Sellin, editor of THE ANNALS, to suggest that an
issue of the publication be devoted to the subject of social indicators.
Two issues-were published in 1967, "Social Goals and Indicators
for American Society," Vol. I, May 1967, Vol. 11, September 1967,
and one-in March 1970: "Political Intelligence for America' 8
Future. "

10

 

Cohen, "Commentary, " p. vi.

184

1"To improve our ability to chart our progress, I have

asked the Secretary to establish within his office the resources to
develop the necessary social statistics and indicators to supplement
those prepared by the Bureau of Labor Statistics and the Council of
Economic Advisors. With these yardsticks, we can better measure
the distance we have come and plan for the way ahead. "

12U. S. , Department of Health, Education and Welfare,
Toward a Social Report (Washington, D. C. : U. S. Government
Printing Office, 1969). Alice Rivlin and Mancur Olson, Jr. , worked
with the several drafts of the document.

13

 

For a different view of the constraints and problems in
the preparation of the Report see Lewin' s harsh comments. Arthur
Lewin, The Satisficers (New York: The McCarl Publishing Co. ,
1970).

 

14Eleanor B. Sheldon and Wilbert E. Moore, eds. , Indi-
cators of Social Change: Concepts and Measurements (New York:
Russell Sage Foundation, 1968).

 

15Daniel Bell, ed. , Toward the Year 2000 (New York:
Houghton Mifflin, 1968). The commission' 3 work is similar in
scope to various other long -range studies: Herman Kahn and
Anthony J. Wiener, The Year 2000: A Framework for Speculation
on the Next Thirty —Three Years (New York: McMillan, 1967f and
Bertrand de Jouvenel' s Futuribles project in Paris, The Art of
Conjecture (New York: Basic Books, 1967). See also Robert Jungk
and Johan Galtung, eds. , Mankind 2000 (London: Allen and Unwin,
1969).

 

 

 

 

 

 

6Gross and Springer, "New Orientation, " p. 10.
17President' 8 Commission on National Goals, Goals for
1h; Americans: Programs for Action in the Sixties (Englewood
Cliffs, N. J. : Prentice Hall, 1960).
18Albert D. Biderman, "Social Indicators and Goals, "
in Bauer, ed. , Social Indicators, pp. 68-153.

 

 

 

 

19Office of the White House Press Secretary, "Statement
by the President on the Establishment of a National Goals Research
Staff, " 13 July 1969.

185

2
0National Goals Research Staff, Toward Balanced Growth:
Quantity with Quality (Washington, D. C. : U. S. Government Printing
Office, 1970).

 

 

21Nestor E. Terleckyj, "Measuring Possibilities of Social
Change, " Looking Ahead 18, no. 6 (August 1970): 1-10, and "The
Role of Efficiency in Achieving National Goals, " paper presented to
the Annual Meeting of the American Association for the Advancement
of Science, Chicago, Ill. , , 29 December 1970.

 

22Dwight A. Ink, "Statement Before the Special Sub-
Committee on Evaluation and Planning of Social Programs of the
Senate Committee on Labor and Public Welfare" on S. 5, "The Full
Opportunity and National Goals and Priorities Act, " mimeo supplied
by the author.

23Office of Management and Budget Statistical Policy,
"Social Indicators, " Draft no. 6, June 1971. See also Daniel B.
Tunstall, "Developing a Social Statistics Publication, " paper pre-
sented at the 1970 Annual Meeting of the American Statistical Asso-
ciation, Detroit, Mich. , 27 December 1970. In this paper only five
areas of social concern are mentioned: health, public safety,
legal justice, education, and employment and income.

2‘JESee, for example, Irma Adelman and Cynthia Taft
Morris, Society Politics and Economic Development (Baltimore,
Md.: The John Hopkins Press, 1967); Frederick H. Harbison,
Joan Maruhnic and Jane R. Resnick, Quantitative Analysis of
Modernization and Development (Princeton, N. J. : Princeton» Uni-
versity, 1970). See also the issue of the Annals of the American
Academy of Political and Social Science 393, ”Social Information
for Developing Countries" (January 1971).

25Donald V. McGranahan, "Analysis of Socio —Economic
Development Through a System of Indicators, " Annals of the Ameri-
can Academy of Political and Social Science 393 (January 1971): 66.

26Jay W. Forrester, Industrial Dynamics (Cambridge,
Mass.: The M.I.T. Press, 1961); and Jay W. Forrester, Prin-
ciples of Systems (Cambridge, Mass.: Wright-Allen Press, 1968).

 

 

 

 

 

 

 

 

 

27Dennis L. Meadows, "World Simulation--An Approach
to World Planning, " The MBA (April 1971), pp. 42 -46.

 

186

28Meadows, "World Simulation. " See also: Jay W.

Forrester, "Counterintuitive Behavior of Social Systems, " Tech-
nol_ogy Review 73 (January 1971): 53 —68; and Jay W. Forrester,
World Dynamics (Cambridge, Mass.: Wright-Allen Press, 1971).

 

 

9Bauer, Social Indicators.

 

30Bertram M. Gross, "The State of the Nation: Social
System Accounting, ” in Bauer, ed. , Social Indicators, pp. 154-271.

 

31Biderman, "Social-Indicators, " pp. 68- 153.

2Sheldon and Moore, Indicators.

 

3Educational Policy Research Center, ”Toward Master
Social Indicators " (unpublished memorandum), Stanford Research
Institute (Menlo Park, Calif., 1969).

34Amitai Etzioni, ”Toward a Theory of Societal Guidance, "
in Sarajane Heidt and Amitai Etzioni, eds. , Societal Guidance: A
New Approach to Social Problems (New York: Thomas Y. Crowell
Co. , 1969). See also: Amitai Etzioni, ”Short-cuts to Social
Change?, " Public Interest 12 (Summer 1968): 40 -51.

35Amitai Etzioni and Edward W. Lehman, "Some Dangers
in Valid Social Measurement, " Annals of the American Academy of
Political Science 373 (September 1967): 1-15.

 

 

 

 

 

6Toward a Social Report.

 

37Towa rd Balanced Growth.

 

8Terleckyj, "Measuring Possibilities."
9Raymond A. Bauer, "Detection and Anticipation of
Impact: The Nature of the Task, " in Bauer, ed. , Social Indicators, p. 1.

40Sheldon and Moore, Indicators, p. 4.

 

 

41Toward a Social Report, p. 97.

 

2”Toward Master Social Indicators, " p. 12.

it'll-D p Jiflwvlnlfi.

 

187

43Gross, "State of the Nation. "

44Ibid., p. 183.

451mm,, p. 185.

461bid., pp. 264-65.

7"Toward Master Social Indicators. "

48Ibid., p. 15.
49Ibid., p. 7..
50

Adrian B. Ryans, "Developing a Rational System of
Social Indicators, " unpubl. paper, Graduate School of Business,
Stanford University, 1970, p. 6.

1Toward a Social Report. See also: Mancur Olson, Jr. ,
"The Plan and Purpose of a Social Report, " Public Interest 15
(Spring 1969): 85-97.

 

 

52Toward a Social Report, p. 100.

53mm, p. 101.

 

4Towa rd Balanced Growth.

 

55Ibid., pp. 5-6.

561bid.. p. 33.

57Leonard A. Lecht, Goals, Priorities and Dollars: The

 

Next Decade (New York: The Free Press, 1966).

 

58Terleckyj, "Measuring Possibilities. "
591bido 1 ppo 2‘3.
60Ibid.

61Terleckyj, "The Role of Efficiency. "

188

621bid., p. 16..

63Nestor E. Terleckyj, "Measuring Output of Government
Activities, " paper presented at the International Conference on
Income and Wealth, Ronneby, Sweden, 29 August 1971, p. 25.

4Biderman, "Social Indicators. "

651bid., p. 24.

66Sheldon and Moore, Indicators.

 

7Some of the same restrictions are expressed in Toward
a Social Report, pp. 96 -97. A large part of our existing social
statistics are excluded from the category of social indicators since
they are records of inputs; they do not indicate whether things
effectively improved. The main shortcomings of the existing sta-
tistical system are: (1) many of our statistics on social problems
are merely a by -product of the informational requirements of
routine management; (2) the decisions about what statistics should
be collected are ad hoc. A series of more or less independent
decisions, however intelligent, may not provide the most coherent
and useful system of statistics.

68

 

Sheldon and Moore, eds. , Indicators, p. 10.

9
Etzioni and Lehman, ”Some Dangers. "

7olbid.. p. 2.

71On indexing, see Iwao M. Moriyama, "Problems in the
Measurement of Health Status, " in Sheldon and Moore, Indicators,
pp. 573 -600. Analyzing the need for an overall index of healthand
the difficulties of deriving it, Moriyama suggests that an index
should have certain properties: ; (1) it should be meaningful and
understandable; (2) it should be sensitiveto variations in the phe-
nomenon being measured; (3) the assumptions underlying the index
should be theoretically justifiable and intuitively reasonable; (4) it
should consist of clearly defined component parts; (5) each compo-
nent should make an independent contribution to variations in the
phenomenon being measured; and (6) the index should be derivable
from data that are available or quite feasible to obtain.

189

2Thesame kindof restrictions are made by Terleckyj.
Arguing that there has been a failure of both demand and supply
. statistics for social fields, the author states that "the existing
statistical systems in the social field do not adequately serve the
needs, either of scholarship or of policy making for measuring and
analysis of social changes in the United States. " Nestor E. Ter-
leckyj,. ”Data Systems for Measuring Social Change, " paper present-
ed at the 1970 Business and Economic Statistics Section, Proceedings of
the American Statistical Association, mimeo supplied by author.

73Michael Springer, "Social Indicators, Reports and
Accounts: Toward the Management of Society, " Annals of the Ameri-
can Academy. of Political and Social Science 388 (March 1970): 1 -13.

 

 

74Quoted in ibid. , p. 12.

758pringer, "Social Indicators, ” p. 12.
7
6Ibid. , p. 13. This idea seems consistent with the ideas
espoused by Daniel Bell concerningthe emergence of a new class
as required by the postindustrial society. His ideas will be reviewed
in more detail later in this chapter under "Technology. "

77Mancur Olson, Jr. , "An Analytic Framework for Social
Reporting and: Policy. Analysis, " Annals of the Academy of Political
and Social Science 388 (March1970): 112 -126.

78Ibid., p. 126.

 

 

9Biderman, "Social Indicators, " p. 102.

0Daniel Bell also sponsors the view that the responsibility
for a Social Report must rest with the government, "becauseonly
the government has theresources to maintain such a large -scale effort
and because onlya government report has the independence and
authority to commandattention and become the basis of policy. "
Bell, "Social Report, " p. 83.

For the defense of a multiplicity of data source see, for
example, three articles in Annals of the AmericanAcademy of
Political Science 371: (May 1967): Gross and Springer, "Newfirien-
tation, "pp. 13 -14; Otis Dudley Duncan, "Discrimination Against
Negroes, " pp. 95-96; and Daniel Glaser, "National Goals and
Indicators for the Reduction of Crime and Delinquency, " p. 126.

 

 

190

1Cohen, "Commentary, " and Ink, "Statement. "
82Gross, "State of the Nation, " pp. 268-69.

3Sheldon and Moore, Indicators.

 

4Gross, "Social State. ”

8E’Toward a social Report.

 

6Towa rd Balanced Growth.

 

87Conrad Taueber, "Population Trends and Characteristics, "
in Sheldon and Moore, eds. , Indicators, pp. 27-74.

 

8Toward Balanced Growth.

8 9Ibid .

 

0Taueber, "Population. "

”William J. Goode, "The Theory and Measurement of
Family Change, " in Sheldon and Moore, eds. , Indicators, pp. 295-348.

 

92 Toward Balanced Growth.

93A. W. Sametz, ”Production of Goods and Services, the
Measure of Economic Growth, " in Sheldon and Moore, eds. ,

Indicators, p. 77.

 

 

94Towa rd Balanced Growth.

95Sametz, ”Production. "

 

96Toward Balanced Growth.

 

97LeontH- Keyserling, "Employment and the 'New Econom-
ics, ' " Annals of the Academy of Political and Social Science 373
(September 1967): 102 -119.

 

, 98Stanley Lebergott, "Labor Force and Employment Trends, "
in-Sheldon and Moore, eds. , Indicators, pp. 97 -143,

 

9Keyserling, "Employment. "

191

100John McHale, "Science, Technology and Change, "
Annals of the American Academy of Political and Social Science
373 (September-1967): 120-140.

01Daniel Bell, "The Measurement of Knowledge and
Technology, " in Sheldon and Moore, eds. , Indicators, pp. 145 -246.

102

 

Ibid., pp. 161, 163.

1 03Towa rd Balanced Growth.

104McHale, "Science. ”
105Bell, "Measurement. "
106mm,, p. 180.

107Ibid.

108

Toward Balanced Growth. Technology assessment is
the-label givenin Congress to a set of procedures to aid Congress
in making decisions for the orderly introduction of new technology
and theevaluationof technology already in use. . However, it is
better viewed as a, manifestation of a. larger phenomenon of a
decreasingwillingness of both the public and its representatives
to accept the undesirable effects of things done in the name of
progress. See: U. S. , Congress, House, Committee on Science and
Astronautics, A Study of Technoggy Assessment. Report of the
Committee on-Public Engineering Policy (Washington, D. C. : U. S.
Government Printing Office, 1969); U.S. , Congress, House, Com-
mittee onScience and Astronautics, A Technolcgy Assessment
System for the ExecutiveBranch. Report of the National Academy
of Public Administration (Washington, D. C. : Government Printing
Office, 1970); Harvey Brooks and Raymond Bowers, "The Assess-
ment of Technology, " Scientific American 222, no. 2 (February

. 1970): 13-20; and James D. Carroll, "Participatory Technology, "
Science 171 (February1971): 647-53.

109Alvin Toffler, "The Art of Measuring the Arts, " Annals
of the American Academy of Political Science 373 (September 1967):
T41 ~155.

110Toward a Social Report.

 

 

 

 

lll‘fief, .JIII 1,1. ...1: I94.“

192

111Toffler, ”Art of Measuring, " p. 146.

112Joseph L. Fisher, "The Natural Environment," Annals
of the American Academy of Political and Social Science 373 (May
1967): 127-140. See also: Boyd Collier, Measurement and Environ-
mental Deterioration, Research Monograph no. 34 (Austin: Bureau
Kf Business Research, University. of Texas, 1971).

113Toward Balanced Growth.

 

 

 

 

114Toward a Social Report.

 

115Daniel P. Moynihan, "Urban Conditions: General, "
Annals of the American Academy of Political and Social Science 371
(May 1967): 159-177. See also: Barry Gottehrer, "Urban Condi-
tions: New York City, " ibid. , pp. 141 -158; and Jay W. Forrester,
Urban Dynamics (Cambridge, Mass.: The M.I.T. Press, 1969).

116

 

 

Fisher, "Environment. "

1 17Moynihan, "Urban Conditions. "

8Ross Stagner, "Perceptions, Aspirations, Frustrations
and Satisfaction, An Approach to Urban Indicators, " Annals of the
American Academy of Political and Social Science 388 (March1970):
59-68.

 

 

1 19Toward Balanced Growth.

120Toward a Social Report, p. 41.

2
1 1Milton-Moss, "Consumption: A Report on Contemporary
Issues, " in Sheldon and Moore, eds. , Indicators, pp. 449 -523.

1ZZIbid.

 

 

 

123PhilipH. Ennis, "The‘Definition and Measurement of
Leisure, " in Sheldon and Moore, eds. , Indicators, pp. 525-72.

 

124Ibid., p. 566.
125 . .
Toward a Somal Report; and Iwao M. Moriyama,
"Problems. " See also Philip‘R. Lee, "Health and'Well Being, "
Annals of the American Academy of Political and Social Science 373
(September 1967'V 193-207.

 

 

‘. your-III”

 

 

193

126Toward a Social Report.

 

12 7Moriyama, "Problems. "

128Toward a Social Report.

 

129Wilbur J. Cohen, "Education and Learning, " Annals
of the American Academy of Political and Social Science 373
(September 1967): 79~101; and Beverly Duncan, "Trends in Output
and Distribution of Schooling, " in Sheldon and Moore, eds. , Indi-
cators, pp. 601-719. See also Toward a Social Report.

1 30Toward Balanced Growth.

 

 

1 3 1Cohen, "Education. "

2
13 Duncan, "Trends. "

133At first sight it may seem a rather broad range of issues
to be included under the same heading. But they all refer to the
basic questions of whether goals have been achieved in a democratic
or totalitarian way, and of whether there is harmony in society.

The questions of individual freedom, of civil rights, the sense of
belonging, equality and justice (justice in courts, access and redress
in large organizations) are basic to a democratic society. As is
clearly stated in Toward a Social Report, p. 79, at present, one can
no more than ask the right questions, hoping to encourage the develop-
ment of the needed data in the future. See Milton Konvitz, "Civil
Liberties, " Annals of the American Academy of Political and Social
Science 371 (May 1967): 38-58.

1343. M. Miller, Martin Reed, Pamela Roby, and Bertram M.
Gross, "Poverty, Inequality and Conflict, " Annals of the American
Academy of Political and Social Science 373 (September 1967.): 16-52.
See also: Eli Cox, "What Is Poverty? Who Are the Poor?, " Busi-
ness Topics 19, no. 3 (Summer 1971): 5-10,‘ and Eli Cox, "Poverty
and Demand, " Business Topics 19, no. 4 (Autumn 1971): 25-32.

135

 

 

 

 

Duncan, "Discrimination, " p. 86.

136Ibid., p. 87.

194

137Otis Dudley Duncan, "Social Stratificationand Mobility

Problems in the Measurement of Trend, " in Sheldon and Moore,
eds., Indicators, p. 696.

138Toward a Social Report, p. 15.

139Miller et a1. , ”Poverty. "

 

 

0
Duncan, "Social Stratification. "

141Ibid.

1“Nathan Goldman, “Social Breakdown, " Annals of the
American Academy of Political and Social Science 373 (September
1967): 156-79.

143Biderman, ”Social Indicators. "

14‘J‘Glaser, "National Goals . "

145Toward a Social Report.

 

 

 

146Goldman, "Social Breakdown. "

1MGlaser, "National Goals. "

148Joyce M. and William C. Mitchell, "The Changing
Politics of American Life, " in Sheldon and Moore, eds. , Indicators,

p. 247.

 

149Richard M. Scammon, "Electoral Participation, "

Annals of the American Academy of Political and Social Science
371 (May 1967): 59-84.

 

150Sidney Verba, "Democratic Participation, " Annals of
the American Academy of Political and Social Science 373 (Septem-
ber 1967): 54.

151Mitchell and Mitchell, "Changing Politics, " and Verba,
"Democratic Participation. "

1528ee Russell L. Ackoff, The Design of Social. Research
(Chicago, Ill. : University of Chicago Press, 1953) ; and Russell L.
Ackoff, with the collaboration of Shiv K. Gusta and J. Sayer Minas,

 

 

 

195

Scientific Method: OptimizingApplied Research Decisions (New
York: John Wiley and Sons, 1962).

153Nake M. Kamrany and Alexander N. Christakis, "Social
Indicators in Perspective, " Socio -Economic Planning Science 4
(1970): 207-16.

154See for example, Moynihan, "Urban Conditions"; Ennis,
"Definition"; Duncan, "Social Stratification”; and Kamrany and
Christakis, ”Social Indicators. "

1
55Gross, "Preface, " in Bauer, ed. , Social Indicators,

 

p. xvii.

CHAPTER 4

CONCEPTUAL FRAMEWORK

Introduction

 

In chapter 2 it was noted that doubts exist about the
ability of the present system (and underlying ideology) to provide
a quality of life comparable to its achievements in purely economic
terms. It was also noted that traditional economic and marketing.
theories have not provided a conceptual framework for evaluating
quality of life even in general terms, much less in terms of
measurements. The information explosion concerning social
indicators represents an attempt to conceptualize and measure
variables other than economic ones in order to evaluate the quality
of life.

The‘review of the literature in chapter 3 indicates the
progress of such developments and clearly shows that, despite the
present immaturity of the state of the art, the concern with social
indicators is an irreversible process for three reasons. First,

there is extensive ongoing research, the results of which should

196

197

contribute to better conceptualizations and measurements. Second,
the ongoing work within federal government agencies is a sign of the
government' 3 interest and commitment to the subject. Third, the
high visibility brought to social issues by social indicators could
make them an important tool for support of claims and causes by
interested groups. Having discovered the usefulness of this kind
of data, it is not likely that these groups will let the subject drop.

Ongoing research is being supported, among others, by
the National Science Foundation. It has given a substantial grant
to the University of Michigan to continue research thatwill lead to
better social reporting, and has contracted for the Urban Institute
to continue its work in social andeurban indicators. 1

Several agencies within the federal government have
evincedinterest. Since 1969, the Statistical Policy Staff of the
Office of Management and Budget has been working on social
indicators. "Although still in the development stage, most of the
indicators selected are presently published and used intensively by
analysts and policy makers. "2 The Presidential Commission on
Federal Statistics, which is reviewing the federal statistics system,
will propose a five -year plan for research in social indicators and

social reporting, both in private and government research organiza -

tions. 3 Late in 1970, the Office of Management and Budget was

 

198

directed by the president to develop-a performance measurement
system for federal programs. It is expected that the system will
state-clearly the goals and objectives of important social concerns,
their conditions, problems, and needs, and will be a reporting
system by which the results of programs dealing with these prob-
lems and needs can be evaluated in terms of the stated goals. 4

The National Marketing Advisory Committee of the Department of
Commerce appointed task forces in 1970 to study and make recom-
mendations in three areas of social concern: social legislation and
business; new marketing criteria. created by environmental issues;
and new values and measures in the quality of life. 5 The final
report, withrecommendations, already has been presented to the
Secretary of Commerce.6 The recommendations are concerned

with understanding the effects of marketing activities on the economy
and society, with the social changes taking place, and with the role of
the Department of Commerce as a liaison between government
agencies and business as they cope with these changes. The report
alsoesuggests the utilization of existing information, the gathering

of new data, and that the responsibility for the proposed periodical
publication onsocial indicators be assigned to the Bureau of the.

Census as a high priority issue.

199

Examples of the high visibility brought to social issues by
social indicators can be found in the tone of most contributions
reviewed in chapter 3.

It seems very likely that the conceptualization and mea -
surement of social indicators will continue. The Office of Statistical
Policy of the Office of Management and Budget already is committed
to the'study of a social indicators statistical series to be published
regularly. Social indicators information already is influencing and
will continue to influence policy planning and decision making at the
governmental level. In addition, such data also will influence

corporate policy planning and decision making.

Conceptual Framework

A conceptual framework should include the underlying
theory or theories, and the assumptions, models, concepts, and
hypotheses that indicate the viewpoint from which the study is con-
ducted:7 Because of the immaturity of the state of the art, there
is no well-developed and tested theory on social indicators. Thus,
the firststep is to establish a. series of concepts and general

assumptions and deductively derive propositions from these assump-

tions .

Jul!» ... ... r M !flt.fl 9:~.'I..Iaw

 

200

As pointed out in chapter 3, both Etzioni and Olson criticize
the goals approach adopted by some other authors. 8 However, the
review in chapter 3 indicates that most government-sponsored
research or government-oriented research is adopting a goals
approach. It seems reasonableto accept this approach.
Accordingly, policy is conceptualized as referring to deliberate
action taken by the various parts of a government or corporation
in pursuit of certain goals and in response to problems and
opportunities. These deliberate actions take the form of particu-
lar activity(ies) which have definite effects in the face of current
forces.

The initial premise of the conceptual framework used here
is Terleckyj' 3 statement that

achievement of national goals is defined analytically in terms
of observable changes in a series of specific goals indicators,
such as life expectancy, crime rate, educational testing scores,

etc. , which wereeselected to reflect the actual objects of public
concern.

. changes in goals output indicators are possible only
by means of specific combinations of events comprising new
types of public policies and private developments called
"activities" . . . defined to include . . . large aggregations
of public policies and private behavior patterns.

This concept can be schematiz ed on the macro level as follows:

201

I— —9 goals (social indicators - - criteria for performance)

w
policies (guidelines for action)

I

I

l

I

| W
l programs (activities --allocation and mobilization of
I

|

|

l

I

 

resources)
6

performance evaluation (social indicators)
l

— — ——' 6— flow of action

e——— flow of feedback

Thesame scheme can beapplied either to the corporation orto the
corporation marketing system (micro level).
|———> goals (economic and social indicators--balance

between economic maximization goal and
social considerations - - suboptimization
of goals)

policies (guidelines for action)

programs (marketing activities--allocation and

mobilization .of resources)

performance evaluation (economic and social indicators)

The-relation between these two schemes‘lies in the inter-
face between the corporation's marketing system and the govern-

ment system and can be visualized in the model shown in Figure 3.

202

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203

This model describes the marketing system and the

process and sequence of decisions that it entails. Let us examine

the main components of the system.

The Constraints

 

1)

2)

The external environment. Sociocultural, political, and
legal conditions, the existing level of technological
development, market structure, and the structure of
distribution define the environment surrounding the firm.
They affect the marketing system but are relatively uncon-
trollable by it (although there is some interrelationship
and feedback, as the model indicates); consequently, the
marketing system must adapt to them, rather than the

opposite .

The internal environment. The marketing system' s own
internal constraints refer to the material, human, and
organizational resources that it can mobilize. To some
extent, they limit what the system can do in its adaptation
to environmental conditions, its goal definitions, and the

choice of alternative activities.

3)

204

The goals. The general goals are here conceptualized as
being suboptimized. Long-run, economic maximization
goals, implying consideration of volume, cost, market
entrenchment, and so forth, are counterbalanced by the
desired social goals, 11 which are expressed in terms of

social indicators.

The Inputs

 

Time, money, and know- how are mobilized and allocated

for marketing activities, which here are conceptualized as being of

three types: product and service strategy; communications strategy;

and distribution strategy.

1)

2)

Product and service strategy includes consideration of the
product both in its intrinsic, functional characteristics and
its perceived characteristics as a need satisfier. Activities
related to the product include product planning and product
development, packaging, labeling, branding, pricing,
choice of product lines, and warranties and services

related to the product.

Distribution strategy encompasses the distribution channels
and physical distribution activities: unitization, communica -

tions, inventory allocations, transportation, and warehousing.

205

3) Communications strategy includes personal selling, mass
selling (advertising and publicity) and sales promotion

activities. Personal selling refers to the situation where

 

two or more people interact face -to-face with the objective
of closing a sale, which is in contrast to the impersonal

nature of mass selling. Sales promotion refers to various

 

specialized promotional activities of relatively short
duration such as displays, contests, and shows. ”Since
personal selling, mass selling, and sales promotion all
are reinforcing efforts and are substitutable among them-
selves, up to a certain point, the strategic decision of the

allocation of effort among the three is of major importance.

These groups of activities must be combined coherently
to assure maximum effectiveness in reaching the market, in
accordance with the stated goals. This is marketing strategy.
Implied in the concept are the ideas of combined inputs, relative
substitutability among activities, and varying emphasis on the
different activities depending on the overall marketing strategy

selected .

The Outputs

 

The outputs of the marketing system are obtaining and

servicing demand and, ultimately, creating consumer satisfaction.

206

These outputs reflect themarketing mix and are expressedin terms

of product mix, communications mix, and distribution mix.

The Performance Evaluation

The marketing system' s performance is evaluated through
its outputs-—product, communications, and distribution—-and is
reflected in terms of economic and social indicators as related to
previously set goals. Economic indicators include suchitems as
sales volume, profit, and return on investment; social indicators

include standards of health, safety, and pollution.

The Feedback

 

There is a continuous feedback flow from the marketing
system to the external environment and to elements of the system
itself. The .firm' 3 decisions and actions have internal and external
repercussions, and, although external conditions are relatively
uncontrollable by an individual firm' 3 marketing system, the firm
is not entirely powerless. Through the system of representation
of interests discussed in chapter 3, the firm has some political
power and exerts it.

In this model, interface between the marketingsystem and

government emerges. Government policies and programs are part

207

of the firm' 3 environment and affect it strongly because of the
government' s multiple role. It is an important buyer, is a large
supporter of research and development (even if it subcontracts this
function to private firms and research institutions), and serves as
regulator.

Present and future governmental policies and programs
may be of importance for the corporation as a whole and for the
marketing system in particular. Information about these policies
and programs is part of the information the marketing intelligence
system (MIS) processes. The next model, Figure 4, shows how
this information (including social indicators and social reports) is
fed into MIS. The latter can be seen from two perspectives: the
factors which are producing the information, and the impact of the
information. The model shows both.

The model indicates that data from social indicators and
social reporting will be. part of the environmental information that
MIS collects and processes. This step is necessary to generate
knowledge about environmental developments and trends and the
marketing system' 3 opportunities and constraints. It also shows
the continuous feedback process.

MIS informationwill havea strong impact on corporate

decision making in two ways.

208

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

System performance
evaluation F-1
Consumer data and
analysis ---I
Product data and
analysis F--
Distribution data
and analysis -—4
Communication data
and analysis ....
Economic data and
analysis I——.
Social data and
analysis —-I

 

 

 

 

 

 

 

 

 

      

 

 

  
   
   

  

 

 

 
     

 

 

 

 

 
 
 
       
   

 

 

 

  

 

 

 

 

 

 

 

Key:
-ur———.Activity flow
-¢ —— Information flow

  

 

 

 

 

 

 

    

         

 

 

 

 

 

 

 

 

 

      

  
   

  

   

   

   

     

     

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Marketing mix

 

I

 

l' ‘‘‘‘‘‘‘‘‘‘‘ T ________ 'l
—————— f—-"__-—————-fi
{— i i 1 I I
I External [ Internal I I
I constraints constraints
I l r J T I
I _______ _ _____ _I I
I
‘ _____ ;_l_‘ Marketing system‘s goals ————————— ~4
{- II (Indicators) I.— I
I I I I
I I I I
I I I marketing] I
system's goa s
Ret:;:::11:nd I I consistent with the I
T I I constraints? I
I I I I
I I | I
.J I Time. money and know-how I
-—-— I allocations and mobilization I
Ins ---J I
data bank ‘‘‘‘‘‘‘‘‘‘‘‘‘‘‘‘ "" - "I I
| I
| I
marketing I I
I system's goals
L be met with present I I
‘‘‘‘‘‘ allocations I I
I and
I mobilization? I I
Retrieyaliand I I
ana vs s
‘ Yes I _J
______ _. _._.___.__ __._._f\
1.-..-- _...‘S____ A}.-- I I I
I I I I I I I I I I
I Product Distribution Communication I I
I strategy strategy strategy I I
I ' I
I No No No I I
I I I
I nication : I
I strategy strategy I
marketing consistent with | I
I goals? marketing marketing I I
I goals? goals? I I
I I I
I l I
I | I
I ' l I
I [ Implementation I I
I I I
i————— .— _______ ._ ______ I
I T I "I I I
Product Distribution Communication I
mix mix mix I I
I l I I
I L. _______ ____L.____._._.....l_u_.i_._.._____J I
I
I
I
I
I
_I

Performance evaluation (Indicators)

 

 

 

 

Figure4

The Marketing Intelligence System

Senircew Adapted from Hotohisa Hiranoi. "Advertising Feedback." Paper prepared for Communications.820 class.

Michigan State University. 1970.

 

209

1) In a micro sense, thedata base provided by the indicators
may lead to a better understanding of the trends in social
change, life styles, values system, and consumer behavior.
Such knowledge gives better clues to plan its adaptive

strategy.

2) In a macro sense, the information from indicators both
will provide evaluation of performance in relation to national
goals and redirect selection of goals and priorities.. The
data will be used by decision makers in establishing national
policies, including the ones that might affect corporations
directly. The concern with health, safety, and pollution
(to name only a few) already has resulted in extensive
legislation and stricter enforcement by agencies like the

FDA and the FTC.

Both in the micro and macro sense, decision making may
be schematized in simplistic terms: ( 1) identify the problem or
opportunity and goals and constraints of the situation; (2) procure,
process, and evaluate information; (3) identify alternatives of action;
(4) evaluate each alternative' 5 uncertainties, advantages, and dis-
advantages; and (5) choose the best alternative, in terms of the

problems, goals, and constraints. This scheme, useful as it is,

210

should be used cautiously. . Its simplicity is its main appeal, but it
can be misleading, at least in twosenses. First, it seems ‘to imply
that this is a logical sequence, which is not a rigorously established
fact. Different authors disagree about the number and sequence of
steps, although there is some consensus as to what is involved in
the decision making process. Second, the scheme seems toimply
that the procurement, processing and evaluation of information is

confined .to the second step, when actually it pervades the entire

decision-making process.

Decision making, is approached here from a behavioral,
descriptive vieWpoint: how decisions are made-—and not from the
normative viewpoint of how they should be made. It is further con—
ceptualized to be situational, that is, constrained by the limitations
of the environment and the marketing, system and by how the executive
--the decision maker--perceives and reacts to the environment.
The-decision maker' 3 perception of the situation and his reaction
are influenced by personal factors, such as his personality character-
istics, past experience, and information, by his values and attitudes,
and by the organizational structure within which he acts, which has
characteristics and values which also play a role.

To study the impact of social indicators and social report-

ing on corporate decision making it is then necessary to identify:

211

(1) the actors, the decision-making unit (individual or group) that
has the leverage or capacity to effect a substantial influence on the
output of the system;12 (2) their position in the organizational
structure; (3) their awareness of the existence of social indicators
and social reporting; and (4) their perception of how this information

would fit into the complex of information that guides their decision-

making process.

Definition of the Problem

Within the context of the proposed conceptual framework,
the general problem. of assessing the impact of social indicators and
social reporting on corporate product strategy decision making can
be redefined in specific terms. The objective of this dissertation
is to investigate,. in the automobile industry, the awareness of the
existence of the social information explosion and the perception of

how social indicators and social reporting data will influence product

strategy decision making.

Operational Definitions

Social indicators are indicators of observable changes in a

 

s'EBI‘JZes of specific goals that help to evaluate the quality of life (for

93:8. triple, life expectancy and the crime rate). Based on Table 3,

212

page 127, these indicators refer to areas of concern such as health
and safety; housing; the physical environment; education; science
and the arts; employment and income; leisure and recreation;

justice, harmony, and freedom.

Social reporting is periodic reporting on the social state

 

of the nation, based on regular publication by the Bureau of the
Census (or other official agency) of a statistical series of social
indicators.

The automobile industry in this context is restricted to the
domestic'industry producing passenger cars. Due to the market
structure of the industry it includes only four companies: General
Motors Corporation, Ford Motor Company, Chrysler Corporation,
and American Motors Corporation. Three are included in thestudy.

Points of leverag refer to those groups or individuals
capable of effecting a substantial influence on the system' s output.
The preliminary survey, taking into consideration the differences
in the organizational structures of the four companies, indicates a

c=0Inlnon point of leverage for product decisions can be identified.
This is the product planning group. In the automobile industry,

Mud planning can be described as the determination and imple-

 

mentation of product strategy. The degree of formal organization

resin ired to perform the functions of product planning depends on the

213

productI s complexity, rate of change of products, the size of the
company, and the importance of new products to the company. The
characteristics of the automobile industry require a formalized
organization and approach to product planning. It is an industry with
highly complex products, annual product changes, long lead times,
and high volume production. It also is characterized by heavy fixed
costs associated with model change, high market risks, andinten-
sive product competition.

Despite a common product and similar problems, each
company has developed a different system for coping with product
planning problems. For example, one firm considers product plan-
ning primarily an engineering function; another views it mainly as
a separate staff function at the corporate level; a third assigns it
primarily to the product marketing division along with the responsi-
bility for engineering and selling the product. 13

It should not be assumed that the product planning group
is the only point of leverage for product decisions, but it was the

Primary group for product decisions in all companies included in
file ' study. Other points of leverage exist, and these may differ
'from company to company.
Taking a car from concept to production involves the

development and coordination of a plan among the four basic

214

operations of styling, engineering, manufacturing, and sales. A

data collecting system that reaches into all areas of the companyI 3

business is essential. These data are needed to assess the trends

of market preferences and the reaction (private and governmental)
(towardthe industry and eachecompanyI 5 products and practices.
According to theconceptual framework adopted in this study, social

indicators will be part of this data base.

Product stratefl refers to decisions on product planning,

 

development, differentiation, standardization, and diversification,
to warranties and services relating to the product, and to customer
product information. An important aspect of the product is its
quality, which can be conceived of in two senses. First, it implies
quality in a purely functional sense (materials and engineering). It
involves the notions of reliability, or functional product design, and
durability, or a product designed to last. Second, it implies the

idea of social quality, including considerations such as safety and

P011ution , standards.

In accordance with theconceptual framework, the definition

of the problem, and the'operational definitions, several propositions
ar e presentedfor study. At least one question, and sometimes

several, relatingto each propositionwas included in the interview

gu ide.

Proposition 1 .

215

Propositions

 

Awareness

Corporate decision makers are aware of the

social. information explosion.

Perception of Impact of Social Indicators

Proposition 2 .

Proposition 3 .

on the Corporation

Corporate decision makers perceive of social
indicators as having an impact on corporate

decision making.

The availability of social indicators will have
an impact on corporation goals, organizational

structure, and product strategy.

Perception of Impact of Social Indicators
on Business and Government Interfaces

Proposition 4.

Proposition 5 .

Proposition 6 .

Government regulation of business in general

will increase.

Government regulation of the automobile

industry will increase.

The-risk of product failure will increase due to

government' s tighter controls and regulations.

216

'Proposition 7. The rate of development of new products (pace

of innovation) will decrease.

Proposition 8. Government' 3 relative share in research and

development will increase.

Proposition 9. Pressures for government regulation of busi-
ness indicate that business has failed to meet

consumers' needs and wants.

Perception of Social Indicators as Indicators
of Changes in Life Styles

Proposition 10. The social change trends (as revealed by
social indicators) point to changes in peopleI s
life styles, value systems, and attitudes as

consumers.

Perception of Impact of Social Indicators
on Product Strategy

Eroduct Mix
Proposition 11. The number of product elimination decisions

will increase.

Proposition 12. Diversification of present product lines will

increase.

Product Quality

 

Proposition. 1 3 .

Proposition 14.

Proposition 15.

Proposition 16.

Proposition 17 .

217

Corporate concern with functional quality will

increase.

Corporate concernwith social quality will

increase.

Corporate concern with product styling will

decrease.

Corporate concern with standardization of

product features will increase.

Corporate concern with product differentiation

will decrease.

Warranties and Guarantees,

 

Customer Service, and

 

C onsumer Education

 

Proposition 18.

Proposition 19.

Corporate concern with making guarantees

and warranties more explicit will increase.

Corporate concern with customer service will

increase.

218

Proposition 20. Corporate concern with consumer education

will increase.

Cost

 

Proposition 21. Product costs for the manufacturer and con-

sumer will increase.

Propositions and Related Interview Questions

Proposition 1. Question 1 was designed to explore‘whether

subjects are or are not aware of the social information explosion.
If the subjects answered yes, they then were asked where they had

heard about social indicators.

Proposition 2. An explanation of what social indicators are

and of the main areas of social concern was read to the subjects.
Question 2 then was asked to investigate whether they thought the
availability of social indicators would affect corporatedecision
making. Subjects were asked to justify their "yes" or*"no" answers.
If the answer was "yes" they'were further asked to mention areas
in Which-indicators would be more important to the automobile

industry (question 3) .

Proposition 3. Subjects who answered "yes" to question 2

were asked questions 4, 5, and 6 of the questionnaire. These‘were

designedto obtain the subjects' perception, using a semantic

219

differential scale, of the degree of effectiveness or ineffectiveness
of social indicators oncorporation goals, organization structure,
and product strategy. Questions 7 and 8 investigated who should be
responsible in the corporation for the procurement and analysis of
the social indicators and social reports. Question 9 inquired who
should make policy recommendations based on these analyses.

Proposition 4. . Proposition 4 was covered by question 34.

 

Subjects were-asked to give their opinion as .to whether government
regulation of business wouldincrease, remain about the same, or
decrease, due to the availability of social indicators and policies
that follow from them. They'were also solicited to justify their

answers.

Proposition 5. Question 35 was designed to explore the

 

same topics as mentioned above, but specifically for the automobile
industry. Subjects also were asked .to give their opinion on which
areas seemed morelikely to be subject to government regulation in

the future.

Proposition 6. Questions-30 and 33 were included to investi-

 

gatethe proposition :that the~risk of product failure will increase,
due to government' 3 tighter controls and regulations. Subjects were
g iventhree alternatives: the risk will increase, remain about

me same, or decrease, and were expected to justify their choice.

 

 

 

220

Proposition 7. Question 29 referred to the effect of the

availability of social information, and the government policies that
follow from them, on the rate of development of new products (pace

of innovation). Subjects again were invited to explain and justify

their answers.

Proposition 8. Questions31 and 32 were designed to

elicit subjects' opinions about government and corporate relative

shares in expenditures for research and development.

Proposition 9. A set of questions was included to explore

the proposition that pressures for government regulation of busi—
ness indicate that business has failed to meet consumers' needs and
wants. Questions 37 -40.were designed to investigate how the sub-
j ects perceived the popular images of the overall system, the
business system, the automobile industry, and their own company.
The questions used a semantic differential scale to obtain an idea
01' the degree of satisfaction or dissatisfaction with the systems

IIlentioned above.

Questions 41 - 44 asked the subjects' opinion about whether

people were justifiedin their satisfaction or dissatisfaction.

Questions 45-47 were included to investigatewhether the

Subjects agree or disagree about what is important in a car for the

consumer. They also deal with the consumer' s ability to evaluate

ca r features.

221

Questions 48—52 were designed to explore how the subjects
perceive the high visibility of the automobile industry in the context
of consumer and environmental protection, and how they evaluate
the .industry' 3 and their own company' 3 reaction to these movements.
They were asked what they thought could be done and has been done
so far to overcome the criticisms leveled at the industry.

Proposition 10. Questions 21 -29 were designed to investi-

 

gate the proposition that social changes (as revealed by social

indicators) point to changes in people' 3 values system and attitudes

as consumers. The wording of the questions implied that social

indicators reflect trends in social change and consequences inlife

styles and value system of consumers. Subjects were asked to

speculate on the direction of these changes in the specific case of

their product, the automobile.

Proposition 11. Question 10 was included to investigate

- the proposition that the number of product elimination decisions
Will increase.
The proposition that diversification of

Proposition 12 .

present lines will increase was explored in questions 55 (diversi-
f1 cation Will increase, remain about the same, or decrease?) and

5 6 (diversification to what lines of products seems more likely?).

222

Proposition 13. Question 12 investigated the statement

 

that corporate concern with functional quality will increase. Answers
to question 12 also were compared with answers to question 21
(consumer concernwith functional quality) and 45 (In a car, what is

more important for the consumer?).

Proposition 14. The proposition that corporate concern

 

with'social quality will increase-was investigated by question 13.
The answers were compared to answers to question 22 (consumer
concern with social quality) and 45 (In a car, what is more

important for the consumer ? ) .

Proposition 15. Questions 18 and 19 refer to the propo-

 

sition that corporate concern with product styling will decrease.
Thejanswers to question. 19 were compared to ,those to question 23
(consumer concern with styling) and 45 (In a car, what is more

important for the consumer?).

Proposition 16. Question 14 was designed to explorethe

 

proposition that corporate concern-with standardization of product

features will increase.

Proposition 17. The proposition that corporate‘concern

 

With product differentiationwwill decrease was investigated with

Question 1 1 .

223

Proposition 18. Question 15 was included to explore the

 

proposition that corporate-concern with making guarantees and
warranties more explicit will increase. The answers to this
question were compared with those .to question 45 (In a car, what is
more important for the consumer ?).

Proposition 19. Question 16 referred to the proposition

 

that corporate concern with customer services will increase, and
answers were compared to answers to question 45 (In a .car, what
is more important for the consumer?).

Proposition 20. This proposition states that corporate

 

concernwith consumer education will increase. Question. 17. investi-
gated this proposition and the answers were compared to answers

to questions 46 and 47, which refer to consumer' s ability to evaluate
the product.

Proposition 21. Question 20 relates directly¢to the propo-

 

sition that corporate-concern with cost will increase. Answers to
question 20 were compared to answers 'to question 24 (consumer
concern-with price) and question 45 (In a car, what is more important
for the consumer?).

The procedures. used to selectrespondents within the
companies as well as the details concerning the interviewing pro-

cedure were described inchapter 1.

224

Chapter 4 Footnotes

 

1Ink, "Statement. " See also the article by the Director
of the University of Michigan Institute for Social Research, Angus
Campbell, "Social Accounting in the 1970' s, " Michigan Business
Review 23, no. 1 (January1971): 2-7. '

2Ink, "Statement, " pp. 8-9. See also U. S. Office of
Management and Budget, "Social Indicators. "

3Ink, "Statement, " p._ 10.

4Ink, "Statement, " p. 11. Actually, this is not the first
attempt to evaluate the performance of government programs.
See: U. S. .Bureau of the Budget, Measuring Productivity of
Federal Government granizations, Executive Office of the Presi-
dent, 1964.

 

 

 

5William D. Lee, "The-Responsibility of Government for
Creating a Sound Marketing Environment, " paper presented at the
54th International Marketing Congress of the American Marketing
Association, San Francisco, California, 13-14 April 1971.
6U.S. Department of Commerce, National Marketing
Advisory Committee, "Life Style and Environmental Issues and
Challenges, " Report to the Secretary of Commerce with Recom-
mendations.

7Paul H. Rigby, Conceptual Foundations of Business
Research (New York: John Wiley & Sons, 1965), p. 95.

 

 

8The same distinction between a goal model and a system
model, as expressed for -marketing by Lazer, can be generalized
here.

"A goal model, sometimes called a task- or end-means
model, starts with a management task to be achieved. The goal
model focuses on a particular aim of marketing, such as increased
sales and the use of company resources to achieve this aim as
efficiently as possible. The achievement of this specific goal
becomes the important target. . . . In the systems model, the
starting point is not a goal but a total functioning system--a system

225

capable of achieving goals. The system model recognizes that
there can be many conflicting objectives within an organization that
require concessions to be made. This model also considers the fact
that some resources must be allocated to efforts not directed spe-
cifically toward the goal, such as the resources necessary to main-
tain marketing organization itself. " Lazer, Marketing Management,
p. 199.

 

9Hollander and Boddewyn, ”Public Policy, " p. 4.
10Terleckyj, "Role of Efficiency, " pp. 1 -2.

11There already is some evidence that corporations are
clearly recognizing social goals. For example, Lipson' s research
indicates that 38 percent of large U. S. industrial corporations
included social goals for 1970 planning. Lipson, "Management
Use, " pp. 5-7. See also: Peter Vanderwicken, "G. M. : The Price
of Being Responsible, " Fortune 85, no. 1 (January 1972): 99-101,
172 -176; and Seymour Marshak, "Social Indicators--How to Use
Them Responsibly, " paper presented to the First AMA Conference
on Social Indicators, Washington, D. C. , 18 February 1972, p. 4.

12Raymond A. Bauer and Kenneth J. Gergen, The Study
of Policy Formation (New York: Free Press, 1968), p. 19.

 

 

13Educational Affairs Department, "Product Flaming and
Development" (Dearborn, Mich.: Ford Motor Company, n.d.), p. 1.

14Ibid. See also B. H. Bouwkamp, "The Role of the
Product Planner, " paper presented to the Society of Automotive
Engineers, Detroit Section, Detroit, Mich., 9 February 1970,

pp. 1-4.

CHAPTER 5

MAIN FINDINGS

Introduction

 

The purpose of this chapter is to present an analysis of the
findings of the study. Thedata did not lend themselves to statisti-
cal analysis. However, all the answers to the interview guide were
tabulated and analyzed to identify by observation'whether or not
there was a prevailing trend. To indicate the intensity of the trend,

a five -point scale is used in reporting the findings:

Strongly agree: about 75 percent or more of the answers
agree with the initial proposition or
viewpoint implicit in the interview

guide' 3 questions.

Agree: more than 50 percent to about 75 percent
of the answers agree with the initial
proposition or viewpoint implicit in the

interview guide' 8 questions.

226

 

 

I33.» . A u rial. PM ffrJ.‘
H. a.

227
Indeterminate: wide dispersion of opinions.

Disagree: more than 50 percent to about 75 percent
of the answers disagree with the initial
proposition or viewpoint implicit in the

interview guide' s questions.

Strongly disagree: about 75 percent or more of the answers
disagree'with the initial proposition or
viewpoint implicit in the interview

guide' 3 questions.

Subjects' answers and comments were grouped according to their
relevancy. tothe sets of initial propositions as stated in chapter 4.
In this manner the analysis allows a comparison between what was
conceptualized and what the exploratory study brought out.

It is interesting to note that there is no intracorporate
pattern of response. Subjects in the same corporationdid not
answer the questions in a way that might suggest "a corporation
point of view X. " Also, there was no pattern that could be~discerned
by, comparing the-answers of subjects occupying similar positions
in different corporations. A product planning point of view or engi-
neering point of view does not exist. As alackof pattern began

to emerge after several interviews, this was discussed with

228

the subjects themselves at the end of the interviews. The gist of
their explanation was that "contrary to what most people may think,
we are very individualistic in this industry. " Another subject com-
mented that "the lack of pattern in the'responses you have been
finding is not strange. Each one of us perceives things differently,
makes decisions, and moves ideas forward. The criteria used for
decisions reflect our values. We are deeply involved in the
industry and we may be provincial in outlook, but by nature we are
aggressive, innovative, and individualistic people. "

These observations are consistent with the conceptualiza-

tion in chapter 4 that an executive' s behavior is situational. The

 

executive' s perceptions and his reactions are influenced by several
factors. These include personal factors such as personality
characteristics, past experience, information, and values and
attitudes. The organizational structure within which he acts and
its own characteristics and values also play a role. It can be
argued, then, that even if subjects in one corporation do reflect

its organizational structure and values, these factors are tempered
by their own personal characteristics. The same reasoning might (I
explain why all product planners do not necessarily agree on the

answers to all questions.

229

An adequate'randomsample coupled with-sophisticated
statistical analysis would be required to generalize these conclu-

sions. But the above exploratory observations did emerge.

Awareness of the Social Information Explosion

 

The study shows conclusively that most interviewees were
not aware of social indicators as such. This was expressed by a
"no" answer or by comments such as "not by this name, " "not the
terms per se, " "not sure, " or ”What do you mean by social indi-
cators?" "Why don't you explain to me whatlou mean by social
indicators ? "

These answers are in some sense surprising. It is true
that this social information explosion only recently has been
acknowledged in marketing. In two of the three corporations
included in the study, it was reported that there is some ongoing
work concerning social indicators and how they could be factored
into the information system and decision-making process. However,
several subjects in these same corporations either did not know
about the ongoing work or did not relate it initially to the questions
being asked. One possible explanation for the lack of awareness
is that the topic is too new. The procedures to procure and analyze

social indicators or to make policy recommendations based on them

230

are not yet institutionalized. The work going on in the corporations
is in the initial stages and has not been communicated throughout the
organization.

Of the executives who answered "yes, " two were very
familiar with the literature on social indicators. A third remarked
that "some of the social indicators are not new, you know. Only the
name is new. "

When the explanation about social indicators was read, all
the subjects immediately recognized the issues and areas of concern.
By observation, it seems that they understood the concept of social
indicators very well. It can be safely concluded that the subjects
are aware of the social issues with-which the social indicators deal.

The expression social indicators and the association of measurements

 

to the-issues, however, were unfamiliar.

Perception of the Impact of Social Indicators
on the Corporation

 

 

Impact of SOcial Indicators on
Corporate Decision Making

Respondents strongly agree with Proposition 2 that the

 

availability of regularly published social indicators will affect
corporate decision making. The reasons mentioned most often were

good. social statistics are useful, social indicators can help predict

231

the direction of government' s future actions and regulations (macro
effects), and social indicators can better identify future market
trends (micro effects).

The following comments are examples of the perception of
social indicators as useful statistics. "In some cases [social indi-
cators] are already affecting decision making. What we do not have
is a good system to collect these statistics. If we could get them on
a national basis, collected by a national bureau, I would view them
as excellent data." "One of the things we lack in the corporation is
concrete information. Regular, consistent statistics are desirable
to indicate what happened and to help to plan ahead. " "This-
company' 3 success as a business institution was enhanced by the
flow of technological information. . Hence, the great importance of
technological research. Now there is the need for both technological
and social datawfor decision making. We need social research too. "

One subject' 3 comment focused on the macro effects of
social indicators. "Social indicators are bound to have an impact
on both government' 3 policies and future regulation and because
of this on us. . I wouldlike to see good indicators developed. But I
am not sure how you can measure them. I am afraid of having [asso—
ciated with thegindicators] goals written into law. As a citizen I

wouldlike to participate in setting social goals. "

232

Another subject' s comment shows awareness of the micro
effects of the availability of social indicators. "We spend half of
our time figuring out what effects things will have on customers and
their acceptability of our products. We are concerned with living
patterns and how [our products] can best fit them. Social indicators
may help to identify customers' needs and wants, as new life styles
are developing. "

Some subjects commented that social indicators will have
an impact on decision making, but in a limited way. "They are
useful [information] inputs, among hundreds or thousands of others."
"Yes, social indicators will affect corporate decision making, but
they would be a rather small portion of our forecast. We already
use economic indicators, but do not take them at their face value
either. You know how inaccurate data can be. We have to temper
the data with judgment. We pile all the stuff together. No one
thing is more important. Also some of the indicators should be
handled in a qualitative way. They are not sophisticated enough to
be quantified. "

Finally, an interesting observation on the possibility of
information overload : "I already get so many materials that I do

not have time to read them all. It will get worse with all these

social indicators. "

233

Only a few subjects answered "no" to question 2. One
indicated that "social indicators would not affect corporate decision
making in the near term. Managers of industries are themselves
reflections of the value system of society as a whole. Society still
holds the view that ecOnomic indicators, profit, are objective. . . .
There is nothing even remotely equivalent to the emotional reaction
to profit. " Anotherstated that "before there is any demonstration
that [social indicators] might affect policy, we would have to see
the specific relationship between the indicator and the policy. "

Asked which indicators would be‘more important to
the automobile industry, answers ranged from mention of only a
few to mention of indicators in all areas. Indicators in the areas
of health and safety and the physical environment were mentioned
more often, which is understandable. Both are major regulatory
issues for the automobile industry. Also mentioned as important
were indicators for the economic issues (employment, income) and
for leisure and recreation, which would characterize market oppor-
timities. Overall, the comments indicated that the subjects were
more concerned with indicators related to social concerns which
may be subject to governmental regulation, than with those which

might reflect new market opportunities.

234

Other interviewees stressed that all indicators are
important. There is a close interrelationship among them. For
example: "There are overlaps in the areas of concern you men-
tioned. When you are talking about these indicators, you are talking
about values. You cannot measure values or separate them in nice
little pockets. " ”Social indicators in all the areas mentioned are
important. I view this corporation as being in the transportation
business. This being the case, they all are important. They all
are related and interact with each other. There is synergism.

We should look at all together. They all are important in terms of
the total characteristics of the car. "

Impact on Corporate Goals,
Organizational Structure, and Product Strategy

Proposition 3 stated that ”the availability of social indi-
cators will have an impact on corporation goals, organizational
structure, and product strategy. " Respondents agrie with this
proposition, although a few qualified their affirmative answers.
The effectiveness of social indicators would depend on how good a
measurement they will be and on their acceptance by other sectors

of society as well.

235

Impact on Corporate Goals

 

Respondents _a_ggcfi that the corporation should accept social
goals and responsibilities, without jeopardizing its present goals.
These include profits, and satisfying the interests of consumers,
employees, stockholders, dealers, and suppliers. It is clear that
most of these answers reflect the framework of the free enterprise,
capitalistic ideology. Even the subjects who criticized the present
lack of social goals in the corporation were quick to add that the
corporation needs profits to survive and grow and to preserve the
interests of all parties involved. For example, "We have to move-
beyond the profit goal, but we do need profit to achieve the other
goals. " One subject said that "social indicators will affect corpora-
tion goals, but only if they become an important procedure to measure
growth in some sense other than the economic. The corporation is
just one element of society and it will only accept [indicators] for
decision .making if others do too. "

Among the few who thought that indicators would not have
an impact on corporate goals, one observed: "1 do not think goals

will change. Maybethe course [means] to reach them might change. "

Impact on OrJganizational Structure

 

The interviewees agree that the availability of social indi-

cators would affect the organizational structure. Some subjects

236

stressed that social issues already have had an effect. The three
companies inthe-study. have appointed toprlevel corporation officers
to new positions'concerned with consumer affairs and areas of
government regulation such as safety, emissions control, urban
affairs, and minority rights.

The organizational changes needed to incorporatesocial
indicators into decision making procedures were mentioned also.
"We will have to be able to analyze and interpret the indicators. We
have .toprovide the organization to take care of this [procurement,
analysis, and interpretation of social indicators] . " "It will affect
the number of people on the payroll. We will expand, in the areas

involved. "

Impact on Product Strategz

 

Respondents also 3.3319. that the availability of social indi-
catorswould affect product strategy, both'in the micro sense (as
indicators. of market trends and opportunities) and in the macro
sense (as indicators of regulatory policies affecting product
strategy). ‘ The following are examples of comments on micro
effects. "If social indicators are available in amannerwe can
accept [as good measurements], they will affect product strategy.

Wewill try to adapt the [product] offerings. For example, if

237

indicators show that life styles will be such that people will be
wanting mass transportation, we will shift to it. In some sense

we are already using social indicators, but imperfectly." "Social
indicators will be very effective for product strategy, provided the
goals they represent really refer to what people want. We still have
to devise products for'identifiable segments of the market. " "This
industry has a peculiar problem: time lag. . We are identifyingwhat
people want today to plan a car for! 75. Will they still be‘wanting
the same things? Social indicators may help to identify the change
in trends. "

Other executives were more concerned with the -macro
effect. "Social indicators will be effective. Not so much in them-
selves, but because of what they mean. Are things going bad or
well? They. are. indicators of where government, consumer advo-
cates, or the corporationitself should move to. "

It also was mentioned that the impact of social indicators
on product strategy cannot beevaluated in the short run. The
automobile industry has along lead time. "It takes three or four
years to developa new car. We are taking evenlonger than that.
Wedo not introduce a new car every fiveyears anymore because of

economic reasons. "

238

Locus of Responsibility

 

for Social Indicators

 

The subjects were asked to comment on the locus of
responsibility for social indicators within the corporation. How
should social information data be factored into the decision-making
process? Respondents strongly agree that responsibility should be
given to .a specific group‘as opposed to several different groups

within the corporation. They are indeterminate, however, about

 

which one. Marketing research or similar groups (business,
economic, and corporate research), product planning, "topcorporate
officers, " or an independent, explicit agency were suggested as
possible organizational structures to handle social indicators.
Thevfollowing comment is an example of the suggestions
of the marketing research group. "We will be dealing with data
from two different sources: total universe or census data and
sampling data. So, the procurement and analysis should rest with
a group like ours that can evaluate both sets of data. " Others sug-
gest the product planning group or a group‘reporting to it. "Product
planningis responsible for defining a product program that will
meet all kinds of requirements: a product that will sell, that the
company can produce with the present infrastructure, and that is

socially responsible. " "Product planning is more directly involved

 

IrIIII'p35} . .1 . . p;‘JA.*

239

with collecting all data relative to future model alternatives. It is
the key group for‘product strategy. "

It also was suggestedthat social indicators should be the
concern of "topcorporate officers" (the board of directors, the
office of public responsibility, or similar offices). Finally, others
saw the need for an independent, explicit agencywithin the corpora-
tion. "It has to be anrexplicit agency to serve as a clearing house.
The average decision maker does not have the training and knowledge
to use the information directly. We need an explicit agency to

interpret [social indicators] to the executives. The [same is true

 

with economic-indicators. We havea formalized group that studies
them and reports the conclusions .to the decision makers."

This diversity of opinion on the locus of responsibility
indicates the newness of the corporation' s concern. Procedures to
deal with social information are not yet well institutionaliz ed. The
two corporations already concerned with social indicators are still
in the research stage. They are interested. in: identifying the indi-
cators that may be relevant -.to theirindustry, and the next step will
be the evaluation of their validity and reliability. But,_ as a group,
the executives interviewed couldtnot visualize how the collection and
analysis of social indicators, and the recommendations based on

this analysis, could be handled. in terms of organizational delegation.

240

The model suggested in the conceptual framework showed
social indicators and the social report as part of the environmental
information that the marketing intelligence system processes.
Assimilation of this data is necessary todevelop the knowledge about
environmental conditions and trends and to evaluate the-marketing
system' 3 opportunities and constraints.

If the locus of responsibility for social indicators is market-
ing research, or product planning, the model as conceptualized fits
reality. If the locus is placed onsome independent group, the model
still stands but it must be modified. Instead of collecting and pro-
‘cessing the data, the marketing intelligence system would receive
the data already analyzed and interpreted. The same pattern already
adopted for theuse of economic indicators in- several corporations
would be followed. The processed economic data are a received
input to the marketing intelligence system, and the same would be
the case with social indicators.

The discussion of responsibility brought out some interest-
ing facts. The same concern with the data, and its measurements
and uses as analyzed in chapter 3, reappear now at the corporate
level. There‘was some anxiety‘expressed about improper use of
data not fully understood. This was reflected in the opinion that the

average manager cannot evaluate social indicators unless they first

241

are analyzed for him. The observation also was made that "access
to this kind of data should be limited to senior executives.. There
is the problem. of failure of nerve of people who have to make deci-
sions and do not know how to interpret these data. "

Perception of Impact of Social Indicators
on Government and Business Interface

 

 

Several propositions were advanced referring to the per-
ception of impact of social indicators on government policies and

program-s and, hence, on corporations. Subjects stanglyggree

 

that the regulation of both business in general and the automobile
industry in particular will increase. They also agree that the risks
of product failure will increase, due to government' 3 tighter con-

trols and regulations. They disagree with the initial proposition

 

and saw the pace of innovation as increasing also.

Extent of Government Regulation of Business

Proposition 4 states that "government regulation of busi-

ness in general will increase. ' Interviewees strongly agree. The

 

essence of their comments was that once governmental regulation
begins, it is almost irreversible. "The only thing capable of
reversing this trend [toward greater regulation] will be a catastrophe

of major proportions, like the depression in the ' 30s. " "The trend

 

:I' .Il-r'hmi i.‘h’ “
.

 

a
. a

242

is irreversible. The rate may decrease, but the trend is upward. "
"I would like to think that the trend to a mixed economy is stabilized,
but as an objective person I see that it will increase. " "Changes in
people' 3 values are pressing business more than ever- These
changes have been building up for some time. They are reflected in
legislation, more control by regulatory agencies and even in court
suits. "

A few remarked that even though legislation is going to
increase, there will bea change of emphasis in the areas to be
regulated. "Price control is becoming now what antitrust was in
the19503. Legislation is moving inithis direction. "

Respondents stronglyresent the increase in regulation of
business. Theyrecognize that some business practices improved
only after public and government pressure were exerted, but they
"dislike government running our business. " This attitude is reflected
in their comments. "Some people might be willing to give up free-
dom for health and safety. You, let the government protect you as
a necessity. But once government starts protecting, where, does it
stop?" "Regulations affect consumers' ability to choose. Less
choices. will be offered. " "Now, anybody that has an idea, makes

it into a regulation. "

243

A few subjects speculated that government regulation of
business could either increase or decrease. "Social indicators will
give a better understanding of where we are going and willshow
whether we need more or-less legislation. " "I might answer all
three ways [government regulation will increase, remain the same,
decrease]. It depends more on individual leaders in the government
and business than on great changes in society. "

Extent of Government Regulation of the
Automobile Industry

Respondents strongly agree with the initial proposition that

 

"government regulation of the automobile industry will increase. "
The following areas are suggested as the more likely to be subject
to regulation in the near future: product social quality, product
functional quality, and price. Some respondents suggested that in
addition to safety and emission controls, two other issues are
emerging: noise control and damageability. The concern with the
latter is a result of pressure from both the public and insurance
companies. The insurance industry argues that it must charge

high premiums because of the high costs of car repairs. The con-
sumer complains about the high cost of insurance policies and about
the costs of repairs not covered by insurance. Some evidence of
damageability as an issue exists already in the standard requirements

forbumpers.

244

There was some disagreement about price as an issue of
regulation. Some indicated that price will be a new area of con-
cern. "They have not touched us on price yet. The standard
requirements will add to the cost of the car and the politicians will
claim that the [added dollars] will be all going to profit." Others
argue that "they are already regulating price and this will increase. "

The idea seemed to prevail that the concern with car
services and repairs has tended to increase as the number of auto-
mobiles and people' 3 dependence on them has increased. "The
(consumer did not articulate this feeling [of dissatisfaction], but
when someone [Nader] took on the automobile industry, the public
thought it was great. In '65, ' 66, ' 67 the whole industry was caught
off guard. " "Actually, it is surprising that such an important
industry survived so long without regulation. Transportation is
really a matter of public'interest. It involves almost everyone. As
the number of automobiles increased, people' 3 dissatisfaction with
autos increased too. This led to regulation. " "Underlying the
politicians' interest there is an awareness that the consumer is
dissatisfied. But what he really is dissatisfied with is his only
Contact with-the industry, the dealer. "

As in thecase of regulation of business, the respondents

agree that some regulation of their industry was necessary. "The

245

way antitrust laws are now, automobile companies cannot agree on
standards. [Standards] have to be regulated. But then over-
regulation becomes the problem. " It also was accepted that regula -
tion is needed for the "things peoplewould not be willing to pay for.
Seat belts, for instance. - We had them, before the regulation, on
an optional basis. We could not sell them. "

The main issue underlying the comments was the dividing
line between necessary legislation and ,too muchlegislation. The
respondents themselves recognized that some measures were taken
only after public and governmental pressure. They also recognized
that, in the competitive situation of the marketplace, several of the
safety and emission control devices could not be adopted because
theconsumer would not be willing to pay for them. Still, they
perceived government regulation negatively. They argued that
government is pushing : standards that are too strict and] or too
costly for the present state of technology. Some subjects distrusted
the'competence of*"Washington people" to set standards. "They hire
engineers that are not good enough to make it in the industry. " This
viewpoint is contradicted by. the comment that "the government is
competingwith me for my best engineers. "

Some of the legislated requirements were seen as contra-

dictory: "I really do not know whether it was the industry or the

246

automobile that got so much criticism because of effects on
environment, the quality of life, andso forth. The rules of the

game have changed. People feel that industry should take care of
externalities. . . . We are required to make better products . . .
but this is inConsistent withother requirements like hiring minorities
and hard core unemployed, plus spending money, on this and that. "

Some respondents expressed the feeling that the automobile
industry was "singled out. " "Vehicles are the largest pollutants
only if the criterionfor-pollution is tonnage ; if the criterion were
toxicity, industry and power plants would be the major pollutants. "
As .to safety, it was argued more than once that "safety involves
three variables: the car, the highway, and the driver. " "Why pick
on the car only? Nobody wants to pick on the driver. Politically it
is not the thing to do. "

A few respondents answered that regulation of the auto-
mobile industry either would remain the same or increase only
slightly. "It cannot increase much. We are already at threshold
point and [politicians] may not find us so easy as the railroads. "

"It is at a high level right now. It will increase some more and then
it will level off and go on to something else. Everybody' 3 been on

the car. "

247

Risk of Product Failure

Proposition 6 states that "the risk of product failure will
increase. " The underlying reasoning is that increasingregulation
of business and of the automobile industry implies increasing risk
for the corporation, which would make the corporation more cautious.

Interviewees 3.3.33. with the proposition. Subjects repeatedly
mentioned the costs of product elimination decision, of recall cam-
paigns, and of owner complaint settlements as additional burdens
and risks facing the corporation. To the "normal" market risks due
to uncertainty about future consumer tastes and competitive moves,
they believed one had to add the risks due to uncertainties created
by government regulation. The Corvair was quoted several times as
an example of pressure induced product failure. It also was argued
that "because of regulations, many changes are being introduced in
the car. The more changes, the larger the probability of failure. "

It is interesting to note that, using the same kinds of
arguments, other subjects concluded that the rate of product failure
will remain the same or decrease. "We will have fewer product
failures because of the pressures. The public is less tolerant.

The corporation will have to be more careful. It costs money to

fail. " "Now more features of the car have standards of performance. "

248

There are more things that can fail. On the other hand, the ..industry
will take more care to avoid failure. It is difficult to see how they
net out. "

Consistent with the Opinion that the rate of product failure
will increase, subjects also perceived that the risk of introducing
new products will increase. "Now we have market risks plus
liability risks. " "Risks of introducing new products are inherently
greater as there are more legal standards to be met by the product. "
Other respondents perceived the risk of introducing new products as
remaining the same or decreasing. "We will be more careful now,
so there will be less chances of failing. " "Well -developed social
indicators will decrease the risk. The largest element of risk is

the uncertainty about change. "

Pace of Innovation

Proposition 7 states that "the rate of development of new
products (pace of innovation) will decrease. " Although it seems a

logical deduction from Propositions 4, 5, and 6, subjects disagree

 

with the initial proposition. They perceived the pace of innovation
as increasing. In. justification they mentioned new market values,
needs, and potentials, or the government regulations themselves.
"We will increase the pace of innovation. We will do even more

than necessary because of the exposure. ' Some viewed the

249

regulations. themselves as spurring innovation, but, as one subject
said, "the-industry is turning fundamental capabilities to areas which
are not goingto result in perceptible differences in consumers' views."
"The more regulationwe have, the more we need to innovate. "

The few subjects who agreed with'the initial proposition
argued: "If social concerns as reflected by social indicators bring
about additional legislation, thenthe pace of innovationvwill decrease.
The development of the product becomes too expensive. Plus the
new liability, risks. ” "If we are to live up to certain standards,
accept liability for products, thenwe have to be more careful in
design, testing, and so forth. The costs will increase. The pace
of innovationwill decrease. "

Finally some subjects argued that they were not sure what
the pace of innovation will be. "In some [industries] it will increase;
in others it will decrease. There will be more opportunities for
some and more constraints for others. " In the same vein: "We may
be witnessing a swinging pattern. The pace of innovation will
decrease in some areas and increasein others. "

Government' 3 Relative Share in
Research and Development

Proposition 8 asserts that "government' 3 relative share in

researchand development will increase" (and the private sector' 8

250

will decrease). Unhappily the idea of ”relative share" was not
understood by several subjects. Despite additional explanation,
several subjects answered that both shares will increase. This
interprets the question as referring to absolute terms instead. of
relative share. Because of this misunderstanding, any attempt to
find a general trend in the answers may. be misleading.» Some
interesting remarks referred to the shift in priorities for research,
namely, to areas of "more relevancy, " such as "from aerospace to

cancer."

This was the only indication, although indirect, of con-
cern with technology assessment. The question of technology
assessment was not mentioned directly by anyone.

Pressures for Government Regulation
of Business

It was proposed (Proposition 9) that "pressures. for
government regulation of business indicate that business has failed
to meet consumers' needs and wants. " A variety of topics related
to consumer satisfaction and dissatisfaction were discussed. Over-
all, subjects _a_g_rie_withthe proposition.

Satisfaction or Dissatisfaction with the
Overall System, the Business System,

 

 

the Automobile Industry, andOwn Company

 

Subjects were asked to comment on what they perceived to

be-the popular image of the business system, the automobile

251

industry, andtheir own company. Some subjects admitted their
company. hadlresearch data on the questions. Others answered in
terms of what-they believed people generally think. Respondents
ig_r£e_ that there is dissatisfaction with the overall system, the
business system, and the automobile industry, but that there is
satisfaction with their owncompany.

They suggested that some issues, like the Vietnam War,
may color people' 8 views, and that "some people are really satis-
fied, but get upset because they think that others are dissatisfied. "
Another stated: ”The silent majority is a very satisfied large
majority. [One] only hears the small, noisy group. " "People may
be concerned, but they are satisfied. " A few ventured the opinion
that "people are- confused" and most do not know how they feel.
"Most opinion polls are not asking the right questions. "

Very few subjects admitted that people generally were dis-
satisfiedwith their own company, but the overall results show
inconsistency. * If people are satisfied with each of the three com-
panies, how can they be dissatisfied with the industry? As this
pattern of inconsistency began to appear, it was discussed in the
remaining interviews. Some (did not offer explanation; another
suggested: "It means that consumers are more satisfied or‘less

dissatisfied with our company than with the other three. " One

252

might conjecture that the perception of their own company' 3. image
may be biased.

Respondents 3332 that people are justified in the way they
feel about the overall system, the business system, the automobile
industry, and their own company. The "justified" answers were
given in reference'to the "satisfied" answers, but also, in several
cases, in reference to the "dissatisfied. " The gist of the comments
was: "If this is the way they feel, they are justified, " implying
that feeling is self -justifying. A candidremark was that "they
would be justifiedin being even more dissatisfied than they are.
They do not know how good. the vehicle could and should be. " Another
comment was: "There are‘some real facts to justify the way they
feel [dissatisfied] . There have been lots of wrongs. But people
are discounting all positive, right things, in arriving at their con-
clusions. Theconclusions are-wrong. But it is understandable how
they got there. "

The "not justified" comments were mainly associated with
the "dissatisfied" answer. "The lack of confidence inbig business
is not justified. I cannot be objective. We are a very hard -working
industry in technology and administration. Maybe we are not so
sensitive as we should be. But hard work and motivation should

rate higher than they do. " "The utility provided by the car far

253

exceeds its price. The industry is not worthy of all criticisms.
They are disproportionate. "

Throughout the interviews the subjects repeatedly empha-
sized that they are in the business of satisfying consumer needs and
wants. ‘The marketing concept was stated and restated. The words
may have varied, but the same idea was expressed. Nevertheless,
the subjects did admit the following: First, consumer advocates and
politicians have capitalized on some dissatisfaction‘with the product
and the industry. Second, some of the regulation, at least, was
brought about by consumer pressure. Third, some of the safety and
emission control devices had to be introduced by, legislation. They
were useful, but the consumer was not willing to pay for them.
These statements are not consistent with the implementation of the
marketing concept.

Consumer Evaluation of
the Product

 

 

In the subjects' opinions, for the consumer, the most
important features in a car are its functional quality, styling,
customer service, and price, in that order. Respondents are

indeterminate on whetheror not the consumer can evaluate these

 

features. Answers ranged from "can evaluate all of them" to

"none. " Concerning functional quality and customerservice, it was

254

mentioned that evaluation may be based on own experience or
word -of-mouth information. As to styling, "either the «customer
likes it or not. " "It is in the eyes of the beholder. " It also was
mentioned that evaluation depends on how the consumer feels about
the car. "He feels good or'bad about his car, based on his expec-
tations. If he likes his car, he will go as far as lying to say how
good his car is. "

Respondents are indeterminate on what should be done to

 

improve the consumer' s ability to evaluate the product. Some sub-
jects saw some value in giving the consumer more information.
Others argued that he does not read the information already pro-
vided. Either "he is not interested" or "information given by the
corporation lacks credibility. " Consistent with this latter opinion,
it was suggested that "consumer protection agencies [might] help
the consumers to evaluate [cars] . " Some "poor starts by the gov-
ernment in this direction" also were mentioned.

There were other comments regarding improvement in the
consumer's evaluating ability. "In a free enterprise system, we
have to build a better-mousetrap. Consumers and corporations
must play in this field. And one does not get there by social legis-
lation. " "The consumer knows what he wants and will get what he

wants. He should educate _u_s in what he wants. If he does not get

255

what he wants, it is because we do not know what he wants. We
have to find this out. " Finally, other subjects stated that they did
not know what could or should be done in this area.

This last set of comments also did not seem very consistent
with theimplementation of the marketing concept that the subjects

had stressed before.

Visibility of the Industry

 

Subjects strongly agree that the high visibility of the auto-

 

mobile industry and its product in the concerns of consumer and
environmental protection is due mainly to the size and importance
of the industry and the characteristics of the product itself. It also
was argued that the industry, despite its economic significance,
lacks political power.

The subjects _a_g_r_'3e_ on various product characteristics
that make it an important issue for the consumer. First, the
pervasiveness of the car throughout society was mentioned. The
car means mobility, freedom, and access to work or recreation.
Second, it is a major purchase, outranked only by the home.
Third, it is a product of high technical complexity, which affects
product quality directly. It makes adequate service and repairs

difficult. According to the subjects, all these factors explain why

256

any problems the consumer has with his car become a major source
of dissatisfaction.

The lack of political power was explained by arguments like
the following: "We represent only a few votes. The dealers repre-
sent many more votes and are more successful in protecting them-
selves. We have failed to gain the dealers' support for mutual help
and interest. "

The executives £133 that overall, the industry' 3 response
to both consumer and environmental protection issues has been
"aboutright. " "We do not over- react. We only do what makes
sense. " "We are-rational, conservative, in our reactions." "We
may have over-reacted in some things and under-reacted in. others,
but overall the response was about right. " Some argued that the
reaction was correct but slow. Others pointed out that the problem
was not one'of over- or-under-reaction, but that the reaction was
inadequate. "There was lack of understanding of what these move-
ments were. There was a tendency to generalize instead of taking
specific action. " "We completely misunderstood the whole prob-
lem. " A few thought that the industry may have over- reacted. "In
terms of time-and costs there was maybe some over-reaction. The
consumer advocates should be blamed for not understanding the

state of technology and the price effectiveness of each measure. We

257

count pennies in each'car. Every decision ends up being a
million -dollardecision. We cannot have everything in the car at
the same time."

Opinion about the industry' s response to government

regulations was indeterminate. Some thought the reaction was

 

correct. "We analyzed thedemands [of regulatory agencies].

We complied with the ones that made sense and fought the others.
We would be irresponsible if we did not fight goals that do not make
sense. We cannot fight good goals, but we can fight means that are
not adequate to reach those goals. "

Another thought industry over- reacted "because of the
first impact of legislation. I do not know whether it was because
of guilt feelings, but we tried to do everything that was asked from
us, be it right or wrong. A two -sided debate would get better
results. Some of the-regulations are foolish. " "The industry
refused to deal with issues in the terms they should have been
dealt with. For example: it should have examined mathematically
thecost/benefits of tackling the issue [of safety] from the three
variables: car, highway, and driver. The industry had the data
and did not use them. . . . it would have had to say that one million
to save onevlife is too much. " One subject also mentioned that "in

our-own research we are beginning to get professional people

 

 

258

speaking negatively about the industry and our company. They feel
we let them down because we did not take a firm enough stand
against unrealistic'demands [of regulatory agencies] . "

Again the subjects m that their own company reacted
better than the industry as a whole to consumer and environmental
protection movements and to government regulations. A few recog-
nized that the company could have done better in relation to con-
sumer movements. "There was a time lag in the response." In
relation to government regulation, "we over- reacted in some cases,
but have been under- effective in supporting current positions. "

Respondents were asked what the automobile industry
should do to overcome criticisms leveled at it. The answers polar-
ized around two positions. First, the industry should do as much
as possible to improve the product. Second, the industry needs
moreandmbetter communications with the public. These Opinions
were expressed in several comments. "The industry should con-
tinue to improve the products according to what the consumer
wants. And service is right, at the right price. " "The industry
needs more and better communications with the public. The con—
sumer does not know the positive things about us, just the bad. "
"Public relations in this industry have been very bad. " "We should
have sorted between the good and bad criticisms. We should

have taken a firm stand [about the latter] and gone to Washington

259

and the consumer with the facts. We do not brag enough about what
we have done that' 3 good. We did a lot about safety, even before
there were criticisms and regulations. "

Some views were more radical. The industry should "fight
back. " "Industry should become as pure as it can be. Then, it
should resort to legal action in some of these issues. We should
sue in a punitive way. We should let people be aware that if they
criticize [the industry] they have to be ready to back it up with facts. "
"The industry is doing a disservice to society [by agreeing] to appro-
priate money where it is not very effective to cause social benefits. "

The subjectsggffg that so far industry has improved both
the product and communications. Most think that the industry "has
come a long way in becoming socially responsible. "

Perception of Social Indicators as Indicators of

Changes in Life Styles, Value Systems,
and Attitudes of Consumers

 

 

 

Proposition 10 states that "social trends point to changes in
people' 3 life styles, value systems, and attitudes as consumers. "

The subjects were asked to speculate on the direction of
social change trends and their specific effect on the automobile.
Overall, they $333.9. with the implications of the initial proposition.

The interviewees strongly agree that the consumer' s concern with

 

260

the product' 8 functional quality either will remain the same (very
high) or increase. They 3gre_e that consumer concern with social
quality will increase and that consumer' 8 concern with styling will
remain about the same as at present (very high). They also m

that consumer concern with price is increasing.

Consumer Concern with Functional Quality

The respondents strongly agLee that the consumer' 8 con-

 

cern with functional quality either will remain the same or increase.
The concern is already very high. The consumer is showing irrita-
tion with lack of product quality. This is indicated by the number

of consumer complaints, either directly through business channels
or to consumer protection agencies. In addition, as the consumer
becomes more knowledgeable about products, his expectations

about them tend to increase. Their comments illustrate all these
points. For example, "The consumer has already shown irritation
with lack of quality. . His expectations are increasing and provide

a (background forcomparisons. " "The consumer wants to believe

he is sophisticated in relation to the product. "

Consumer Concern with Social Quality

The interviewees agree that the concern with social quality

 

will increase, but there is less agreement about it than in the case

 

1]]! 2.: .Li r. rl'r.’ 31...»:

I I
.
n

is.

261

of functional quality. "The consumer has changed. He is becoming
aware of things like safety and pollution. " Some think that the con-
cern will remain the same (low) or even decrease when "the cost of
social quality begins to be recognized by the consumer. "It is not
only the cost of the car too. There are costs related to the fact that
the consumer will not get the same level of performance from the

car. "

Consumer Concern with Styling

Respondents 35333 that consumer concern with product
style will remain about the same as at present (very high). Although
a few thought it may even decrease, throughout the interview it was
apparent how style -conscious the industry is. "Style is what really
grabs the customer. " "First the customer has to like the way the
car looks. Then he‘will see the other features. " Consequently,
it is notable that a few subjects mentioned that the consumer

-may become less concerned with styling.

Consumer Concern with Price

Interviewees agree that the consumer is concerned that
price will increase. They believed he already is concerned and
will become even more so when prices rise because of the costs of

meetingstandards. "When these costs amount to $800. 00 or $900. 00

 

I

 

 

262

per car, the consumer has to be concerned with the price he will be

paying- "

Cost -Benefits of Added Social Quality

The answers were indeterminate on whether or not the

 

increase in product quality due to the social concerns is propor-
tional to its high costs. There were a few conditional "yes"
replies. "If we are allowed to control what we do, yes. If we are
controlled by government regulations, no. " Others gave a negative
answer. "Some of the things we are adding cost more than the
benefits they bring. " Some stressed the idea that resources are
not unlimited and that evaluation should be made in terms of costs
of alternatives. "No, in terms of alternative costs. I do not think
money is being put where it matters. " "No doubt the standards
[demanded] will save some lives and will improve the pollution
situation. But could not this money be better spent? Deaths by
accidents can be avoided by safety devices in the car, or better
highways, or by not allowing drunk people to drive. Or all three
together. Or by getting the victims to the hospital faster. Or by
giving them better medical care. Where is the money better spent?

My objection is not against the Spending. It is against the waste. "

263

Some subjects said that the cost-benefit ratio depends on
the quality being added and stressed the difficulty of attaching a
dollar figure to some of these values. One executive showed an
attitudinal study done by his corporation and quoted one of his sub-
jects: "I would say that the costs in dollars, performance, and
reliability for emission controls outweigh the current gain to the
consumer regarding clear air interest. "

Subjects strongly agree that the consumer is the onewho

 

will pay for the added costs of social improvements inthe product.
The gist of their argument was that "there is no other that could
pay. " "My opinion on who should pay has nothing to do with .it.
Ultimately theconsumer pays it, regardless of how it is accounted.
He will pay, freely or unfreely, knowingly or not. " A few thought
the general public could pay some of these costs, but that the bulk
should be paid by the consumer. It also was recognized that in the
case of a product like the car, the two almost coincide, but not
entirely.

The interviewees strongly agree that the corporation can-
not and will not pay for the added costs. It was argued that under
the present economic system there is no way the corporation could
do so; costs will have to be passed on to the consumer. Moreover,

even if the corporation were to give up all profits, funds would not

264

be sufficient to cover the anticipated increases of 20 to 25 percent.
One subject commented: "What an amazing question. What difference
does it make? Society will pay for it. The industry will simply
raise prices. Should it come from the shareholders or consumers,
there is very little the automobile industry can do. Consider the
complex network of consumers, plus stockholders, plus stockholders
of supplying industries. It is society imposing a price on itself. "

The answers on whether or not consumers will be willing

to pay for these added costs were indeterminate. Some thought the

 

consumer will be willing, up to a point, if he sees the advantages of
the added features. Others argue that, given the choice, the con-
sumer will not be willing, but that in the future he will not be given
the choice. Subjects _a_g_£6_2_e_ that the average consumer will be able
to pay, but that there may be some changes in the present pattern
of market segmentation and product mix offerings. They strongly

agree the trend in the market is toward thevsmaller car.

 

Concerning consumer willingness and ability to pay, the
following comments were made. "The consumer will be willing to
pay, up to a point, but not for what he will have to pay three or four
years from now. This is why I think the concern with safety and
pollution will decrease. " "Thus far, the consumer is not being

given too much'choice. By not giving choice, some safety and

265

pollution devices were successfully introduced, without much outcry. "
"It is a matter of education. If he is educated and sold on the advan-
tages of the added features, he will be willing to pay. " "It is not the
consumer paying for added costs. It is society establishing new
priorities and reallocating resources accordingly. "

Many responses referred to smaller cars and changes in
buying habits. "The consumer is able to pay, but in order to do
this he may have to trade-down or give up the family' 3 second
car. " "People already are buying smaller cars because of price
pressures. " "Yes, they will be able to pay for the car, but they
may have to buy a smaller car or give up some options." Some
subjects argued that the average consumer will not be able to pay
forthe added costs. "Some people are already findingit difficult
to pay for these added costs, and the costs are going up. Some
may be‘forced to smaller cars or no car at all. " "The more
expensive cars are, the-less cars 'will be bought. Sales dollars
might not decrease, and profit is on sales, not on the number of
cars sold, but the product mix will be changed. "

Perception of Impact of Social Indicators
on Product Strategy

 

 

Propositions 11 -21 concerned the impact social informa-

tion would have on corporate product strategy decision making.

266

The subjects agree with the initial proposition that the

number of product eliminations will increase, but they disagree

 

that diversification of present lines will increase. The subjects
strongly agree with the propositions that corporate concern with
functional quality and social quality will increase. They Egre_e that
corporate concern with functional product features is increasing,

but they disagree that the concern with aesthetic features will

 

decrease. They believed this latter concern will remain as high
as at present. Respondents strongly agree that corporate concern
with standardization of product features is increasing. However,
answers on whether or not this will necessarily mean standardiza—

tion of the final product were indeterminate. Some thought it will.

 

Others thought that even with standardization of product features it
is still possible to have some differentiation of the final product.
However, the executives Egr—egwith the proposition that corporate
concern with product differentiation will decrease. They §g_r_e£

that corporate concern with guarantees and warranties will increase,

and strolgly agree that concern with customer service and consumer

 

education also will increase. They-strongly agree that costswill
increase and that the added costs will be reflected in the prices of
the finished product. These issues will be analyzed in more detail

to include the subjects' justifications for their answers.

267

Product Mix

Product Elimination Decisions

 

Proposition 11 states that"the number of product elimination
decisions will increase." Subjects justified their agreement by
citing either regulatory pressures or economic reasons. An example
of the former is the comment that "the industry will eliminate the
convertible because of convoluted pressure. The government is
concerned with the problem of roll -overs. Also, the consumer is
showing preference for stereos and air conditioning. Add all
these, the convertible will go. " "The number of products is decreas-
ing already. Some products will not meet the government standards. "
"We are eliminating muscle, highly powered cars from our lines.
This is because of pressure by the insurance companies and also
because of public pressures. " The economic reasons refer to the
added costs of meeting standards. "We have limited resources to
allocate for transportation. Proliferation of products is costly. If
the government is requiring greater expenditures, we will have to
reduce the variety of offerings. "

All these arguments are summarized in another subject' 8

comment: "We had two decades of expansion and proliferation of

products in answer to what we believed the market wanted. It led

 

 

268

to a complication of product lines difficult to cope with. Now, with
all the federal requirements on the design of the vehicle, we lack
the resources--men, money, materials--.for a large variety of

products. It has to result in the increase of elimination decisions. "

Diversification of Present

 

Product Lines

 

Proposition 12 states that"diversification of present product
lines will increase." Respondents disagree with this proposition, and
argued that the tendency is for diversification to remain at about the
same level as it is today. Their observations referred to the dif— :
ficulties that they considered peculiar to the automobile industry.
"The problem is to find something large enough to diversify to. "
"This is a large, heavy capital industry, keyed to large capital
operations. " Some subjects emphasized that "we are in the trans-
portation business. If we diversify, it should be to other forms of
transportation. "

The topic of mass transportation provoked various
responses. Some were strongly in favor. "If it is shown that
people are changing and willing to accept mass transportation, we
should go into it. " "We should expand our role in public transpor-
tation. Growth does not come by staying with the same product

lines. We should expand to other vehicles. " "I hope we will be

269

permitted to go into mass transportation. We are discouraged by
the government from entering new fields. " "We are in the business
of moving people. If the trend evolves to something like mass
transportation, we should do it. But we are not systems people.
We would not be involved in planning the system, but in producing
the basic hardware. "

Others vehemently opposed mass transportation. "The
most rigorous reaction should be mounted against it by the auto-
mobile industry. There is no economic or social argument for it.
Some top managers in this industry think that if there is social
pressure for mass transportation, then let us go into it. This is
wrong. Mass transportation precedes the automobile. It reflects
an urban environment that is socially and psychologically unhealthy
and economically wasteful. " "In thirty years the vehicle may be
something you would not recognize. Maybe it will not even be
called a car. But the idea of personal mobility will not change. It
will still be some mode of personal transportation and we are all
going to like it. "

Finally, a few subjects pointed out that the best solution
might be market diversification. "We should expand foreign opera-
tions to meet the greater demands in other countries." "The world

is our‘market. " "Successful, profitable operations in growing

270

countries may offset the future domestic problems of slower growth

and cost pressures. "

Product Quality

Corporate Concern with
Functional Quality

 

 

Proposition 13 states that "corporate concern with functional

quality will increase." Respondents strongly agree. Only a few sub -

 

jects thought that this concern will remain about the same because it
is already very high.

Comparing the answers to questions 12 and 21, referring
to corporate and consumer concern with functional quality, there
was consistency in the direction of the answers. Subjects strongly
_a_g_gfg that both will increase. Some pointed out that upgrading
functional quality is the best answer to consumer movements.
"There is a terrific drive to upgrade quality of product both as to
reliability and durability. " "Upgrading quality is really the best
answer to consumer movements. We should build a product of
such high quality that the problem of guarantees and services will
really lose significance. " Others adopted a more cautions approach.
"We should try to build the best car that technology allows, but

there are economic considerations too. We have to reach a

271

compromise between the durability and reliability and the cost to
the consumer. We are concerned with the durability and trade -in
value of our cars because the customer rates them as important
considerations. "

Corporate Concern with
Social Quality

 

 

Subjects strongly airee with Proposition 14, which states

 

that "corporate concern with social quality will increase. " Subjects
cited both market and regulatory pressures as reasons. There
were several comments from the market pressure proponents. "If
the public is aware of the social issues, it will pressure and we
will respond. " "We are responsive to anything that affects viability
in the marketplace. " Others stressed the regulatory pressure.
"Concern with social quality would not increase without regulations.
We tried to sell safety features on an optional basis five to seven
years ago. We never got our investment back. " "[Social quality]
will increase because of [government] imposed constraints. "

"It' s got to increase. We are committed to it by public policy. "
The comparison of answers to questions 13 and 22, referring to
corporate and consumer concern withsocial quality, also showed
consistency. Both were seen as increasing. However, the number

of subjects who thought that consumer concern with social quality

272

will increasewwas smaller than the number who stated the same
concern for the corporation. If, as the subjects repeatedly claimed,
the corporation responds directly to consumer needs and wants,
how does one explain this discrepancy? There are two possible
explanations. First, some who thought the consumer will not be
concerned with social quality believed the corporation will be con-
cerned because of regulatory pressures. Second, there may be a
time lag in the responses of the two groups: "The corporation is
lagging behind theconsumer. It has been slow to react. Now it is
reacting and will increase its concern with social quality, when the
consumer is letting off. "

Trying to explore this point further, answers to questions
12 and 21 and 13 and 22 were compared to answers to question 45
(In the subjects' opinion, what is more important for the consumer
in a car?). Subjects cited functional product quality, styling,
customer service, and price, in that order. It seems reasonable
to conclude, then, that although alarge number of respondents
stated that the consumer concern with social quality will increase,
their belief was not as strong as their belief in the increased
interest in functional quality, where there was strong consistency

between the three sets of answers.

273

One of the-subjects criticized the author' 8 arbitrary
division of functional and social quality as incomplete. "A third
dimension should be added: psychological, satisfaction quality. It
has to do with enjoyment, pride of ownership. This kind of quality
is going todecrease because of the standards. The car will not even
have the same performance. Some comforts and little touches will
have to go, too, as the number of choices decreases. "

The-next observations, that contrast concern with functional
features with concern for styling, may confirm this viewpoint.
Styling may be considered as referring directly to a psychological
dimension.

_Cprporate Concern with
Product Styling

 

 

Proposition 15 states that "corporate concern with styling
will decrease. " Interviewees agr_e£ that concern with functional
product features will increase, but disagree that concern with
aesthetic features (styling) will decrease. Rather, it will remain
about the same (very high). They argued that the greater concern
with functionality and regulations do not lessen demands on design-
ing. On the contrary, the demands will be the same or even higher
than before to accommodate these requirements and still keep the

vehicle aesthetically pleasing. In the-subjects' opinions, the industry

274

is very style -conscious, and very significant changes in market
demands would be needed to modify its outlook.

The gist of the comments concerning greater interest in
functional features was that it is a response to a market trend. This
point of view is consistent with the one expressed before on increas-
ing concern with functional quality (questions 12 and 21). "In the
past, this industry emphasized styling. The trend was toward
bigger, more luxurious, more expensive cars. Some buyers still
like a big, luxurious car, but many others want a functional,
economic kind of car. " "The corporation will put money where the
consumer can discern a difference. It is difficult to acquire dif-
ferential advantage in styling today. All cars are very well styled.
Thelast significant [styling] market advantage was car X in 1965. "
"From now on, if we have style changes, they will be functionally
related, that is, styling changes to accommodate new functional
features. "

The subjects who sponsored the idea that corporate con-
cern with styling will remain about the same point out that in the
past styling determined whether a car would sell or not, and that
this. is still true. "The love affair with the car is not over. " Other-
wise, why would consumers buy cars with "de luxe, " not functional,

features? "To sell a car to a customer, you have to get him to the

275

showroom first. Styling does it. " For these subjects, regulations
and the greater concern with functionality will not decrease demands
on designing: they will be the same or heavier than before to accom—
modate the requirements "aesthetically." "Styling changes will
become less frequent, but concern with styling will remain the
same. PeOple are going to aesthetics in everything, including
cars."

The comparison of the three sets of data (answers to
questions 19, 23, and 45) shows consistency in the belief that styling
is and will remain an important concern for the consumer-and the
corporation.

Throughout the intereviews, as noted before, it became
evident that the industry is style -conscious to a high degree. The
subject was explored. Some executives said that they had "data to
back up the opinion that style is what grabs the customer. "

Others answered that they had no research data, but that this has
been a strong belief of the industry. One subject cautioned: "Maybe
it is just a belief, about which the success of the VW raises serious
doubts. " Other subjects speculated that so many issues are demand-
ing the corporation' 3 attention that the focus on styling gradually

may shift to them.

276

Corporate Concern with
Standardization of
Product Features

 

 

Subjects also were asked to comment on Proposition 16,
"corporate concern with standardization of product features will

increase. " They strongly agree. Several subjects stressed the

 

economic advantages of standardization of components: reduction
of parts inventory and simplification of manufacturing and training
of mechanics. Others again mentioned government requirements
leading to standardization. "Standardization will increase out of
necessity, not because consumers want it. " "Standardization leads
to minimization of trouble. " Some subjects thought that standardi-
zation will remain at present levels, mostly because of market
pressures. "People like multiplicity of choices and freedom of
choice. The customer loves to custom design his own car and get
away from standardization. "

The question of whether standardization of product features
necessarily will mean standardization of the final product was

indeterminate. Some thought that it will, but others thought there

 

still could be some differentiation of the final product. "We can
combine the standard features in different packages. We also can
offer optional features that differentiate the car. " "We will never

produce complete sameness because we are ingenious in meeting

277

all the regulationsand still designing a product that is different in

the consumer' 8 eyes. "

Corporate Concern with
Product Differentiation

 

 

The subjectsiggggwith Proposition 17: "Corporate con-
cern with differentiation will decrease. " Several arguments were
presented in justification. First, government requirements are a
"push to sameness. " Cost factors and market reaction also will
lead to less product differentiation. "By 1974, 1975, all bumpers
will look pretty muchwalike. " "The cost of meeting the standards
leads inevitably to cutting down expenses for other things, product
differentiation included. You cannot increase everything with the
same amount of money. Something, product differentiation, for
instance, will have to go. " "The market itself is reacting differ-
ently. Nowadays, it has to be a meaningful differentiation. "
"Consumers do not go for small, meaningless differences any more. "

Some subjects believed the level of product differentiation
will remain the same as today. "The market requires differentia -
tion in the car. " "Product identity is the most important thing to
sell in a car. We would have to have very compelling reasons to

discontinue product differentiation, so compelling as to outweigh the

advantages of differentiation. " A few thought that product

278

differentiation might even increase. "Differentiation is basic in
this business. As society changes, the indicators will show what

kinds of differences people want in their cars. "

Guarantees and Warranties, Consumer Service,
and Consumer Education

All the subjects perceived these three issues as closely

interrelated and as areas of increasing concern for the corporation.

Corporate Concern with
Guarantees and Warranties

 

 

Proposition 18 states that "corporate concern with making
guarantees and warranties more explicit will increase. " Subjects

agree. Some mentioned market demand for more explicit guaran-

 

tees, and regulatory demands and the need for the corporation to
protect itself from a competitive and legal viewpoint also were
emphasized. "The market is better educated. It demands more
explicit guarantees and warranties. The corporation has to be
responsive to what it perceives as market needs and wants. " "The
concern with making guarantees and warranties more explicit
increases greatly as government develops a greater regulatory
posture and the corporation has to respond to it. " "Because of the

loosening up of the legal process, the advantages [in the liability

e1

 

 

 

 

279

suits] are all on the-side of the consumer. Companies will tighten
up‘warranties and promiseless and less. "

Other subjects used the same kinds of arguments to justify
the opinion that corporate concern with guarantees and warranties
will remain at the same level. "Guarantees will not be increasingly
explicit. Courts already have gone further than the corporation
would have gone in making the implicit more explicit. " "We want
to have our consumer satisfied. We stand behind our product. But
we do not feel we should stand behind abuse. "

Subjects stress that the problem of guarantees and warran-
ties is closely related to customer service and product quality.
"We should strive to have a car that does a good job for a long
time. Then warranties would not be so important. "

Corporate Concern with
Customer Service

 

Proposition 19 refers to customer service. It states
" cm 0 all 0 "
that corporate concern w1 customer serv1ce W1 mcrease . 4

Respondents stronggggree. Some rated it "number one priority. "

 

They believed that cost and inconvenience related to servicing and
repairing the car are the main sources of consumer dissatisfaction.
This is consistent with answers to question 45, where customer

service was mentioned as important to the consumer. The subjects

280

perceived the dealer as the mainlocus of responsibility for this
dissatisfaction. "The dealer is the point of contact with the con-
sumer and he very much influences consumer satisfaction with the
product, both in services and administration of the manufacturer' 3
guarantee. "

It was argued that because the dealers are independent
businessmen, the manufacturer cannot have, as it should, strong
control over services. "We are blamed for the bad service, ..but
we do not own the dealerships. And the dealers are the ones that
contact customers. " "People are more and more concerned about
the services and the dealers. Customers do not want to depend
on others they can' t trust. "

The subjects recognized that most dealers do not see
themselves as the ones responsible for the poor service. They
blame the problem on the manufacturer. Dealers argue that the
car' 8 complexity plus poor workmanship and extended warranties
require an extensive service organization that most of them are
not preparedto manage. Manufacturing problems, as exemplified
by the recalls of great numbers of cars, put an added stress. on
service demands. . In addition, the dealer has no incentive to pro-
vide good service. "You see, people say they. are concerned about

services, but they do not develop any loyalty to the dealer. They

281

go down the street to whoever gives them a $25. 00 discount. Then
the dealer does not feel he gets rewarded for good service and does
not provide it. The customer reasons that since he is not going to
get good service anyway, he might as well take the‘discount. And
so on. . . . it is like a vicious circle. "

Subjects _a_g_r_e£ that the dealers are not prepared or'willing
to cope with the service problem on their own. The solutions the
subjects proposed varied. They suggested bypassing the dealers,
increasing product quality, and minimizing product complexity.
"We just could set up our own service organization . . . but there
are the antitrust laws that do not let us do it. " Others suggested
the need for "an almost trouble -free car that does not need servicing. "
"The solution is to minimize the product' 3 complexity. We should
have product simplification and the highest possible component
standardization across car lines. " "The solution to the service
problem should begin at the very start, when the product is con-
ceptualized at the designer' 3 table. "

Efforts to improve service were mentioned in all the three
corporations, including "hot line, " mobile training units to help
dealers' technicians, and incentive programs giving awards to
dealers about whom customers do not complain. Subjects in all

three corporations mentioned Ford' 3 recent decision to set up

282

service as an organizational division separate from sales. Subjects
pointed to it as an example of the priority that service is being
given.

It becomes clear that not only the question of customer
service is being discussed, but also thecomplex web of manufacturer
and dealer relationships and power conflicts within the channel of
distribution. Consumerism brings these to the surface, since each
party blames the other for consumer dissatisfaction. Some of the
subjects seemed aware of the fact that any solution to the customer
service problem must take these interrelationships into considera-
tion. If the consumer is to be satisfied, there must be a provision
for swift "flow of services, " in the same way there is a flow of
transactions and a flow of physical distribution activities. The prob-

lem, however, is how to organize and administer the flow of services.

Corporate Concern with

 

Consumer Education

 

Proposition 20 states that "corporate concern with consumer
education will increase." Again subjects strongly agree. Several
mentioned on -going and planned activities within the corporations
for better product information and recourse channels. Most view
consumer education within the context of improving communication

with the consumer.

283

The importance of expanding consumer education was
recognized, but it also was stated candidly that any such program
encounters difficulties that the manufacturers do not yet know how
to overcome. They have not found the way to gain credibility or to
capture consumers' attention and interest. "We should expand the
feedback system. " "We have to find better ways of communicating
with consumers. " "We don't know how to get the customer' 3
attention andinterest. He does not read even the informationwe
are putting out now. " "Maybe the consumer will be overloaded with
information. " "Customers do not trust us very much as a source of
information. They trust the dealers even less. " One subject sug—
gested "that independent consumer agencies or even government
agencies could be an unbiased good source of product information.
But the government efforts in this direction, up to now, have been
awful. "

Comparing answers to questions 17, 53, and 54, one is led
to conclude that the subjects believed in the value of better communi-
cation with consumers, but have not yet found a good way of imple-

menting it.

Product Cost

Proposition 21 states that "product cost for the manufacturer

and consumer will increase. " Interviewees strongly agree on this

 

284

topic. Subjects argued that the standards for safety, pollution
control, and damageability protection are adding and will add even
more to the cost of the car, and this will be passed on to the con-
sumer. Subjects' perception of costs as increasing is consistent
with their perception of price as important for the consumer
(question 45) and of consumers being increasingly concerned with
price (question 24). "Prices will be going out of sight. " "Costs
are a major concern already. The government will have to back
off. " "Costs are increasing and will continue to go up, and so will.

the prices consumers will have to pay. "

CHAPTER 6
CONCLUSIONS AND SUGGESTIONS

FOR FURTHER RESEARCH

The purpose of this chapter is twofold: first, to summarize
the conclusions of the study, and, second, to set forward suggestions

for further research.

Conclusions

 

This dissertation' s focus is on the impact of social indi-
cators and social reporting on corporate decision making for product
strategy. Underlying this study is the basic assumption that the
idea of social indicators and social reporting is here to stay. There-
fore, the exploration of their implications for marketing planning is
justified.

It is also assumed that social indicators and social reports
will help gauge the state of society. They may point to the areas
to which government will be directing policies and programs.
Because of government business interfaces, whatever indicates the

direction in which government will move is bound to have an impact

285

286

on corporate decision making. Social indicators and social
reporting will define trends in social change and consequent life
styles, value systems, and consumer behavior. They may, then,
be useful information for the corporation in planning its marketing
strategy, especially product strategy.

The propositions advanced in chapter 4 referred to these
basic assumptions. These initial propositions were explored by
interviewing 14 automobile industry executives, in leverage positions
for product strategy decisions. The detailed analysis of the findings
was given in chapter 5. In the present chapter only the dominant

trend (strongly agee, Egree, indeterminate, disagree, strongly

 

disggree) toward each proposition will be summarized.

 

The first proposition referred to executives' awareness
of the social information explosion, and the conclusion is that most
interviewees were unaware. All executives were familiar with the
social areas and issues for which'social indicators are being.

developed, but the term social indicator, and the idea of associating

 

measurements with social issues, were unfamiliar. Once the con-
cept of social indicators was explained, it was well understood,
although some executives expressed reservations about the possi-

bility of valid and reliable measurements.

287

The conceptual framework suggested that social indicators,
because of their micro and macro effects, would have an impact on
corporate decision making, goals, organizational structure, and
product strategy.

Respondents strongly agree that the availability of regularly

 

published social indicators will affect corporate decision making.
In justifying the affirmative answers, the factors mentionedmost
often were the usefulness of good social statistics, the value of
social indicators in pointing the direction of future government
actions and regulations, and the uses of social indicators for better
indentifying future market trends. The respondents mentioned
indicators in the areas of health, safety, and the physical. environ-
ment as more important for the automobile industry. Safety and
pollution are major regulatory issues and it is understandable that
indicators in these areas should have been mentioned often. Also
mentioned as important for characterizing market opportunities
were indicators of economicissues (employment, income) and, in
a few cases, indicators of leisure and recreation. Overall, the
subjects' comments showed more concern with the relationship of
social indicators to the social concerns that may be subject to
governmental regulations than with indicators possibly reflecting

market trends and new market opportunities.

288

Respondents agreethat the availability of social indicators
would have an impact on corporate goals, organizational structure,
and product strategy. A few qualified their affirmative answers,
stressing that the effectiveness would depend on how good a mea -
surement indicators will be and on their acceptance by other sectors
of society. The gist of most observations on corporatersocial goals
is that corporations should accept social goals and responsibilities,
but without jeopardizing present economic goals. The executives
stressed that social issues already have affected the organizational
structure. The three companies in the study have appointed top
corporate officers to new positions concerned with consumer affairs
and areas of government regulation such as safety, emissions con-
trol, urban affairs, and minority rights. Respondents also 13.533
that the incorporation of social indicators into decision—making
procedures will induce organizational changes. The procurement,
analysis, and interpretation of social indicators will have to be
delegated to an expanded, existing organizational group, or to some
new group.

Interviewees 355$ that the availability of social indicators
will affect decisions on product strategy, both in the micro sense
(as indicators of market trends and opportunities) and in the macro

sense (as indicators of regulatory policies affecting product strategy).

289

The locus of responsibility within the corporation for
procurement and analysis of social indicators and policy recom-
mendations based on them also was discussed. The respondents

stroggly aggee that the responsibility should be given to a specific

 

group as opposed to several different groups within the corpora -

tion; they are indeterminate, however, about which group. Market-

 

ing research or similar groups (business, economic, and corporate
research), product planning (or a group reporting to it), "top
corporate officers, " or an independent, explicit agency were sug-
gested as possibilities. This diversity of opinion on the locus of
responsibility indicates the newness of the concern for the corpora-
tions. Procedures to deal with social information are not yet well
institutionaliz ed.

The model suggested in the conceptual framework implied
that social indicators and social reports are part of the environmental
information that the marketing intelligence system processes. Such
social data are necessary to develop knowledge about environmental
conditions and trends and to evaluate the marketing system' 3
opportunities and constraints. . If the locus of responsibility for
social indicators is a marketing research or product planning group,
the model as conceptualized is adequate. If responsibility is given

to some other independent group, the model still stands, but is

290

modified, somewhat. Instead of procuring and analyzing the data,
the marketing intelligence system will receive the input of data
already analyzed and interpreted.

Respondents strogglyagree with the proposition that govern-

 

ment regulation of business will increase. In essence, they see
the trend to regulation as an almost irreversible one. They also

strongly aggeewith the proposition that government regulation of

 

the automobile industry will increase. The followingareas are
suggested as the most likely to be subject to regulation: the prod-
uct' s social quality, functional quality, and price.

Some respondents suggested that in addition to safety and
emissions controls, two other issues are emerging: damageability
and noise control. The respondents recognized. that some regula-
tions were necessary, because of the importance of the industry to
the public, and because safety and pollution control standards
otherwise could not be met in the competitive conditions of the
market; consumers are not willing to pay for them. But the
executives seemed to strongly resent the extent of regulation to
which business in general, and their‘industry in particular, has
been subjected. It is claimed that safety and pollution standards

are too strict and are beyond the possibility of present technology.

291

Some propositions were offered regarding related areas
of business-government interfaces. The reasoning underlying these
propositions is that increasing regulation of business and of the
automobile industry imply increasing risk for the corporation. This
would move the corporation to more cautious actions.

Subjects m that the risk of product failure will increase,
thus agreeing with the initial proposition. Costs of product elimina -
tion decisions, recall campaigns, and owner complaint settlements
were mentioned as examples of additional burdens and risks that the
corporation is facing. Consistent with the previous perception that
the rate of product failure will increase, subjects also _a_gr_e_e_ that
the risk of introducing new products is increasing. They disagree,
however, with the proposition that the rate of development of new
products (pace of innovation ) will decrease. They believed that the
pace of innovation will increase because of new market values,
needs, and potentials, or will be spurred by the regulations them-
selves. Technology will have to be developed so that the required
standards can be met at a reasonable cost.

The proposition that government' 3 relative share in
research and development will increase was not well understood.
This being the case, any attempt to interpret a general trend in the

answers may be misleading.

292

Subjects _a;_g_r_§_e_ that people in general are dissatisfied with
the overall system, the business system, and the automobile
industry. Somewhat contradictorily they giggle that people in
general are satisfied with their own companies. They also E}:
that people are justified in the way they feel. The essence of their
comments was: "If this is the way people feel, then they are justi-
fied. "

The subjects seemed to believe in the marketing concept.
They also believed that their own company implements it. It was
repeatedly stressed that the industry is in the business of satis -
fying consumer' s needs and wants, but they did admit to a few
failures. First, consumers' advocates and politicians have capi-
talized on some dissatisfaction with the product and the industry.
Second, some of the regulation, at least, was brought about by
consumer pressure. Third, some of the safety and emission con-
trols could only be introduced by legislation because the consumer
did not want them. These attitudes hardly are compatible with the
implementation of the marketing concept.

Most often mentioned as important in a car for the con-
sumer were functional product quality, styling, customer service,

and price, in that order. Answers are indeterminate on whether

 

consumer can or cannot evaluate these features. They are also

293

indeterminate on what, if anything, should be done to improve

 

consumers' ability to evaluate the product.

Subjects strongly agree that the high visibility of the auto-

 

mobile industry in the concerns of consumer and environmental
protection is due to the size andimportance of the industry and
the characteristics of the product itself. Some also argued the
industry lacked political power to combat the situation.

The subjects _a_ggeg on the various product characteristics
that make it an important issue for the consumer. Most often
mentioned were the pervasiveness of the car throughout society,
the fact that it is a major purchase, second only to the home, and
the fact that it is a product of high technical complexity. This
latter affects product quality directly and makes it difficult to
obtain good service and repairs. Poor dealers' service was often
noted as a major source of consumer dissatisfaction.

Interviewees 3g_re_e that the industry' 8 reaction to both
consumer and environmental protection movements has been
about right. Answers about the industry' 3 response to government

regulations are indeterminate. Some of the respondents thought

 

industry' 3 reaction was about right. Others thought that the industry

overreacted .

294

The subjects _a_tgre_e that their own company reacted better
than the industry as a whole to consumer and environmental pro-
tection movements and to government regulations.

Subjects were asked what the automobile industry should
do to overcome criticisms leveled at it. The answers polarized
around two positions. First, the industry should do as much as
possible to improve the product; second, the industry needs more
and better communications with the public. The subjects perceived
that so far this is exactly what the industry is trying to do.

It was conceptualized that social change trends revealed
by social indicators point to changes in people' 3 life styles, value
systems, and attitudes as consumers. Subjects were asked to
speculate on therdirection of these changes in the specific case of

the automobile. They strongly agree that the consumer' 3 concern

 

with functional product quality either will remain the same (very
high) or will increase. They also EngE that consumer concern with
social quality will. increase. They _a_g_r_e_£ that the concern with
styling will remain about the same (very high) and that the concern
with price is increasing. Answers on whether or not the increase
in product social quality is proportional to its high costs are

indeterminate. Subjects strogly aEee that the consumer will pay

 

for the added costs of social improvements in the product; the gist of

their argument was that "there is no one else that could pay. "

295

Answers are indeterminate on whether or not the

 

consumer would be willing to pay for the costs of increased social
quality of the car. Some thought the consumer would be willing to
pay, up to a point, and if he is educated to see the advantages of
the added features. Others argued that, given the choice, the con-
sumer would not be willing to pay, but that from now on he will not
be given the choice. Respondents _a_g_ggg that the average consumer
will be able to pay, but that there may be some changes in the
present pattern of market segmentation and product mix offerings.

They strongly agree that the trend in the market is toward the

 

smaller car.

It further was conceptualized that the impact of social
information on corporate decision making would have some specific
impact on product strategy decisions.

Subjects 3.3933. that the number of product elimination
decisions will increase because of botheconomic and regulatory
pressures.

They disagee, however, with the initial proposition that

 

diversification of present lines will increase. Justifying their
perception that the tendency is for diversification to remain at
about the present level, the subjects pointed out the difficulties

that they consider peculiar to the automobile industry. These

296

include antitrust restrictions and the fact that automobile
manufacturing is a large, heavy capital industry, geared to large
capital operations.

The topic of the role of the industry in mass transportation
provoked various responses. Some strongly favored it, if this is
what the market demands. Others were vehemently against mass
transportation and even felt that the automobile industry should
react against it. Finally, some subjects perceived market diversi-
fication, through expansion to foreign operations, as a solution for
the domestic problems of slower growth and cost pressures.

It was proposed that corporate concern with functional

product quality will increase. Subjects strongly agree. They also

 

stroggly agree with the proposition that the corporate concern with

 

social quality will increase. In both cases it will be a response to
market and regulatory pressures.
Respondents agree that corporate concern with functional

product features is increasing. They disggree with the initial

 

proposition that corporate concern with product styling will decrease.
They perceived the concern withaesthetical features (styling) as
remaining about the same (very high). It was argued that the greater
concernwith functionality and the regulations does not mean lesser

demands on designing. The demands will be the same or even

297

higher than before to accommodate these requirements aesthetically.
The subjects perceived the industry as being highly style- conscious,
and significant changes in market demands would be needed to
modify this basic belief.

Subjects strongly agree with the initial proposition about

 

standardization of product features. They perceived corporate con-
cern with it as increasing. Economic reasons and regulatory
pressures were mentioned to support the answers. Answers are

indeterminate on whether or not standardization of product features

 

will necessarily mean standardization of the final product. Some
thought that it will, but others thought that even with standardization
of product features, it is still possible to have some differentiation
of the final product. However, subjects ggr_egwith the proposition
that corporate concern with product differentiation will decrease.
Arguments to justify the answers included government' s "require-
ments for sameness": costs factors, and market reaction. It was
believed that the market "won' t go for small, meaningless differ-
ences any more. "

The subjects strongly agree the issues of guarantees and
warranties, customer service, and consumer education are closely
interrelated. They gggegwith the initial proposition that corporate

concern with guarantees and warranties will increase. The

298

increased concern with guarantees and warranties is justified by
thedemands of a more educated consumer, regulatory demands,
and the need for the corporation to protect itself both from a legal
and competitive viewpoint.

Subjects strongly aggee that corporate concern with

 

customer service and consumer education will increase. Customer
service is rated "as top priority. " The respondents believed it to
be the main source of consumer dissatisfaction. They perceived
the dealer as the main locus of responsibility for this dissatisfaction.
Behind all these comments lie the complex interrelationships of the
manufacturer-dealer actions in assuring consumer satisfaction.
The respondents mentioned efforts by the manufacturers to improve
customer service: mobile training units to help dealers' techni-
cians, incentive programs to award dealers with no customer
complaints, and establishing service as a separate organization at
the corporate level.

The importance of expanding consumer education was
recognized. The issue was perceived within the context of improv-
ing communications with the consumer, but it was candidly recog -
nized that the corporations are not sure of how a good program of
consumer education could be implemented. They do not know how

to achieve credibility or win consumers' attention and interest.

299

Interviewees strongly aggee that costs will increase. The

 

standards for safety, pollution-control, and damageability protection
are adding, and will add even more, to the cost of cars. These
added costs, of course, will be reflected in the prices of the final
product.

The conclusions are summarized in Table 4. The proposi-
tions and main trends of the answersaare listed, following the same

criteria explained in chapter 5: strongly agree, Egree, indetermin-

 

ate, disggree, strongly disagree. There is one exception to these

 

 

criteria. For Proposition 8, no conclusion could be drawn because
the subjects did not. seem to understand the related questions very
well. It also should be noted that although the interviewees _agggg
overall with Propositions 9 and 10, these are broad propositions,
including several issues. A better understanding of the trends for
specific aspects can be gained from the analyses on main findings

or from< the conclusions .

Restatement of Propositions

 

According to the objectives of the study, the initial propo-

sitions are restated as a result of the findings detailed inchapter 5.

300

TABLE 4

SUMMARY OF CONCLUSIONS

 

 

Propositions

Conclusions

 

10.

ll.

12.

13.

14.

15.

16.

17.

18.

19.

20.

21.

Corporate decision makers are aware of the social information
explosion.

Corporate decision makers perceive of social indicators as having
an impact on corporate decision making.

The availability of social indicators will have an impact on corpora-
tion goals, organizational structure, and product strategy.

Government regulation of business in general will increase.
Government regulation of the automobile industry will increase.

The risk of product failure will increase, due to government' 5
tighter controls and regulations.

The rate of development of new products (pace of innovation) will
decrease.

Government' 8 relative share in research and development will
increase.

Pressures for government regulation of business indicate that
business has failed to meet consumers' needs and wants.

The social change trends (as revealed by social indicators) point
to changes in people' 8 life styles, value systems, and attitudes as
consumers.

The number of product elimination decisions will increase.
Diversification of present product lines will increase.

Corporate concern with functional quality will increase.
Corporate concern with social quality will increase.

Corporate concern with product styling will decrease.

Corporate concern with standardization of product features will
increase.

Corporate concern with product differentiation will decrease.

Corporate concern with making guarantees and warranties more
explicit will increase.

Corporate concern with customer services will increase.
Corporate concern with consumer education will increase.

Product costs for the manufacturer and consumer will increase.

 

Strongly Disagree

Strongly Agree

Agree

Strongly Agree
Strongly Agree

Agree
Disagree
No Conclusion

Could Be Drawn

Agree

Agree

Agree

Disagree
Strongly Agree
Strongly Agree

Disagree

Strongly Agree

Agree

Agree

Strongly Agree
Strongly Agree

Strongly Agree

 

Proposition 1

301

Awareness

Corporate decision makers are aware of
social issues and concerns, but are not aware
of the social information explosion. They do
not yet associate indicators and measurements

to these issues and concerns.

Perception of Impact on the Corporation

Proposition 2

Proposition 3

Proposition 4

Proposition 5

Corporate decision makers perceived of social
indicators as having an impact on corporate

decision making.

The availability of social indicators will have
an impact on corporation goals, organizational

structure, and product policy.

Perception of

Business - Government Interfaces

Government regulation of business in general

will increase.

Government regulation of the automobile

industry will increase.

302

Proposition 6 The risk of product failure will increase due
to government' 8 tighter controls and regula-

tions.

Proposition 7 The rate of development of new products (pace

of innovation) will increase.

Proposition 8 Government' 3 relative share in research and

development will increase.

Proposition 9 The pressures for government regulation of
business indicate that business has failed to

meet consumers' needs and wants.

Perception of Social Indicators as Indicators
of Consumers' Changes

Proposition 10 The social change trends (as revealed by the
social indicators) point to changes in con-
sumer life styles, value systems, and attitudes.

Perception of Impact on Product Strategy

Product Mix

 

Proposition 11 The number of product elimination decisions

will increase.

Proposition

Product Quality

 

Proposition

Proposition

Proposition

Proposition

Proposition

12

13

14

15

16

17

303

Diversification of present product lines will

remain at the present level.

Corporate concern with product functional

quality will increase.

Corporate concern with product social

quality will increase.

Corporate concern with styling will remain

at the present level (very high).

Corporate concern with standardization of

product features will increase.

Corporate concern with product differentiation

will decrease.

Guarantees and Warranties,

 

Customer Service, and

 

Consumer Education

 

Proposition 18

Corporate concern with guarantees and

warranties will increase.

304

Proposition 19 Corporate concern with customer service will

increase.

Proposition 20 Corporate concern with consumer education

will increase.

Costs

 

Proposition 21 Product costs for the manufacturer and the

consumer will increase.

Some Additional Observations

 

Fina-11y, some comments are in order about observations
made throughout the interviews.

The interviewees' answers reflect the framework of the
free enterprise, capitalistic ideology. They believe in free enter-
prise, private ownership, and free competition; they consistently
see profit as the main goal of the corporation. The adherence to
this set of beliefs has several implications.

First, despite the fact that as a group they are well aware
of the social changes occurring~ in society in the 19703 and of the
need to adapt to them, they have difficulty in doing so. It is not
easy to discern, by observation, whether this is because of ideologi-

cal involvement and commitment, or because they are at a loss to

305

interpret the pace and direction of change (or a combination of both).
Only a few respondents seemed to accept change as a positive

value, to welcome it as a challenge, an opening of new horizons

and opportunities. The others seemed to consider change as a
threat to themselves, their corporations, and the capitalistic
system.

Second, although the subjects strongly agree that the
corporation should have social goals and should accept social
responsibilities, most of them qualified the statement by adding
"but without jeopardizing present economic goals. " This indicates
that their own and the corporation' s value structure has not
changed sufficiently to accept general social welfare as the impor-
tant goal, or to easily accept the idea of internalizing social costs.

Third, the-respondents repeatedly stated that the corpora-
tion reflects the values of society. But which values of society does
it reflect? The society is not monolithic, does not have consensual
values. It is pluralistic, involving a complex network of sub-
cultures, each with its own value hierarchy. "Similarities of
culture, social system, caste andclass, sex, occupation, educa-
tion, religious upbringing, and political orientation are major

variables that are likely to shape in more or less similar ways the

value systems of large numbers of people. "1 At this juncture, when

306

basic values of society are being reassessed, such as "the
conceptions of time, space, work, love, religion, sex, and every-
thing else, "2 value differences and conflicts between the various
segments of society become more obvious. For example, "there
are many values that define the difference between being poor and
rich, uneducated and educated, and Negro and white in American
society. "3 The changes in basic orientation are faster in some
segments of society than in others. The younger, the more liberal,
and open -minded, for example, are considered to be more ready to
accept value changes than the older, the more conservative, and
closed -minded. 4 From the executives' comments throughout the
interviews, it can be deducted that the corporationis still strongly
identified with the old ideology, whose values it still reflects.

The interviewees also were deeply committed to the auto-
mobile industry and their own companies. When asked to evaluate
the criticisms leveled at the industry and the need for regulations,
the subjects' commitments surfaced despite their obvious willing-
ness to beimpartial. In the respondents' opinion, the automobile
industry had not forecast and had not planned for the social change
of the 1960s. It reacted as well as it knew how to the change brought
about by the consumer and environmental protection movements and

legislative pressure. But some executives candidly admitted they

307

did not understand or evaluate the former properly, and that they
resented the latter. Pressures placed upon the corporation by
consumer and environmental protection groups, by minority rights
protection groups, by the government, and so forth, indicate a
change in power relationships that seem baffling and even threatening
to the executives. Their well -defined place in the scheme of things
seems to be changing. They perceive these forces, but so far have
lacked the time and space perspective to evaluate them or to cope
with them.

The interviewees considered themselves, their corporations,
and the automobile industry as being m socially responsible, in
the terms in which they understand social responsibility. Primarily,
this implies fulfilling obligations to stockholders, employees,
suppliers, dealers, and customers. They felt "unfairly chosen" to
receive all criticisms. The respondents agreed that people in
general are dissatisfied with the overall system, the business
system, and the automobile industry; they even admitted that people
are justified in the way they feel. But when asked to analyze the
reasons why the industry has been criticized, they did not point out
the industry' 3 behavior. They quoted the size and importance of
the industry, the characteristics of the product itself, and the bad

customer services provided by the dealer. They also added that

308

changes inlwork ethics and the social requirements to hire hard -core
unemployed and minorities have added to the problem of obtaining
excellence in a product of such high technical complexity as the car.

When discussing government regulations, the subjects did
recognize that some were necessary. They admitted that some of
the safety and pollution controls could not have been sold in the
marketplace in competitive conditions, but stronglyresented the
extent of regulation, "the interference of the government in running
our business. "

The subjects saw their industry in a position of "constrained
power" amidst thecontradictory requirements of legislation.
Expected to provide good service, the industry has no control over
the dealers whose franchises are protected. They cannot bypass
the dealer because antitrust laws would not allow further vertical
integration. The industry must meet safety and pollutionstandards
at fixed dates, even if they are unrealistic given the present state
of technology, but the corporations cannot pool research efforts
with their competitors because of antitrust laws.

This concern with government regulation colors the
executives' perception of the impact of social indicators on cor-
porate decision making. Although they recognize the micro effects,

it is obvious that they are more concerned with the macro effects.

309

At this juncture social indicators are perceived as more useful as
indicators of regulatory trends than as indicators of market trends
and of new marketing opportunities.

The author has no reason to interpret interview responses
as being anything but candid. They reflect the subjects' commit-
ments and perceptions. The subjects' comment about consumers,
"if this is the way they feel, they are justified, " could be applied to
themselves. If theircomments reflect the way they _fggl, there is
no way one can argue with their feelings. It seems that despite
outward signs of corporation willingness to accept social goals,
the process of ideologically. internalizing them may be a slow one.
It is to be expected that the availability of social indicators pub-
lished on a regular basis may help-speed this process of ideological
change. The high visibility indicators give to issues and the
credibility associated with data and measurements will have an
impact. While all indicators are important to all industries, some
may be more important for particular industries.

It was conceptualized in chapter 4 that each marketing
strategy can be evaluated in terms of measurable changes in the
indicators. Many decisions and policies may involve different
alternative activities. The evaluation of the social impact of each

alternative also could be made in terms of measurable changes in

310

the indicators. But there are several problems not yet solved.
First, all changes are not yet measurable. However, even a
qualitative evaluation of each alternative in terms of social effects
may be an improvement over the present lack of any social evalua -
tion. Second, some of the activities are counterintuitive and may
affect different indicators in different ways. For example, hiring
the hard -core unemployed may have a positive effect on indicators
of employment and social mobility, but may have a negative effect
on product quality and, thus, on safety.

The unsolved theoretical problem of how to index the
various indicators is reflected in the previous example. Obviously,
setting priorities is an essential part of the process of social
evaluation. Priorities reflect hierarchical values. Therefore,
although-indicators may seem to reflect the objectivity of hard data,
the choice of the indicators themselves and their ranking are the
result of subjective choices. It is to be hoped that for society these
subjective choices will reflect the interests and welfare of all.

Social indicators will have a strong impact on corporate
decision making, and specifically on product strategy. They also
will have a strong impact on the process of internalization of social
values by executives and corporations. But this study is concluded

on the-sobering note-that this will be a slow process. The

311

immaturity of the state of the art in the development of social
indicators coupled with the fact that they deal with areas of strong

ideological commitment lead to this conclusion.

Suggestions for Further Research

This exploratory study was designed to provide insights
into the new area of the impact of social indicators and social
reports on corporate decision making for product strategy. One
of the main contributions of such a study is to indicate the areas
deserving of further investigation.

In a field as new as social indicators, the list of topics
for research that can be drawn from the bibliographic review is
almost endless. The exploratory study, however, suggests several
areas in particular. These suggestions concentrate on two classes
of topics: first, those that relate directly to the conceptual frame-
work and, second, to those that are specific to some problem
uncovered by the exploratory study. All of these could be useful
both for the automobile and other industries.

Impact of the Availability of Social Indicators
on Product Strategy

Underlying this study is the assumption that the availability

of regularly published social indicators would have an impact on

312

product strategy, both from a micro and macro viewpoint. The
conceptual framework, -the propositions, and the questions in the
interview guide were oriented to both kinds of effects. In the study,
however, it became clear that although the subjects recognized
social indicators as indicators of market trends, they were much
more concerned with them as indicators of the trends of future
regulatory practices. This concern seemed to color their percep-
tions and answers. This might be due to the fact that the automobile
industry has received quite a lot of attention from consumer and
environmental protection movements, and has been subject to
extensive regulations and controls. It is conceivable that other
industries, less visible and less subject to regulations, might have
a different perceptionof the impact of the availability of social indi-
cators. It should be interesting, then, to replicate this study across

different industries.

Purpose of the Study

The purpose of the study still would be to test "awareness"
and "perception of impact. " But with an adequate random sample

(drawn from Fortune' 3 500, for instance), statistical techniques

 

could be used to test whether there are significantly different pat-

terns of responses for different industry groups.

313

Type of Study

The data obtained should be analyzed comparing highly
regulated and not highly regulated industries. Some preliminary
secondary data researchwould be needed to establish the operational

definition of highly regulated and to establish the criteria for'classi-

 

fying the industries in the sample.

Hypotheses

The major hypothesis underlying this study would be:
Highly regulated industries tend to perceive social indicators as
indicators of regulatory trends.

The 21 propositions of this study can be used as specific
hypotheses for further research. But some may be more relevant
to a study across industries than others. The relevant questions in

such an inquiry would be:

1) Awareness:

Which industry groups (if any) are more aware of the social

information explosion ?

2) Perception of impact:

(a) Whichindustries (if any) perceive social indicators as

having impact on corporate decision making?

3)

(b)

(c)

(d)

314

Whichindustries (if any) emphasize micro effects of

the availability and use of social indicators?

Which industries (if any) emphasize macro effects of

the availability and use of social indicators?

Indicators in which areas of concern are more relevant

to specific industries?

Locus of responsibility for product strategy decisions and

for the factoring of social information:

(a)

(b)

(c)

Is product planning the leverage group for product
strategy decisions across industries? Are there

other organizational groups with more leverage?

What organizational groups are suggested, across
industries, for the procurement and analysis of
social indicators and recommendations for decisions

based on them?

Is it the sensitivity of the areas social indicators deal
with that determines the organizational concern with

the locus of responsibility?

3 15
4) Government- business interfaces:

(a) Which industries (if any) perceive government

regulation of business in general as increasing?

(b) Which industries (if any) perceive themselves as sub-

? ject to increasing government regulations?

(0) Which areas (if any) are perceived as more-likely to

be regulated in different industries?

(d) Which industries (if any) perceive their risks as

increasing due to tighter controls and regulations?
5) Product strategy:

All 11 propositions on product strategy (Propositions 11
to 21) would be equally relevant to the replication study.
The existence (or nonexistence) of an industry pattern of
response shouldlead .to interesting conclusions about the
initial hypothesis.

An Exploratory Study of the Meaning of

Social Indicators
in Communications Strategy

According to the conceptual framework proposed in

chapter 4, the inputs to the marketing system are mobilized and

316

allocated for marketingactivities and are conceptualized in three
sets: product and service strategy, communications strategy, and
distribution strategy. The assumptions about how the visibility
brought to social issues will affect government' 3 and corporation' 8
policies and programs imply an impact on the decisions for the three
sets of activities. Social information fed into the marketing intel-
ligence system is relevant for the three sets of activities (Figures 3
and 4, chapter 4). The present study concentrated on product
strategy, but theimpact of social indicators on communications and
distribution strategies also should be explored.

Communications activities, especially advertising, have
been subject to criticisms, on one hand, and regulation, on the
other. Some of these criticisms have been analyzed in chapter 2.
Other topics have been mentioned recently as being related to the
quality of life, such as truth. in advertising, violence in mass media,
and advertising of children' 3 products. It seems reasonable to
assume, then, that the visibility brought to social issues by social
indicators might affect decisions on communication strategy.
Moreover, to be effective, communications strategy must be geared
to identifiable market social trends. If regularly published social
indicators can give a better indication of these trends, they will be

a valuable contribution to better planning.

317

Purpose of the Study

The purpose of the study would be to investigate awareness
and perception of impact of the availability of regularly published

social indicators on communications strategy.

Type of Study

This should be an exploratory study, directed to the
development of basic propositions to be tested by further empirical

research.

Propositions

The same conceptual framework of the present study could
be used as a departure point for developing the initial propositions.
Some preliminary investigation is required to determine the point(s)
of leverage for communications decisions. Three basic propositions
are suggested:

Corporate decision makers are aware of the social
information explosion.

Corporate decision makers perceive of social indi-
cators as having an impact on corporate decision
making.

The availability of regularly published social indi-

cators will have an impact on communications
strategy.

318

More specific propositions could be deducted from probing

the following questions:

1)

2)

3)

4)

5)

How would the availability of regularly published social
indicators affect decisions on the components of com-
munications strategy (personal selling, advertising, and

sales promotion) ?

Which of the above mentioned threecomponents is more

likely to be-affected? Why?

Has regulation (and/ or visibility of social issues) already

affected communications strategy decisions ? How ?

Has allocation of resources among personal selling,
advertising, and sales promotion been affected by the

visibility of social issues and/or regulations? How?

Is it likely that the allocation of resources among personal
selling, advertising, and sales promotion will change in
the near future because of visibility of social issues and/

or regulations? How? Why?

319

6) Is it likely that the visibility of social issues and/or
regulation will affect the present allocation among several

media ? How ? . Why ?

7) Is it likely that the visibility of social issues and/or
regulation will affect present techniques of personal selling,
advertising, or sales promotion? (For example, "hard-

pressure" selling, fear appeal advertising.) How? Why?

8) Indicators in which areas are more relevant to communica -
tions. decisions? Why?
An Exploratory Study of the Meaning of

Social Indicators
in the Distribution Strategy

A complete exploration of the meaning of social indicators
in marketing strategy must also consider distribution strategy. The
latter includes channel and physical distribution decisions. Issues
discussed before in the present study, such as customer services
and administration of guarantees, refer directly to channel decisions.
Others, such as the concern with the environment, may have an
important bearing on the choice of modes for physical distribution

and plant warehouse location.

320
Purpose of the Study

The purpose of the study would be to investigate awareness
and perception of itnpact of the availability of regularly published

social indicators on distribution strategy.

Type of Study

This should be an exploratory study, geared to the develop-

ment of basic propositions to be tested by further empirical research.

Propositions

The same conceptual framework used for. the present study
could be used as a starting point fordeveloping the initial proposi-
tions. Some preliminaryresearch is required to determine the
points of leverage for distribution decisions. The general proposi-
tions are:

Corporate decision makers are aware of the social
information explosion.

Corporate decision makers perceive of social indi-
cators as having an impact on corporate
decision making.

The availability. of regularly published social indi-

cators will have an impact on distribution
strategy.

321

More specific propositions could be inferred from analysis

of the following questions:

1)

2)

To what extent might regulations and/ or the visibility of
social issues and problems (product liability suits, for

example) affect channel decisions ?

(a) What are the present channels of distribution? What

are the problems encountered within present channels?

(b) In regard to selection of channel policy, is it likely
that the trend will betoward more or less vertical

integration ? Why ?

(c) In regard to channel control, is it. likely that the manu-
facturer will try to hold on to or acquire a stronger

position in the channel?

To what extent might regulations and/ or the visibility of
social issues and problems (product liability suits, for
example) affect the distribution of functions among the

manufacturer and the other levels in the channel?

(a) What is the present distribution of functions ?

3)

4)

5)

322

(b) Which functions, if any, seem more likely to be

affected? How? Why?

Indicators in which areas are more relevant for channel

decisions ? Why?

To what extent might regulations and/ or the visibility of
social issues (air pollution, noise pollution, traffic conges-

tion) affect physical distribution decisions?

(a) How are physical distribution activities presently
organized? What are the problems encountered within

the present organization?

(b) Is it likely that the trend in physical distribution will
be one of more centralization of the functions, decentrali-

zation, or of delegation of the functions to third parties?

To what extent might regulations and / or the visibility of

social issues and problems affect:

(a) the present allocation of physical distribution functions

among the manufacturer and channel levels?

(b) the decisions about plant location?

323

(c) the decisions about warehousing location?

(d) the decisions about choice of modes?

(e) the costs of distribution?

6) Indicators in which areas are more relevant to physical
distribution decisions ?
Automobile Manufacturer- Dealer Relationships

and Their Impact on Consumer
Satisfaction] Dissatisfaction with Services

The present exploratory study reveals that the automobile
manufacturer-dealer relationship is problematical. The manu-
facturer views the dealer as a source of consumer irritation or
complaints. It is argued that because the franchises are legally
protected, the‘manufacturer cannot have, as it should, strong con-
trol over the quality and costs of services delivered. On the other
hand, it is recognized that the dealers do not see themselves as
being responsible for consumer dissatisfaction and are not properly
- organized for adequate performance of the service function. Dealers
do not even think they are properly remunerated and consider
servicing "just part of the franchising agreement." This problem
is not entirely restricted to the automobile industry. It may be

relevant in all industries where the product has these three

324

characteristics: (1) relatively high cost, meaning it is a major
purchase for the customer; (2) high technical complexity, requir-
ing good administration of guarantees and good services; and (3) fre-
quent use, hence any break -downs represent a break in routine and

a greater source of irritation. Probably a study in the large
appliances industry would reveal the same kinds of problems, but
the three characteristics and the related problems are magnified in

the automobile industry.

Purpose of the Study

The purpose of the study can be stated as follows: How
should the flow of service be organized and administered, both from

the manufacturer' s and dealer' 3 viewpoint?

Type of Study

The inquiry should be twofold. First, a descriptive study
. of thevpresent patterns of organization for the administration of
guarantees and services, both for the manufacturer and dealer.
Second, a normative study to determine how the implementation of

these functions should be organized for consumer satisfaction.

Hypotheses

The two basic hypotheses of the studyare:

325

The -manufacturer is presently inadequately organized
for the administration and control of guarantees
and service.

The dealer is presently inadequately organized for the
administration of guarantees and for services.

The specific hypotheses could be derived from the analysis

of the following questions.

1) Descriptive study:

(a) How does the manufacturer organize the administration

of guarantees and services?

(b) What are the functions delegated by the manufacturer
to the dealer according to the terms of the franchising
agreement (for example, selling, cooperative adver-
tising, administration of manufacturer guarantees,
customer services, and so forth)? The latter two
involve the availability of trained technicians and

inventory of parts .

(c) What are the functions performed by the dealer?

(d) How is the dealer organized for the performance of

these functions ?

2)

(e)

(f)

326

How is he remunerated for the performance of these

functions ? Are they all equally rewarding for him?

What are the major problems with the present set-up
from the viewpoint of the manufacturer, the dealer,

and the consumer ?

Normative study:

(a)

(b)

(c)

(d)

(e)

Taking into consideration the present organizational
set -up and legal constraints (antitrust regulations, for
example), what could the corporation do to improve

the flow of services?

What should be the internal organizational structure,

both for the manufacturer and the dealer?

How should the manufacturer fiscalize and control the

performance of functions delegated to the dealer?

What kinds of dealer help should the manufacturer

provide ?

How could the manufacturer improve communication

with the consumer directly and through the dealer?

327

Business - Government - Consumer
Interrelationships

Finally, a complex but necessary area of research would be
the study of the intricate business, government, and public interrela-
tionships. The consumer and environmental protection movements,
regulatory pressures, and business reactions to both clearly indicate
that the three parties are not communicating well. What are their
communications processes? What are the patterns of conflict
resolution? How are the different interested groups characterized?
What motivates them? What is the power of these groups? How and
for what purpose would each of them use social indicators?

The complexity of problems involved here is such that
several projects of research would benecessary to cover all its

aspects. A few will be discussed.

Consumerism

 

In chapter 2, it was indicated that more research would
be necessary for a better understanding of the present consumeristic

problem .

Purpose of the Study

The purpose of the study is to characterize the present

consumer movement and evaluate its extension and power.

328

Type of Study

A longitudinal study on the objective manifestations of
consumerism and on the "subjective" feelings of satisfaction/
dissatisfaction of consumers would be advantageous. It would allow
an analysis of whether satisfaction/ dissatisfaction is increasing or

decreasing.

Hypotheses

The main hypotheses for the study are:

There are objective indications of an extensive con-
sumer movement.

The consumers are dissatisfied with the overall
system, with the business system, with different
industries, and with different products.

The specific hypotheses could be derived from the sugges-

tions listed in chapter 2, p. 63. These involve the following:

1) What are the existing channels for consumers to voice
their grievances within and without business channels,

and to what extent are they used ?

(a) What are therecourse channels within business (for ‘

example, "hot -lines) ?

2)

(b)

(C)

(d)

329

What are the number, location, organization,
membership, sources and amount of funding, and

functions of private consumer protection agencies?

What are the number, location, organization,
sources and amount of funding, and functions of

governmental agencies for consumer protection?

Concerning (a), (b), and (c), what are the number of
complaints received annually, breakdown by products,
brands, kinds of complaints and, if available, socio—
demographic characteristics of the consumer lodging

the complaint?

Concerning the consumers' subjective feelings of satis-

faction / dissatisfaction:

(a)

(b)

(e)

' How do people feel about the overall system, business

system, different industries, and different products?

What are the sources of satisfaction/dissatisfaction?

What is the extent of the problem? How many are

satisfied] dissatisfied ?

330

(d) What is the intensity of feeling, that is, the degree of

satis faction/ dis satisfaction ?

Regulatory Pressures

 

In chapter 2 it was noted that since the 19608 a reassess-
ment of the performance of marketing has begun to take shape. Due
to the criticisms voiced and resulting pressure, an extensive body
of consumer and environmental protection legislation was developed.
A study of these pressures could provide an insight into the mechanics

of government - business - public interrelationships.

Purpose of the Study

The purpose of the study is to make an analysis of the
pressures that brought about the extensive consumer and environ-

mental protection legislation.

Type of Study

A historical study, dating from 1960, of selected bills
related to consumer protection and of the kinds of pressures which
brought them about is suggested. These pressures can be inferred
from the content analysis of the congressional hearings about the
different bills and of news and editorials on these topics in news-

papers, journals, and magazines of the period.

331

Hypotheses

The main hypothesis for the study is: Legislation for
consumer and environmental protection results more from pressure
of consumer advocates, consumer protection agencies, environ-
mental protection agencies, and politicians speaking on behalf of
consumers than from pressure organized by the consumer himself.

The specific hypotheses will be derived from the study of

the following questions:

1) Do the pressures originate directly from consumer com-

plaints ?

2) , Do the pressures originate from consumers through con—
sumer advocates and/or consumer protection agencies, and /
or environmental protection agencies, and / or politicians'

actions ?

3) Do the pressures originate from) the consumer advocates,
and/ or consumer protection agencies, and/ or environmental

protection agencies, and / or politicians' actions?

4) What is the role of the media. in compounding the pressure?

5)

6)

7)

8)

9)

332

In the hearings, did manufacturers present satisfactory

. answers to the complaints lodged?

Are there any indications of how manufacturers reacted to
these pressures (such as lobbying, industry -government

agreements, increased communications, and public relations)?

How are government agencies (state and federal) organized
to control and enforce compliance to consumer and

environmental protection regulations ?

How effective havethey been in control and enforcement,

both in their own view and in the Opinion of the-regulated?

How could social indicators be used in the future by the
involved parties to support their claims or defend their

actions ?

New Oganizational Rearrangements

 

for Social Responsibility

 

During the interviews the organizational structure

rearrangements promptedlby consumer or government pressure

Often were mentioned. The three corporations in the study have

appointed top level officers to new positions concerned with con-

sumer affairs and areas of government regulation such as safety,

333

emissions control, urban affairs, and minority rights. Other
corporations in other industries have done the same. These organi-
zational changes seem an interesting area of research. What func-
tions do these offices actually perform? DO they have a real impact
on the corporation' 3 actions and decisions, or are they just another
public relations or communications gimmick? How and for what

purpose would these offices use social indicators?

Purpose of the Study

The purpose of the study is to inquire about the functions of

the new offices related to social issues.

Type of Study

The study should be twofold: first, a descriptive study of
the present functions actually performed by the above -mentioned
offices; second, a normative study to determine what functions they
should perform and how. It could be a, cross-industry study to see

whether different patterns emerge for different industries.

Hypotheses

The basic hypothesis for the study is: New offices created
because of governmental or consumer pressure are not yet being
adequately used for the purposes of fulfilling the social responsibility

.of the firm.

334

,Thespecific hypotheses can be inferred from analysis

of the following questions:
1) Descriptive study:
(a) What are the offices' stated functions?
(b) What functions do they really perform?
(c) What is their location in the organizational structure?

(d) How much leverage do they really have for socially

related decisions ?
(e) Do they. use social indicators? Which ones? How?
2) Normative study:
(a) What functions should the offices have?

(b) What should be their location in the organizational

structure ?

(c) How much-leverage should they have for socially related

decisions ?

(d) Which social indicators should they use? How? Why?

335

Conceptualization and Measurement of
Social Indicators

Due to the immaturity of the state of art in the development
of social indicators, moreresearch is required on their concep-
tualization and measurement. This should be a comprehensive,
multidisciplinary effort, so as to ensure methodological consistency
for all areas of concern. This kind of research is beyond the scope
of the individual or small research group. It should be an institu-
tional research project due to the vast amount Of resources and the
variety of know -how needed. The main guidelines for this kind of
research are summarized in chapter 3, pages 179-80, under the
following headings: "Conceptual Framework, " "Data, " and "Policy
Planning. "

Sgggestions for Further Research--
Some Closing Remarks

 

 

As indicated in the introduction to this section, these
suggestions for further research are by no means an exhaustive
listing. The interested researcher might find, in the review of the
bibliography, in the exploratory study, or in the suggested topics
themselves, somec-luesto projects that might seem more challeng-
ing. Social indicators' concepts and measurements and social

indicators' uses for government and corporate decisions are two

336

broad, interesting fields. Not much work has been done yet, and

there is room for a variety of studies and contributions.

, I: 1 . :
. 1' I ’Iufi.‘ Illa-"a
g. ,'

337

Chapter 6 Footnotes

 

1Milton Rokeach, Beliefs, Attitudes and Values (San Fran-
cisco, Calif. : Jossey-Basslnc., Publ. , 1969), p. 161. See also
Alvin Toffler, Future Shock (New York: Bantam Books, 1971),
pp. 303 -304.

 

 

2
Toffler, Future Shock, p. 11. According to Philip Kotler,
the following are "some of the major shifts that seem to be taking
place in American values:

 

self - reliance -------------------- government reliance

hard work ----------------------- the easy life

religious convictions ------------- secular convictions

husband - dominated home --------- wife - dominated home

parent -centered household -------- child - centered household

respect for individual ------------- dislike of individual
differences

postponed gratification ------------ immediate gratification

saving -------------------------- spending

sexual chastity ------------------ sexual freedom

parental values ------------------ peer-group values

, independence -------------------- security. "

Kotler adds that "this is not the place to judge these changes, if
indeed they are actually taking place to a significant degree. The
major point is that ideas and values of people, especially in a
modern society, can undergo changes even within a generation. "
Philip Kotler, Marketing Maggement, Analysis, Planning and Con-
ir_~_o_l_, 2d ed. (Englewood Cliffs, N.J.: Prentice—Hall, Inc. , 1972),
p. 82.

 

William Lazer, John E. Smallwood, and others state that
"despite the attention given changes and technological developments,
predictions for the decade suggest stability in the basic pattern of
American life. . . . social changes and theirimpact onlife styles
are more likely to be subtle, implicit, low in profile, or even
superficial. Rather than changes in values, they will represent
adaptations of basic values and patterns of relationships to new
social, technological, ecological, economic, and political situa-
tions. " William Lazer, John E. Smallwood, and others, "Con-
sumer Environments and Life Styles of the Seventies, " Business
Topics 20, no. 2 (Spring 1972): 5.

 

338

3Milton Rokeach and Seymour Parker, "Values as Social
Indicators of Poverty and Race Relations in America, " Annals of
the American Academy of Political and Social Science 338 (March
1970): 110.

 

 

4Milton Rokeach, The Open and Closed Mind (New York:
Basic Books, Inc., 1960), p. 336. See also Toffler, Future Shock,
p. 40.

 

 

 

 

 

 

 

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..- (ltd.

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ht“ -«

343

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344

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345

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346

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347

Lee, William D.

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"Social Indicators—-How to Use Them Respon-
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"Consumer Satisfaction: The Measure of Mar-
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Mimeo supplied by

 

348

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349

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350

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APPENDIX

INTERVIEW GUIDE

 

5"...u o‘ A .

. .
~o 0.
.... i.
. .

 

APPENDIX

INTERVIEW GUIDE

1. Have you heard about social indicators?

1. 1 Yes D Where?

1.2 No C]

1. 3 Not sure [:I

 

 

 

As you know, recently a number of people inside and outside the
government have been studying and trying to define and measure
social indicators. These indicators are designed to tell us whether
we are advancing or sliding back in various national goals-~to help
us evaluate the social aspects of the quality of life. They are spe-
cific goal indicators such as life expectancy, educational testing
scores, number of persons with major disabilities, number of
persons living in satisfactory neighborhoods, number of persons
exposed to bothersome pollution, and so forth. These indicators
refer to areas of concern like health and safety, housing and the
physical environment, education, science and the arts, employment,
income, leisure and recreation, justice, harmony, and freedom.

 

It seems possible that quite soon we might have most or some
of these indicators developed and published regularly, plus an
annual social report, in the same way we now have economic indi-
cators and economic reports.

2. Do you think the availability of such information would affect
corporate decision making ?

2. 1 Yes E] Why?
2. 2 No C] Why?
2. 3 Not sure [:l

 

 

 

351

352

IF YES -- QUESTIONS 3 to 6.

We mentioned the following general areas of concern: health
and safety, housing and the physical environment, education,
sciences and the arts, employment and income, leisure and
recreation, justice, harmony and freedom, and so forth as

example 3.

3. Indicators on which (if any) of the above -mentioned areas would
be more important to the automobile industry? (Please rank

the first three.)

 

 

 

 

 

Indicators Why?
3. 1
3 . 2
3. 3

 

 

To be even more specific: In your opinion, how might the
availability of the information provided by these social indicators

affect:

s...
o
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4. corporation goals 4.1 C] 4.2 E] 4.3 [_j 4.4 D 4.5 E]
5' °rganizati°nal 5.1 [:1 5.2 [:1 5.3 [:1 5.4 1:] 5.5 [:1

structure

6. product strategy 6.1 [:1 6.2 [3 6.3 E] 6.4 D 6.5 D

In your opinion, within the corporation (or division) who should
be responsible for procurement and analysis of the social indicators
and making policy recommendations based on these analyses?

353 2

o

00-1

.. ‘5

‘3 1:

0’ c:

8 o

g a 8

3 >~ 5* i

H 00-1

0 ‘6 pl 0

5.. i: o o

O. <1 0-. m
1‘ °° C” Observations

 

8.1 [3 9.1 [:1

top management

 

 

statistical
department 8'2 D 9'2 D
marketing '
department 8' 3 D 9' 3 D

 

product planning
department 8'4 D 9'4 D

other (specify) 7.5 D 3.5 D 9.5 E]

DDUD

 

 

 

Assuming that social indicators and social reporting will indi-
cate the state of the society and thus the areas in which government
will be more involved in policy making, in your opinion how would
this specifically affect product strategy decisions?

 

 

 

 

o o
a g a a
3 as *5 <53 93
"' 8 o a) 0
.0 Q) ..Q g a)
E or. <1 9 Why?
10. number of product
elimination 10. 1E] 10. 3E]
decisions
11. product
differentiation 11' 1D

12. corporate concern
Wlth quality 12. 1D

H H H
N H D
If] [if]

H

3...

Eco]

 

(materials,
engineering)

13. corporate concern
with quality
("social quality": 13. 1D

H
m
N
H
03

a

 

safety, pollution -
free)

...“

 

~..z—...~.Nw...u.._.. __

861-.

 

 

354

a) a) ‘1’
a: E E g
‘“ «swig <9
‘1’ :3 L.
‘5 Soc 0
$3 (D.C.-C: Q)
... 0:48 Q Why?

 

14. standardization of 14

14.2 C] 14-3C]

El

 

product features

15. corporate concern
with making
guarantees and 15.

15.2[:] mag

in

 

warranties more
explicit

16. corporate concern
with customer 16.1 D 16.2 [3 16.3 D

 

service

17. corporate concern
with consumer

education (product 17, 1 D 17,2 D 17. 3 D

 

information and
recourse channels)

13- corporate concern
with functional 18.1 [3 18.2 [3 18.3 E]

 

product features

19. corporate concern

 

with aesthetical
product features 19' 1 D 19’ 2 D 19‘ 3 D
(style)

20. the cost of the 20.1 [:1 20.2 E] 20.3 [:1

 

product

Assuming that social indicators and social reporting will indi-
cate social trends and consequent changes in life styles, value
systems, and so forth, in your opinion, the consumer's concern
with the following features will increase, remain about the same,
or decrease?

355

a) g m
m
in? 8
t' 8502 5
0 on a)
E m<i5 a way?

 

2 1 . functional product

quality (materials/ 21. 1 D 21.2 D 21. 3 D
engineering)

 

22. "social" product

quality (safety, 22.1 [3 22.2 [Z] 22.3 E]

pollution -free)

 

23. aesthetic product
features (style) 23.1 D 23.2 [:1 23.3 [3

24. product price 24.1 D 24.2 D 24. 3 E]

 

 

Assuming that because of all these social concerns we are adding
"quality" to the product, in‘your opinion:

25. Will the benefits be proportional to the costs?

25.1 Yes |:] Why?
25.2 No C] Why?
25.3 Not sure [3

 

 

26. In your opinion, who should pay the costs of "social" product
improvement?
26. l the government
26. 2 the corporation (or division)
26. 3 the product consumer
26. 4 the public in general

DECIDE]

26. 5 other (specify)

 

Why do you think so?

 

 

 

 

 

356

27. In your opinion, would the average consumer be willing to pay
for these addes costs?
27. 1 Yes [3 Why?
27.2 No C] Why?
27. 3 Not sure D

 

 

28. Would the average consumer be able to pay for these added

 

costs?
28.1 Yes [:1 Why?
28.2 No [:1 Why?

 

28.3 Not sure [:I

In your opinion, how much would the availability of social indi-
cators and social information and the government policies that follow
from them affect the following:

Increase
Remam
About
The Same
Decrease

 

29. the rate of develop-
ment of new
products (pace of 29.1 [:1 29.2 D 29.3 [3

innovation)
30. product failure 30.1 [3 30.2 E] 30. 3 ['_']

31. government's
relative share in
research and 31‘1D 31‘2 D 31‘3 D
development

 

 

 

32. corporation's
relative share in
research and 32.1[:] 32.2[j 32.3]:

development

 

33.

34.

35.

36.

357

o o m
U)

23 a 5 g

q; ‘13 *5 U) ‘4

3 3.3 m 8

.5 0:: <4 E5 c:
perceived risk of
introducing new 33. 1 D 33.2 D 33 3 D
products
governmental
regulation of .
business in 34.1 [3 34.2 [3 34.3 [3
general
governmental

regulation of
the automobile
industry

35.1 [:| 35.2 [:I 35.3[:]

Why?

 

 

 

 

In your Opinion, which of the following areas will be more

subject to governmental regulation in the automobile industry

(please rank the first three)?

36. 1 functional product quality U
(materials, engineering)

36. 2 social product quality [:1
(quality -safety pollution)

36. 3 product guarantees and D
warranties

36. 4 customer service D

36. 5 price D

36. 6 other (specify) D

 

Why?
Why?

Why?

Why?
Why?

Why?

 

 

 

 

 

 

In your opinion, how do people feel about the following:

358

$4
or: 'o 1:
202 02 '2
94 ‘H ‘H
'U “o 'o

<11 <11 no.9} .3 .53
31‘. 2:1 “’83:; *5 1';
mm m 5mm a, >4.”

a-H .... --' 1..
+1 4n "‘41-’01 0) m
a)“ a (Dan-7 ou-u 0-H
;>U1 ZmQ Q >Q

 

37. the overall
(political, legal,
social, and 37'1EI 37'2D 37'3E] 37'4D 37:5]:1
business) system

38. the business

system in this 38.1 [:1 38.2 E] 38.3 D 38.4 D 38.5 [3

country
39. th t b'l

minis“) 1 8 39.1 [:| 39.2 [3 39.3 [:1 39.4 E] 39.5 [3
40. igglgaigur 0W“ 40.1 E] 40.2 [:I 40. 3 [j 40. 4 E] 40. 5 [:1

In your opinion, are they justified in the way they feel (satisfied/
dissatisfied) ‘7

Yes No Why?

 

 

 

41. overall system 41.1 [:I 41.2 E]
42. business system 42. 1 D 42.2 [:1
43. automobile industry 43. 1 D 43. 2 D
44. own company 44. 1 D 44.2 D

 

 

 

 

45. In your opinion, of the following, in a car, which are more
important for the consumer. Please rank the first three.

45. 1 product quality (materials, engineering) [3
45.2 product quality ("social sense"--safety, pollution) E]
45. 3 product guarantees and warranties D
45.4 price I]
45.5 customer service D
45. 6 product information [:I
45. 7 other (specify) D

 

 

411"1mq°
'1"

names "

.Ijlliewa

     
  
 

\ i‘ufnu

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writes ‘I, ..

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4.. 1,1
,

359

46. In your opinion, which of the above can the consumer evaluate?

47.

48.

46.
46.
46.
46.
46.
46.
46.

 

 

 

 

 

 

«ImmAth-I

 

In your opinion, what (if anything) should be done to improve
consumers' ability to make these evaluations?

To what do you attribute the high "visibility" of the automobile
industry in the concerns of consumer and environmental protec-
tion movements?

In your Opinion, the automobile industry' s response to the

following has been:

49.

50.

 

 

 

s: a:
O O
33 +1 .._, h 5
a o :1 .c: a) o
o as o no 1: as
> G) .0 u-t C‘. Q)
o 0: <1 0: :3 0:: Why?
to consumer
movements 49.1 D 49.2 [3 49.3 E]
t° g°vemment 50.1 E] 50. 2 [_j 50. 3 [:1

 

regulation

c i.

‘3

11 {(31th

H"? .'

J. .h'

I‘v.

I)... 1 .
71‘44430453 . 1W0.”

 

 

 

360

In your opinion, your own corporation' 8 response to the

following has been:

51.

52.

53.

54.

55.

 

 

 

g Why?
to consumer
movements 51.1 [I 51.2 E] 51.3 E]
to government
2. . .
regulation 5 1 D 52 2 D 52 3 D
In your opinion, what (if anything) should the automobile industry

do to overcome criticisms leveled at it?

What has it done so far?

Finally, in your opinion, in the automobile industry the trend
toward diversification of present lines will:

 

 

55.1 Increase DWhy?
55.2 Remain about the same E] Why?
55.3 Decrease [:1 Why?

 

IF ANSWER 55. 1 (INCREASE), ASK 56.

 

361

56. Diversification to what kinds of products, does it seem more
likely to you?

Which one of the following best describes the functional area in
which you now work? '
corporate planning
research and development
product planning

product styling

prnnary

1

2

3

4

5. engineering

6 production final
7 quality control
8 marketing

9

customer relations

CICICJDCIEIDDL—JD

10. other (specify)

 

Please indicate the areas of your previous working experiences.

Functional Area How Long ?

 

 

Your present title or position:

Counting the chairman of the board as first level, at what level of
the organizational structure are you?

What are the main activities that you are directly responsible for?

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