Country of origin effects in developed and emerging markets: Exploring the contrasting ... · 2017-09-09 · Country of origin effects in developed and emerging markets: Exploring

Country of origin effects in developed and

emerging markets: Exploring the contrasting

roles of materialism and value consciousness

Piyush Sharma

Department of Management and Marketing,

The Hong Kong Polytechnic University, Kowloon,

Hong Kong

Correspondence:P Sharma, Department of Management andMarketing, The Hong Kong PolytechnicUniversity, M845 Li Ka Shing Tower, HungHom, Kowloon, Hong Kong.Tel: þ852 2766 7367;Fax: þ852 2765 0611

Received: 25 March 2009Revised: 13 November 2009Accepted: 25 November 2009Online publication date: 6 May 2010

AbstractDespite growing evidence about differences in the attitudes and behaviors

of consumers in emerging and developed markets, there is little research onthe differences in country of origin (COO) effects on their evaluation,

behavioral intentions (BIs), and actual purchase of imported products. This

paper introduces a new conceptual framework incorporating consumerethnocentrism (CET), materialism (MAT), and value consciousness (VC) to

hypothesize several differences in the influence of COO effects on consumers

from developed and emerging markets. A web-based study with 1752consumers in four countries representing two developed markets (the UK

and the USA) and two emerging markets (China and India) shows significant

differences in the moderating influence of CET, MAT, and VC on the effects ofCOO on the evaluations and BIs for a fictitious passenger car brand, and on

the actual choice of car brands owned by them. The findings highlight the

importance of looking beyond CET at other relevant psychographic variables to

understand the differences in motivations underlying consumer perceptionsand behavior towards imported products.

Journal of International Business Studies (2011) 42, 285–306.

doi:10.1057/jibs.2010.16

Keywords: consumer ethnocentrism; country of origin effects; emerging markets;home country; materialism; value consciousness

INTRODUCTIONPrior research on the effects of country of origin (COO) on productevaluations (PEs) shows that consumers perceive products madein developed countries to be of higher quality compared withproducts made in emerging markets. ( Josiassen & Harzing, 2008;Pappu, Quester, & Cooksey, 2007; Usunier & Cestre, 2008).However, offshore outsourcing of manufacturing to less developedcountries has changed the perceptions of foreign-made productsbased on their country of design, country of parts, and country-of-assembly (Chao, 1993). Moreover, many demographic, psycho-graphic, and socio-economic factors may also lead to differences inattitudes towards foreign products for consumers in emerging anddeveloped markets (Batra, 1997; Cui & Liu, 2001; Sharma, Chung,Erramilli, & Sivakumaran, 2006).

However, the findings about COO effects on consumers in emer-ging markets are inconclusive: some studies show a clear preference

Journal of International Business Studies (2011) 42, 285–306& 2011 Academy of International Business All rights reserved 0047-2506

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for foreign goods (Ettenson, 1993; Okechuku &Onyemah, 1999; Wang & Yang, 2008), whereas othersshow differences in COO effects based on productattributes (Huddleston, Good, & Stoel, 2001), pro-duct availability and complexity (Bandyopadhyay &Banerjee, 2002), perceptions about domestic products(Kinra, 2006), private vs public consumption con-text (Hu, Li, Xie, & Zhou, 2008), cultural orientation(Lee, Garbarino, & Lerman, 2007), and ethnocentr-ism (Klein, Ettenson, & Krishnan, 2006; Reardon,Miller, Vida, & Kim, 2005; Supphellen & Grønhaug,2003). Hence it is not clear whether COO effects arethe same for consumers in developed and emergingmarkets.

Moreover, some studies show a negative effect ofconsumer ethnocentrism (CET) on the evaluationof foreign products by consumers in emergingmarkets (Klein et al., 2006), whereas others showeither no significant effect (Huddleston et al.,2001), or different effects based on product type(Hamin, 2006), perceptions about domestic pro-ducts and conspicuous consumption tendencies(Wang & Chen, 2004), and attitudes towards brandsand advertising (Reardon et al., 2005). Thus thereis no consensus on the role of CET in COO effectsfor consumers in emerging markets.

This paper proposes that other variables such asmaterialism (MAT) and value consciousness (VC)may account for these mixed findings, and helpus understand the reasons for differences in COOeffects between consumers in developed andemerging markets. For example, there is a growingtrend towards MAT and status consumption in theemerging markets (Belk, 1999; Wong & Ahuvia,1998). Buying and using imported luxury productsdenotes higher levels of material achievement, andhelps consumers make a positive impression onothers (Hu et al., 2008; Kinra, 2006; Wang & Yang,2008). In contrast, many consumers in the devel-oped markets are moving towards more abstractand less materialistic goals, having reached anupper threshold of MAT (Burroughs & Rindfleisch,2002). This paper proposes that these divergenttrends towards and away from MAT may explainsome differences in COO effects between consu-mers in developed and emerging markets.

Very few studies explore the perceptions ofconsumers in emerging markets about productsmade in other emerging markets, and theymostly show negative perceptions about the qualityof such products, coupled with low purchaseintentions (e.g., Amine & Shin, 2002; Ettenson,1993; Huddleston et al., 2001). With the recent

manufacturing boom in China there is increasingacceptance of Chinese products among value-conscious consumers in other emerging markets(e.g., India; Kinra, 2006), but attitudes towards theseproducts have hardened in many Western countries,as a result of recent quality concerns (Anonymous,2007; Wagner, 2008). Hence VC may also explainsome differences in COO effects between consumersin developed and emerging markets.

Finally, most prior research on COO effectsexamines PEs and purchase intentions, with littleattention to actual purchase behavior (Josiassen &Harzing, 2008; Usunier & Cestre, 2008). In fact,Usunier (2006) laments the relevance gap betweenacademic COO research and marketing practice,calling it ivory tower research that takes placewith little consideration for its practical implica-tions. While such criticism may be harsh, it wouldbe useful to study the influence of COO on actualconsumer choice and purchase behavior, and toprovide stronger evidence of its practical relevanceand importance.

To summarize, this paper addresses the followinggaps in the extant COO literature:

(1) differences in COO effects between consumersin developed and emerging markets;

(2) the role of CET in COO effects for emerging-market consumers;

(3) COO effects on emerging-market consumers forproducts from other emerging markets;

(4) the impact of COO on actual purchase behaviorin both developed and emerging markets; and

(5) the impact of MAT and VC on COO effects.

To address these gaps, this paper develops a newconceptual framework (Figure 1) incorporatingCET, MAT, and VC, and hypothesizes severaldifferences in the influence of these variables onthe PEs and behavioral intentions (BIs) of consu-mers in developed and emerging markets. Thisframework is tested using a web-based study with1752 consumers in four countries – two developedmarkets (the UK and the USA) and two emergingmarkets (China and India) – using a fictitiouspassenger car brand and the actual choice of carbrands owned by the participants.

CONCEPTUAL FRAMEWORK AND HYPOTHESES

COO EffectsPrior research on COO effects uses diverse theore-tical perspectives. From an information-processingperspective it is argued that consumers evaluate a

Country of origin effects in developed and emerging markets Piyush Sharma

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Journal of International Business Studies

product based on both intrinsic cues (e.g., taste,design, and other product features) and extrinsiccues (price, brand, and warranty) (Ahmed &d’Astous, 2008). In this context, COO is treated asan extrinsic cue or an intangible product attribute,presumably used by consumers in the absence ofinformation about tangible attributes (Han, 1989;Han & Terpstra, 1988). According to this view, COOaffects PEs through ‘‘halo’’ and ‘‘summary’’ effects.Under the halo effect, consumers make inferencesabout product quality based on the image theyhave about its COO, whereas under the summaryeffect consumers make abstractions of the productinformation into a country image, which directlyaffects PEs.

However, others argue that COO is not merelyanother cognitive cue but also has a symbolic andemotional meaning for consumers (Hong & Wyer,1989, 1990). Specifically, COO may associate aproduct with status, authenticity and exoticness;link a product to a rich product–country imagerywith sensory, affective, and ritual connotations;and relate products and brands to a sense ofnational identity and pride, building a strongemotional attachment (Verlegh & Steenkamp,1999). Hence COO may act as an affective ‘‘expres-sive’’ or ‘‘image’’ attribute, especially in emergingmarkets (Batra, Ramaswamy, Alden, Steenkamp, &Ramachander, 2000).

Besides these cognitive and affective aspects,COO also has normative associations such thatevaluation of products from a certain country maybe perceived as an endorsement of its policies,practices, and actions (Leonidou, Palihawadana, &Talias, 2007). Thus consumers punish some coun-tries by boycotting their products, and rewardothers by ‘‘buycotting’’ instead (Smith, 1993). CETis another salient norm of COO effects, whichrelates to the inclination to favor domestic

products based on judgments of the morality ofpurchasing foreign-made goods (Shimp & Sharma,1987). Similarly, consumer animosity (ANI) (Amine,2008; Amine, Chao, & Arnold, 2005; Klein, 2002;Klein, Ettenson, & Morris, 1998), consumer affinity(Oberecker, Riefler, & Diamantopoulos, 2008), con-sumer racism (Ouellet, 2007), and home-countrybias (Verlegh, 2007) may also affect consumers’attitudes and purchase intentions towards foreignproducts.

COO effects also relate to the social, financial,and performance dimensions of perceived risk(Ahmed, d’Astous, & Eljabri, 2002a). Consumersare likely to spend more time and effort inevaluating the attributes and performance ofproducts made in countries with high perceivedrisk; to have unfavorable attitudes and lowerpurchase intentions for such products; and toassociate them with greater perceived risk (Verlegh& Steenkamp, 1999). COO effects also vary fromone country to another, owing to differences ineconomic, sociocultural, and political-legal factors(Leonidou et al., 2007). The attitudes towardsproducts from a country may also vary over timeand across product categories, based on its degree ofmarketing sophistication and manufacturing infra-structure (Chryssochoidis, Krystallis, & Perreas,2007). Finally, consumer knowledge, familiarity,and experience with a product category or a specificbrand (Schaefer, 1997), and involvement ( Johansson,Ronkainen, & Czinkota, 1994) also relate to COOeffects.

COO Effects in Emerging and Developed MarketsConsumers in emerging markets perceive importedproducts from developed markets to be of superiorquality, and products from other emerging marketsto be of similar or inferior quality to their domesticproducts (Hu et al., 2008; Kinra, 2006; Wang &

H2 (--)

CET

PE & BI(HC: Emerging)

COO(Developed)

PE & BI(HC: Developed)

MAT VC

H1 (++)

H1 (+)

H3 (--)

H3 (ns)

H5 (++)

H5 (ns)

H7 (--)

H7 (ns)

H2 (-)

CETCOO

(Emerging)MATVC

H2 (-)

H4 (ns)

H4 (--)

H6 (--)

H6 (ns)

H8 (++)

H8 (ns)

Figure 1 Conceptual framework and hypotheses.


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Yang, 2008). In contrast, consumers in developedmarkets perceive products from less developedmarkets to be of inferior quality, and those fromother developed markets to be of similar or superiorquality to their domestic products (Gurhan-Canli &Maheswaran, 2000).

Buying and possessing imported products maydenote higher levels of material achievement forconsumers in emerging markets, helping themmake a positive impression on others (Cleveland,Laroche, & Papadopoulos, 2009). The symbolicvalue of foreign-made products may well explainthe high popularity of such products in theemerging markets such as China (Wang & Yang,2008; Zhou & Hui, 2003), India (Batra et al., 2000;Kinra, 2006), Eastern Europe (Huddleston et al.,2001; Manrai, Lascu, Manrai, & Babb, 2001), andLatin America (Almonte, Falk, Skaggs, & Cardenas,1995).

Increasing exposure to global media, and thedepiction of Western lifestyles in local media, seemto have increased the desire for high-quality goodsand services among consumers in the emergingmarkets (Belk, 1999). Many studies show changesin their preferences as a result of increased exposureto Western products and lifestyle, such as: theassociation of imported products with superiorquality (Ettenson, 1993; Ghose & Lowengart,2001); a shift from utilitarian to hedonic consump-tion values, with an increase in the importanceof status symbols (Tse, Belk, & Zhou, 1989); a pre-ference for non-local products for status enhance-ment (Batra et al., 2000); an increase in fashionconsciousness, and a demand for Western brands(Manrai et al., 2001); and a reliance on the symbolicvalue of foreign products (Zhou & Hui, 2003).

Consumers in less developed markets preferproducts made in more developed countries suchas Japan, Singapore, the USA, and Germany (Kinra,2006; Strizhakova, Coulter, & Price, 2008). How-ever, many consumers in emerging markets maynot be familiar with world-class-quality productsbecause of the poor-quality products produced inthe past by their monopolistic, state-owned man-ufacturers (Batra, 1997). Therefore they may havean enhanced favorable perception (halo and sum-mary effects; Han, 1989) of the quality of importedproducts, compared with consumers in developedmarkets (McLarney & Chung, 1999). Moreover,consumers in emerging markets may use the non-localness of the imported products to enhancetheir social status in product categories related toconspicuous consumption (Batra et al., 2000). As a

result, consumers in emerging markets may haveasymmetric perceptions of the quality of productsfrom developed markets, compared with consumersin those markets. Hence:

Hypothesis 1: Consumers in emerging marketshave more favorable (a) PEs and (b) BIs forproducts imported from developed markets,compared with consumers in developed markets.

Consumers in developed markets generallyhave unfavorable perceptions of products importedfrom emerging markets (Papadopoulos, Heslop, &Bamossy, 1990), but the same may not be true forthe consumers in other emerging markets (Amineet al., 2005). This effect is likely to be stronger forconsumers in developed markets than for those inemerging markets, because of a wider perceivedquality gap between an emerging market and adeveloped market compared with that betweentwo similar markets. In other words, compared withconsumers in the emerging markets (e.g., India orChina), those in the developed markets (e.g., theUK or the USA) may perceive a wider gap betweenthe quality of their domestic products and thoseimported from emerging markets (e.g., China orIndia). Hence:

Hypothesis 2: Consumers in developed marketshave less favorable (a) PEs of and (b) BIs forproducts imported from emerging markets thanconsumers in emerging markets.

Consumer Ethnocentrism (CET)CET is defined as the beliefs held by consumersabout the appropriateness and morality of purchas-ing foreign-made products (Shimp & Sharma,1987). Highly ethnocentric consumers staunchlyrefuse to buy imported products, and may evenchastise fellow consumers for doing so. Highlyethnocentric consumers are prone to biased judg-ment by being more inclined to adopt the positiveaspects of domestic products and discount the virtuesof foreign-made products (Netemeyer, Durvasula, &Lichtenstein, 1991; Shimp & Sharma, 1987). Someargue that PEs may partially mediate the linkbetween CET and purchase intentions (e.g., Klein,2002: 356; Klein et al., 1998: 95; Shankarmahesh,2006: 161).

Consumers in emerging markets differ in theirethnocentric tendencies: those who have benefitedfrom the recent economic development are lessethnocentric than those marginalized as a result of


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globalization (Hamin, 2006; Nguyen, Nguyen, &Barrett, 2008; Reardon et al., 2005; Wang & Chen,2004). Low ethnocentric consumers in emergingmarkets may have a higher preference for productsimported from developed markets, because theycan satisfy their demand for high-quality productswith the increased availability and affordabilityof foreign products (Alden, Steenkamp, & Batra,2006). However, no such difference may existamong consumers in developed markets, becausethey are likely to consider products imported fromother developed markets as similar in quality totheir domestic products. Hence:

Hypothesis 3: Consumers in emerging marketswith low (high) CET have more (less) favorable (a)PEs of and (b) BIs for products imported fromdeveloped markets, but there is no such differ-ence for consumers in developed markets.

In the developed markets, ethnocentric tendenciesare especially prominent among individuals whosequality of life and economic livelihood are threa-tened by foreign competition (Shimp & Sharma,1987). This effect may be stronger in the developedmarkets, because offshore outsourcing of manufac-turing and services jobs to the emerging marketsmay result in job losses and a hardening of attitudesagainst imported products and services (Sharma,Mathur, & Dhawan, 2008).

There are no such widespread negative feelingsagainst offshore outsourcing among consumers inemerging markets, because most of them seem tohave benefited from it in recent past (Sharma et al.,2008). Hence the ethnocentric tendencies of con-sumers in emerging markets are less likely toinfluence their opinions about products importedfrom other emerging markets, than for consumersin developed markets. Compared with consumersin the emerging markets, those in the developedmarkets may perceive a wider gap in qualitybetween their domestic products and thoseimported from the emerging markets. Therefore:

Hypothesis 4: Consumers in developed marketswith high (low) CET have less (more) favorable (a)PEs of and (b) BIs for products imported fromemerging markets, but there is no such differencefor consumers in emerging markets.

Consumer Animosity (ANI)Consumer Animosity is defined as the ‘‘remnants ofantipathy related to previous or ongoing military,

political, or economic events’’ (Klein et al., 1998:90). Many studies show a significant negative effectof ANI on the preference for and purchase ofproducts imported from countries with which thehome country (HC) has a history of political oreconomic conflict (e.g., Ettenson & Klein, 2005;Klein, 2002; Klein et al., 1998; Klein & Ettenson,1999; Nijssen & Douglas, 2004; Shoham, Davidow,Klein, & Ruvio, 2006).

Since this paper focuses on the differences inCOO effects between consumers in developed andemerging markets, and not on the ANI between anyparticular countries, it does not include any specifichypotheses about the influence of ANI. However,there is a history of political and economic conflictamong the four countries included in the empiricalstudy reported in this paper (e.g., the India–Chinaborder conflict in the 1960s, the UK and India’scolonial past until the mid twentieth century, andthe US–China trade and economic disagreementsin recent years). Hence ANI towards other countriesis measured for each participant using a three-itemgeneral ANI scale (Klein, 2002), and used as acovariate in the data analysis.

Materialism (MAT)Prior research defines MAT as the relative impor-tance attached to possessions with three sub-traits – envy, non-generosity, and possessiveness(Belk, 1985); and as a consumer value – anorientation towards the role of possessions in lifewith three dimensions – success, centrality, andhappiness (Richins & Dawson, 1992). MAT has asignificant influence on consumer behavior ingeneral, and on consumer perceptions, preference,and choice in particular. For example, it relatespositively to status consumption, a motivationalprocess by which individuals strive to improve theirsocial standing through the conspicuous consump-tion of expensive products such as cars, houses,appliances, and paintings (Eastman, Fredenberger,Campbell, & Calvert, 1997); and to consumptionsymbolism, a congruence between self-image andmaterial possessions (Belk, 1985). Materialisticconsumers are concerned about displaying theirstatus and possessions in their relevant socialgroups: buying and using imported luxury pro-ducts denotes higher levels of material achieve-ment, and helps such consumers make a positiveimpression on others (Kilbourne, Grunhagen, &Foley, 2005).

MAT is a common personal trait around theworld, but differences in the socio-economic and


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cultural environment may affect its meaningand magnitude across different cultures (Ger &Belk, 1996; Griffin, Babin, & Christensen, 2004).Consumers in the developing countries seem tobe acquiring hedonistic consumption attitudes(e.g., status symbols and conspicuous consump-tion) more rapidly than in Europe and NorthAmerica (Belk, 1999). In fact, this influence maybe stronger in the emerging markets because ofthe high social premium attached to the possessionof imported goods (Eastman et al., 1997; Wong &Ahuvia, 1998).

In contrast, many consumers in the developedmarkets are moving towards more abstract and lessmaterialistic goals, having reached an upper thresh-old of MAT (Burroughs & Rindfleisch, 2002). ThusMAT seems to be growing in the emerging markets,but slowing down in the developed markets. As aresult, materialistic consumers in emerging marketsmay attach a higher premium to products importedfrom developed countries, because they may helpthem enhance their social status, whereas consu-mers in developed markets may not associate suchproducts with a disproportionate symbolic value,because they may be similar in quality to theirdomestic products, and do not help them enhancetheir social status. Consumers in developed marketsmay also not associate MAT with status consump-tion as strongly as those in the emerging markets.Hence:

Hypothesis 5: Consumers in emerging marketswith high (low) MAT have more (less) favorable(a) PEs of and (b) BIs for products imported fromdeveloped markets, but there is no such differ-ence for consumers in developed markets.

Consumers in emerging markets may perceiveproducts imported from other emerging marketsto be of similar or even inferior quality comparedwith their domestic products (Ettenson, 1993;Huddleston et al., 2001). Highly materialistic con-sumers in the emerging markets may evaluateproducts imported from other emerging marketsmore unfavorably than consumers low on MAT,because these products may not help them enhancetheir social status. Moreover, they may be moresensitive to the social costs of buying these pro-ducts and compromising on esthetic attributes. Incontrast, consumers in developed markets havegenerally unfavorable perceptions about productsmade in less developed markets, because theseproducts do not enhance their social status. Hence

MAT may not affect their perceptions of productsimported from the emerging markets. Hence:

Hypothesis 6: Consumers in emerging marketswith high (low) MAT have less (more) favorable(a) PEs of and (b) BIs for products imported fromemerging markets, but there is no such differencefor consumers in developed markets.

Value Consciousness (VC)VC is defined as a concern for paying low prices,subject to some quality constraint (Ailawadi,Neslin, & Gedenk, 2001). Value-conscious custo-mers tend to be concerned equally about low pricesand product quality. They are also more likely tocheck prices, and compare the prices of differentbrands, to get the best value for their money. Priorresearch shows that, compared with consumers indeveloped markets, consumers in emerging marketstend to be more value conscious and price sensitivebecause of their relatively lower purchasing power,higher price elasticity of demand, and greatertendency to spend their family savings rather thanbuy on credit (Brouthers & Xu, 2002). Thus pricemay have a greater influence on their purchasedecisions than product quality or brand image(Batra, 1997; Cui & Liu, 2001).

Most emerging markets also have wide disparitiesin income and education levels, resulting in adivide between the haves and the have-nots (Batra,1997; Cui & Liu, 2001). Many consumers in thesemarkets have also experienced shortages andrationing of essential goods such as food, milk,and fuel for a long time, as well as suffering fromexcessive bureaucracy, corruption, high inflationrates, and poor infrastructure (Batra et al., 2000;Manrai et al., 2001; Zhou & Hui, 2003). In fact,despite tremendous advances in economic devel-opment, many of these consumers still live belowor around the poverty line, and view the purchaseand use of imported products as a ‘‘useless luxury’’and ‘‘wasteful expenditure’’ because of their utili-tarian value system, with little room for hedonicconsumer preferences (Gong, 2003).

Very few studies on COO effects have exploredthe influence of consumers’ VC and price sensitiv-ity on their evaluation of imported products. Someshow that consumers in emerging markets associatelocal products with better value for money (Kinra,2006), whereas others show that price-consciousconsumers in developed markets do not mindbuying products from the less developed marketsdespite their lower perceived quality (Usunier,


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1994). Consumers in emerging markets tend tofocus on the price of a product, choosing cheaper,local brands for private consumption and expensiveimported brands for public consumption, based ontheir quality and image (Hu et al., 2008).

Therefore it is possible that the price-consciousand value-conscious consumers in emerging mar-kets may prefer products from other emergingmarkets, if the perceived quality difference is smalland the prices are lower than those of their moreexpensive domestic products, or of those importedfrom developed markets. In other words, highlyvalue-conscious consumers in the emerging mar-kets may evaluate products imported from devel-oped countries more unfavorably, because of thehigher perceived prices of these products comparedwith their domestic products. In contrast, VC andprice sensitivity may not affect the perceptionsof consumers in developed markets of productsimported from other developed markets because oftheir perceived price, quality, and hence value aresimilar to those of domestic products. Therefore VCmay not have a significant influence on theevaluation of products imported from developedmarkets by the consumers in other developedmarkets. Hence:

Hypothesis 7: Consumers in emerging marketswith high (low) VC have less (more) favorable(a) PEs of and (b) BIs for products imported fromdeveloped markets, but there is no such differ-ence for consumers in developed markets.

Many consumers in emerging markets haveunfavorable perceptions of products imported fromother emerging markets (Amine & Shin, 2002;Ettenson, 1993; Huddleston et al., 2001). However,value-conscious consumers in the emerging mar-kets may evaluate products imported from otheremerging markets more favorably than less value-conscious consumers if these products offer themgreater value, with lower prices than and similarquality to their domestic products. In other words,price may dominate other attributes in forming theperceptions of value-conscious consumers aboutthese products.

On the other hand, consumers in developedmarkets have generally unfavorable perceptions ofproducts made in less developed markets, becauseof their lower perceived quality. Hence VC may notaffect their perceptions of and BIs for productsimported from emerging markets, because thelower prices of these products may not be able to

overcome the larger perceived quality gap withtheir domestic products. Therefore:

Hypothesis 8: Consumers in emerging marketswith high (low) VC have more (less) favorable(a) PEs of and (b) BIs for products imported fromemerging markets, but there is no such differencefor consumers in developed markets.

Figure 1 shows all these hypotheses graphically.Next, this paper describes a large-scale field studyconducted to test all these hypotheses in fourcountries – two developed markets (the UK andthe USA) and two emerging markets (China andIndia) – using a web-based survey methodology.

METHODOLOGY

SampleThis study uses employees of a large multinationalfirm from its offices in four countries (China, India,the UK, and the USA). The corporate office ofthis firm sent an e-mail to all the employees (about10,000) in these four countries with a URL link to aweb-based survey, introducing it as an independentand completely anonymous academic study. Toimprove the response rate, the names of all theparticipants were entered in a lucky draw, with100 gift vouchers worth about US$50 each as prizes.A total of 1752 completed questionnaires werereceived – a response rate of 17.5%, reasonably highfor e-mail surveys (Shiha & Fan, 2009).

To estimate the impact of non-response bias, allthe variables and their relationships were comparedacross two groups (early and late responders), basedon the date on which the responses were received.The two groups showed no significant differencefor any of the variables or the hypothesizedrelationships. Hence non-response bias may notbe a major problem in this study (Armstrong &Overton, 1977).

These four countries were chosen because two ofthem are developed markets (the UK and the USA)and the other two are emerging markets (Chinaand India). Moreover, all the constructs used in thisstudy (CET, MAT, and VC) have been used andvalidated in prior research in all these countries.Hence these four countries provide an appropriatesetting to test all the hypotheses in this researchrelated to the differences in COO effects betweenconsumers in developed and emerging markets.Table 1 shows the sample composition for eachcountry.


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Sample EquivalenceThis study uses the employees of a single firm inthe four countries as participants, and the sameweb-based procedure to collect data from all ofthem, to control for the confounding variables thatplague survey-based cross-cultural studies withconvenience samples (Hult et al., 2008). Thus, byusing the e-mail database of the company as thesampling frame, this study minimizes the between-group differences on non-focal variables, and alsoallows the comparison of focal relationships acrossthe four country samples by ensuring significantvariance within each country sample. Despite this,the samples from the four countries may not matchexactly with each other: therefore several demo-graphic variables are included as covariates tofurther control any between-group differences.The construct validity and measurement equiva-lence of all the scales used in this study are alsotested, as reported below.

ProcedureThis study uses a ‘‘within-subjects’’ design, with atwo-part questionnaire. The first part describesa fictitious passenger car brand (Alco) with threedifferent countries of origin (COO): one emergingmarket (China or India); one developed market(the UK or the USA); and the participants’ own HC.

Next, it measures the PEs and BIs for all threeCOO options (i.e., domestic, developed, andemerging) for each participant, using a six-itemsemantic differential scale, similar to those used inprior research (Ahmed & d’Astous, 2001; Ahmed,Johnson, Ling, Fong, & Hui, 2002b; Schaefer, 1997).The first three items in this scale assess perceptionsof product quality, performance, and value formoney,1 and the second three items captureBIs about trial, purchase, and positive wordof mouth (WOM). The second part of the ques-tionnaire consists of well-established scales tomeasure CET (Shimp & Sharma, 1987), ANI (Klein,

2002), MAT (Richins, 2004), and VC (Lichtenstein,Netemeyer, & Burton, 1990), with seven-pointLikert-type response formats (1¼strongly disagreeto 7¼strongly agree); demographics (age, gender,education, income); and information about somecommon products owned by the participants.

These four countries were also used as the targetcountries of origin. For the participants in India(China), China (India) was used as the emergingmarket, and either the US or the UK as thedeveloped market for half the participants each.For the participants in the US (the UK), the UK (theUS) was used as the developed market, and eitherIndia or China as the emerging market for half theparticipants each. The choice of either country asthe developed or emerging market did not have asignificant influence on any of the variables, or ontheir relationships with each other. Hence the datafor both the target countries for each participantwere combined for further analyses.

A basic version of the questionnaire was devel-oped in English, and with the help of Chineseand Indian graduate students was translated intoMandarin and Hindi (the national languages ofChina and India). Another pair of Chinese andIndian graduate students translated these versionsback into English. Comparison of the originalEnglish questionnaire with the back-translatedversions revealed a few minor differences. Thesewere discussed with the graduate students toresolve the differences in their understanding,and to develop the final Mandarin and Hindiversions. About half the participants in China usedthe Mandarin version, whereas all the participantsin the other three countries completed the Englishversion, thus the Hindi version was not used by anyparticipant.2

A passenger car was used as the context becauseof its high relevance for COO effects (Haubl &Elrod, 1999; Pappu et al., 2007). Cars are importantmeans of transport all over the world, and have

Table 1 Sample composition

Country Overall Gender Age Education Occupation

Male Female p30 years 430 years pHigh school 4High school Blue collar White collar

China 349 (27%) 196 (53%) 153 (47%) 187 (45%) 162 (55%) 167 (49%) 182 (51%) 173 (49%) 176 (51%)

India 388 (20%) 221 (56%) 167 (44%) 210 (54%) 178 (46%) 188 (48%) 200 (52%) 191 (50%) 197 (50%)

UK 468 (22%) 247 (57%) 221 (43%) 212 (54%) 256 (46%) 231 (48%) 237 (52%) 227 (49%) 241 (51%)

USA 547 (31%) 288 (53%) 259 (47%) 261 (48%) 286 (52%) 262 (48%) 285 (52%) 263 (48%) 284 (52%)

Totals 1,752 (100%) 952 (54%) 800 (46%) 870 (50%) 882 (50%) 848 (48%) 904 (52%) 854 (49%) 898 (51%)


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many global and local brands and manufacturers:hence COO has a significant impact on theevaluation of cars (Chao & Gupta, 1995; Han,1989; Han & Terpstra, 1988; Johansson & Thorelli,1985). Cars may have different meanings forconsumers in developed and emerging markets:a car is a necessity in most developed markets, but aluxury in many emerging markets until recently.Hence it is an important product category forstudying COO effects (Kinra, 2006; Okechuku &Onyemah, 1999; Wang & Yang, 2008).

Common Method Variance (CMV)Since this study uses the predictor and criterionvariables from the same source in a single survey,it may suffer from CMV: therefore several recom-mended procedural and statistical remedies wereused to minimize and estimate the impact of CMV(Podsakoff, MacKenzie, Lee, & Podsakoff, 2003). Aweb-based survey was used to reduce the possibilityof socially desirable response and evaluation appre-hension, by ensuring the anonymity of theresponses. Order bias and demand characteristicswere controlled for by counterbalancing the orderof the measurement of the predictor and criterionvariables. For half of the participants the threepredictor variables (CET, MAT, and VC) weremeasured first, followed by the criterion variables(PE and BI); this order was then reversed for theother half of the participants. A dummy variable(ORD, coded 0 and 1 for the two different orders ofquestionnaire presentation) was used as a covariateto assess the impact of order bias.

The participants completed a series of filler tasks,unrelated to this study, between the two parts ofthe questionnaire, creating a psychological separa-tion between the measurement of predictor andcriterion variables, which helps minimize CMV(Fulmer, Barry, & Long, 2009: 696). The study alsouses scales with different response formats (Likertfor independent and semantic differential fordependent variables), reducing the ‘‘method biasdue to the commonalities in scale endpoints andanchoring effects’’ (Podsakoff et al., 2003).

These procedural remedies help to minimizeCMV in this study, but may not eliminate itcompletely. Moreover, it is difficult to identify theexact source or sources of the method bias.Harman’s (1967) single-factor test is a popularchoice for addressing this issue, but some arguethat it is an ‘‘insensitive’’ test, likely to under-identifythe sources of CMV, and it may also not control (orpartial out) method effects (Podsakoff et al., 2003).

Hence this study uses the single common methodfactor approach to estimate the method biases atthe measurement level and to control the measure-ment error, as recommended in such situations(Podsakoff et al., 2003).

DATA ANALYSIS AND FINDINGSSince this study uses data collected from fourdifferent countries, it is important to assess cross-cultural measurement invariance for all the traitscales (CET, MAT, and VC). Prior research suggestsusing a structural equation modeling approach forthis, with a multi-step process putting increasinglyrestrictive constraints on a multiple-group measure-ment model, and testing the significance of chan-ges in model fit (Steenkamp & Baumgartner, 1998).A maximum likelihood estimation procedure withAmos 6.0 is used for this purpose, and to conductconfirmatory factor analysis and internal consis-tency reliability tests to assess the psychometricproperties of all the scales (Bagozzi & Yi, 1988).

First, four groups were defined, based on theparticipants’ HCs, and the configural invariance ofthe three scales was examined by testing the fitindices for an unconstrained three-factor modelacross these four groups. The measurement modelwith three factors related to the three scales showsa good fit (w2¼871.19, df¼528, w2/df¼1.65, RootMean Square Error of Approximation (RMSEA)¼0.043, Standardized Root Mean Square Residual(SRMR)¼0.058, Confirmatory Fit Index (CFI)¼0.97)with all the fit indices better than the cut-off values(RMSEAo0.06, SRMRo0.08, CFI40.95) recom-mended by Hu and Bentler (1999) and (1ow2/dfo5) suggested by Wheaton, Muthen, Alwin, andSummers (1977). Table 2 shows the factor loadingsof all the scales.

A closer look at the output shows that all theparameter estimates (l) are significantly differentfrom zero at the 5% level, suggesting a high degreeof convergent validity; and none of the confidenceintervals of the correlation coefficients for each pairof scales (f estimates) includes 1.0, thus supportingthe discriminant validity of the three scales(Anderson & Gerbing, 1988). An additional test ofdiscriminant validity involves constraining theestimated correlation parameter among the threefactors to 1.0, and then performing a chi-squaredifference test on the values obtained in theconstrained and unconstrained models. The w2

value for the unconstrained model (871.19,df¼528) is significantly lower than the constrainedmodel (983.72, df¼531), showing that the different


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Table 2 Scales summary

Scale items Factor loadings (l)

UK China India USA

Consumer ethnocentrism (1¼strongly disagree, 7¼strongly agree)

1. Only those products that are unavailable in [home country] should be imported 0.82 0.78 0.72 0.80

2. [Country persons] should not buy foreign products, because this hurts [home

country]’s businesses and causes unemployment

0.77 0.81 0.75 0.79

3. It is not right to purchase foreign products, because it puts [country persons] out of

jobs

0.79 0.75 0.71 0.77

4. A real [country person] should always buy [country]-made products 0.75 0.80 0.67 0.78

5. We should purchase products manufactured in [home country] instead of letting other

countries get rich off of us

0.66 0.83 0.77 0.74

6. It may cost me in the long run but I prefer to support [home country]’s products 0.72 0.85 0.61 0.72

Composite reliability 0.80 0.82 0.78 0.80

Value consciousness (1¼strongly disagree, 7¼strongly agree)

7. I am very concerned about low prices, but I am equally concerned about product

quality

0.82 0.85 0.82 0.80

8. When shopping, I compare the prices of different brands to be sure I get the best

value for the money

0.78 0.82 0.80 0.79

9. When purchasing a product, I always try to maximize the quality I get for the money

I spend

0.77 0.78 0.84 0.75

10. When I buy products, I like to be sure that I am getting my money’s worth 0.79 0.80 0.81 0.77


Materialism (1¼strongly disagree, 7¼strongly agree)

11. I like a lot of luxury in my life 0.81 0.77 0.80 0.79

12. Buying things gives me a lot of pleasure 0.83 0.78 0.82 0.80

13. My life would be better if I owned certain things that I do not have 0.78 0.81 0.78 0.77

14. I admire people who own expensive homes, cars, and clothes 0.76 0.82 0.81 0.75

15. I would be happier if I could afford to buy more things 0.73 0.84 0.83 0.73

16. It sometimes bothers me that I cannot afford to buy all the things that I would like 0.74 0.85 0.76 0.75

17. The things I own say a lot about how well I am doing in life 0.78 0.87 0.84 0.74

18. I like to own things that impress people 0.75 0.74 0.85 0.80


Animosity (1¼strongly disagree, 7¼strongly agree)

19. I feel angry towards [target country] 0.73 0.71 0.72 0.75

20. I do not like [target country] 0.66 0.69 0.76 0.69

21. I can never trust [target country] 0.71 0.78 0.81 0.72


Product evaluation (1¼very good, 7¼very bad)

22. Overall quality 0.78 0.81 0.82 0.78

23. Performance 0.76 0.79 0.80 0.75

24. Value for money 0.73 0.75 0.79 0.74


Behavioral intentions (1¼very unlikely, 7¼very likely)

25. Trial 0.75 0.80 0.85 0.78

26. Purchase 0.73 0.75 0.71 0.72

27. Positive WOM 0.69 0.72 0.77 0.75


*Scale items in italic are not invariant across the groups, and are removed from further analysis.


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factors are not perfectly correlated (Anderson &Gerbing, 1988). Finally, the squared multiplecorrelations (r2) for all the scale items are above0.40, and the construct reliabilities range from 0.77to 0.84: hence all the constructs appear to bereliable (Bagozzi & Yi, 1988). Table 3 shows thecorrelation matrices and Table 4 shows the descrip-tives (mean and standard deviation) for all thevariables for the four subsamples.

Only one of the three correlation coefficientsamong the independent variables is significant(r¼�0.17 between MAT and VC), which liesbetween 0.10 and 0.30, suggesting a small correla-tion much lower than 0.50, Cohen’s (1988) cut-offfor strong correlation. Thus the three independentvariables (CET, MAT, and VC) do not correlatestrongly, and hence each of these may be able toexplain unique variance in the dependent variables.

All the factor loadings (l) are large (40.60) andsignificant (po0.01) across the four samples: henceall the scales exhibit configural invariance, indicat-ing a similar pattern of factor loadings across thefour samples (Steenkamp & Baumgartner, 1998).However, despite configural invariance, the itemmeasurements may not be equivalent across thegroups, owing to differences in the interpretationand/or endorsement of the items by the partici-pants. Table 5 shows the results of the stepwiseprocess used for testing the different measurementinvariance levels.

Next, metric invariance was tested for by con-straining the factor loadings to be equal across thefour groups and comparing the fit statistics with theunconstrained model (Steenkamp & Baumgartner,1998). The w2 value for the constrained model(1081.92, df¼588) is significantly higher than thethat for configural model (Dw2¼210.72, Ddf¼60,po0.001), and the other fit indices (RMSEA¼0.063,SRMR¼0.081, CFI¼0.93) are also poorer than therecommended cut-off values (Hu & Bentler, 1999).Hence the probability level of the equality con-straints was examined using the Lagrange multi-plier (LM) test, to identify the parameters thatwould significantly decrease the w2 value if theywere freely estimated subsequently (Byrne, 1994). Alook at the LM w2 values shows five constraints to beuntenable, with significantly different factor load-ings across the four groups (Table 5). Releasingthe equality constraints for these five items gives aw2 value (925.84, df¼568) higher than the con-strained model, but the difference is not significant

Table 3 Correlation matrix

Variables MAT VC PE BI ANI MAT VC PE BI ANI

China (N¼349) India (N¼388)

CET �0.05 �0.03 �0.09* �0.07* 0.10* �0.01 �0.06 �0.13* �0.09* 0.08*

MAT �0.13* 0.15** 0.18*** �0.04 �0.18*** 0.19*** 0.16** �0.05

VC 0.10* 0.08* 0.02 0.07 0.08* 0.04

PE 0.45*** �0.11* 0.34*** �0.10*

BI �0.08 �0.06

UK (N¼468) USA (N¼547)

CET 0.06 0.11* �0.15** �0.12* 0.07 0.07 0.10* �0.18*** �0.14** 0.04

MAT 0.05 0.10* 0.07 0.04 0.08* 0.11* 0.10* 0.03

VC 0.14** 0.11* 0.01 0.17** 0.12* 0.02

PE 0.25*** �0.05 0.21*** �0.06

BI �0.03 �0.04

*po0.05, **po0.01, ***po0.001.

Table 4 Descriptives

Variables China

(N¼349)

India

(N¼388)

UK

(N¼468)

USA

(N¼547)

Mean s.d. Mean s.d. Mean s.d. Mean s.d.

CET 3.67 1.21 3.53 1.34 4.43 1.77 4.57 1.44

MAT 4.78 1.73 4.65 1.51 4.87 1.24 4.93 1.62

VC 4.94 1.58 4.89 1.72 4.71 1.42 4.68 1.81

PE 4.72 1.09 4.46 1.12 4.22 1.38 4.15 1.52

BI 4.38 1.44 4.24 1.33 3.93 1.47 3.78 1.27

ANI 3.23 1.98 3.38 1.77 3.12 1.09 2.97 1.16


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(Dw2¼54.64, Ddf¼40, p40.05). Moreover, the otherfit indices (w2/df¼1.63, RMSEA¼0.053, SRMR¼0.067, CFI¼0.95) are better than the recommendedcut-off values (Hu & Bentler, 1999). Thus this studyfinds support for partial metric invariance of thethree scales.

Configural and metric invariance suggest onlythat the factor structures are similar across the foursamples, and a comparison of the average scores foreach items across the samples requires scalarinvariance (Steenkamp & Baumgartner, 1998).Hence next scalar invariance was tested for byconstraining the intercepts only of the invariantitems across the four groups. For this constrainedmodel the w2 value (1227.59, df¼620, w2/df¼1.98) issignificantly higher than the partial metric invar-iance model (Dw2¼301.76, Ddf¼52, po0.001), andthe other fit indices (RMSEA¼0.065, SRMR¼0.083,CFI¼0.93) also suggest a poor fit (Hu & Bentler,1999). A closer look shows two intercepts with highLM w2 values (po0.05), and after relaxing thesetwo constraints the revised model shows a goodfit (w2¼991.42, df¼612, w2/df¼1.62, RMSEA¼0.054,SRMR¼0.071, CFI¼0.95), with no significant dif-ference in w2 value from the configural model(Dw2¼65.62, Ddf¼44, p40.01). Hence this studyfinds support for partial scalar invariance, allowingvalid comparison of factor means.

Having achieved full configural and partial metricand scalar invariance for all the scales, the remain-ing tests of invariance were performed. Supportwas found only for partial factor covariance, factorvariance, and error variance invariance. The factorcovariances, correlations and error variances arenot invariant across the four samples, but they areinvariant between the samples from the two

emerging markets (China and India) and thosefrom the two developed markets (the UK and theUSA). Thus the participants from the two emergingmarkets (and the two developed markets) seemto be similar in the way their CET, MAT and VCassociate with each other, and influence PE andBI towards imported products (Table 3). Thereforethe data were pooled to create two groups torepresent the emerging and developed markets,and a dummy variable HC was created, coded 0 foremerging and 1 for developed markets. A similardummy variable, COO, was used for the countryof origin.

CMV was assessed by comparing the fit indicesbetween the partial scalar variance measurementmodel and one in which all the items loaded on alatent CMV factor besides their theoretical con-structs for all the four subgroups. This methodallows partitioning of the variance of responses to aspecific measure into three components: trait,method, and random error. The model with theCMV factor showed a poor fit (w2¼1239.37, df¼680,w2/df¼1.82, RMSEA¼0.093, SRMR¼0.154, CFI¼0.79) and a significantly higher w2 value than thepartial scalar variance model (Dw2¼247.93, Ddf¼68,po0.001). Hence most of the variance in this datais explained by the three traits, and hence CMVmay not be a significant problem in this study(Podsakoff et al., 2003).

Next, all the hypotheses in this study were testedby comparing the differences between regressioncoefficients for participants from the developedand emerging markets using moderated multipleregression analysis with the mean-centered scoresfor all the independent and dependent variableswith various interaction terms (Baron & Kenny,

Table 5 Model comparison for measurement invariance

Model descriptiona w2 df w2/df RMSEA SRMR CFI

Full configural invariance 871.19 528 1.65 0.043 0.058 0.97

Full metric invariance 1081.92 588 1.84 0.063 0.081 0.93

Partial metric invariance 925.84 568 1.63 0.053 0.067 0.95

Full scalar invariance 1227.59 620 1.98 0.065 0.083 0.93

Partial scalar invariance 991.42 612 1.62 0.054 0.071 0.95

Full factor covariance invariance 1292.45 624 2.07 0.072 0.090 0.92

Partial factor covariance invariance 1001.23 618 1.62 0.056 0.072 0.95

Full factor error variance invariance 1341.63 630 2.13 0.075 0.094 0.91

Partial factor error variance invariance 1013.29 624 1.62 0.058 0.073 0.95

Full error variance invariance 1569.13 696 2.25 0.081 0.106 0.90

Partial error variance invariance 1059.26 660 1.60 0.059 0.075 0.95

aRows with data in bold show the supported invariance models.


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1986). For this, two-way interaction terms (CET�COO, MAT�COO, VC�COO, ANI�COO; CET�HC, MAT�HC, VC�HC, ANI�HC, and COO�HC)and three-way interaction terms (CET�COO�HC,MAT�COO�HC, VC�COO�HC, and ANI�COO�HC) were created. The mean-centered scoresfor all the variables, the interaction terms, andthe demographics were used as predictors in twomultiple regression models with PE and BI as thedependent variables.

As shown in Table 6, both the regression modelsprovided a good fit to the data for PE (adj. R2¼0.38,F¼25.37, po0.001) and BI (adj. R2¼0.33, F¼21.74,po0.001), with most standardized beta coefficientsstatistically significant, and in the expected direc-tions. COO has a significant positive effect on PE(b¼0.19, po0.01) and BI (b¼0.21, po0.001), show-ing that consumers generally have more favorableperceptions of products imported from developedcompared those from with emerging markets. Incontrast, HC has no significant effect on PE(b¼0.05, p40.10) or BI (b¼0.03, p40.10), showing

that there is no difference in the overall PE and BItowards imported products between consumers indeveloped and emerging markets. However, theinteraction between COO and HC is significantand negative for PE (b¼�0.18, po0.01) and BI(b¼�0.19, po0.01), supporting Hypotheses 1 and 2.

Neither ANI nor any of the demographic variables(age, gender, education, and occupation) has anysignificant influence on either dependent variable,nor do they interact significantly with any of theother independent variables: hence further analysesexclude these variables. The dummy variable ORDalso had no significant influence: thus order biasmay not be a major issue in this study. Moreover, allthe variance inflation factor statistics are between1.0 and 2.0, significantly lower than the recom-mended cut-off value of 10: hence multicollinearitydoes not seem to be a problem.

CET has a significant negative effect on PE(b¼�0.12, po0.01) and BI (b¼�0.11, po0.01),showing that highly ethnocentric consumers gen-erally have less favorable perceptions of imported

Table 6 Moderated multiple regression output

Independent variable PE (product evaluation) BI (behavioral intention)

Std beta coefficient t-values Std beta coefficient t-value

CET �0.12** �3.52 �0.07 �1.43

MAT 0.21*** 5.86 0.16** 4.12

VC 0.03 0.88 0.13** 3.37

ANI 0.05 1.03 0.03 0.68

HC �0.20** �5.62 �0.15** �3.92

COO 0.19** 5.28 0.21*** 5.77

CET�COO 0.04 0.97 �0.06 �1.39

MAT�COO 0.13** 3.31 0.18** 4.43

VC�COO �0.17** �4.34 �0.14** �3.64

ANI�COO �0.06 �1.11 �0.05 �1.06

COO�HC �0.18** �4.59 �0.19** �4.73

CET�HC 0.09 1.65 0.05 1.06

MAT�HC �0.11** �3.09 0.07 1.57

VC�HC �0.14** �3.93 0.04 0.94

ANI�HC 0.03 0.73 0.01 0.44

CET�COO�HC 0.18** 4.72 0.15** 3.81

MAT�COO�HC �0.23*** �6.03 �0.19** �4.73

VC�COO�HC �0.22*** �5.57 �0.18** �4.52

ANI�COO�HC �0.07 �1.33 �0.05 �1.03

ORD 0.01 0.34 0.02 0.54

AGE �0.04 �0.94 �0.05 �1.21

GENDER 0.05 1.12 0.03 0.77

EDUC �0.03 �0.72 0.04 0.81

OCCUP 0.04 0.96 0.06 1.32

Adj. R2 (F-values) 0.38 (25.37***) 0.33 (21.74***)

**po0.01, ***po0.001, all two-tailed.HC and COO¼0, emerging; ¼1, developed.


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products; and the two-way interactions betweenCET and COO as well as HC are not significant(p40.10) for either PE or BI. These findings supportthe negative influence of CET on the evaluations ofand purchase intentions for imported products,irrespective of their COO, and a positive link withthe preference for domestic products (Klein, 2002;Klein et al., 1998; Yu & Albaum, 2002). Moreover,the three-way interaction CET�COO�HC is sig-nificantly positive for both PE (b¼0.18, po0.01)and BI (b¼0.15, po0.01), showing that, comparedwith participants from developed markets, thosefrom emerging markets have a stronger negativeassociation between CET and COO for productsimported from developed markets, and comparedwith participants from emerging markets, thosefrom developed markets have a stronger negativeassociation between CET and COO for productsimported from emerging markets, thus providingsupport for Hypotheses 3 and 4.

MAT has no significant direct effect on PE(b¼0.02, p40.10) or BI (b¼0.06, p40.10), but itsinteractions with COO are significantly positive forPE (b¼0.13, po0.01) and BI (b¼0.18, po0.01),showing that highly materialistic consumers gen-erally have more favorable perceptions of andintentions for products imported from developedmarkets. Moreover, the interactions between MATand HC are insignificant for PE (b¼�0.05, p40.10)and BI (b¼0.07, p40.10), showing that there is nooverall difference in the influence of MAT on theevaluations of and intentions for imported pro-ducts between participants from emerging anddeveloped markets. However, the three-way inter-action MAT�COO�HC is significantly negativefor both PE (b¼�0.23, po0.001) and BI (b¼�0.19,po0.01), showing that, compared with participantsfrom developed markets, those from emergingmarkets have a stronger negative association forproducts imported from emerging markets, and astronger positive association between MAT andCOO for products imported from developed mar-kets, thus supporting Hypotheses 5 and 6.

VC has no significant direct effect on PE (b¼0.03,p40.10) or BI (b¼0.01, p40.10), but its interac-tions with COO are significantly negative for PE(b¼�0.17, po0.01) and BI (b¼�0.14, po0.01),showing less favorable perceptions and intentionsfor products imported from developed marketsamong highly value-conscious consumers. Theinteractions between VC and HC are significantlynegative for both PE (b¼�0.14, po0.01) and BI(b¼�0.16, po0.01), showing that VC has a sig-nificantly more positive effect on consumers inemerging markets than on those from developedmarkets. The three-way interaction VC�COO�HC is significantly positive for both PE (b¼0.22,po0.001) and BI (b¼0.18, po0.01): hence partici-pants from emerging markets seem to have astronger negative association between VC andCOO for products imported from developed mar-kets, and a stronger positive association for pro-ducts imported from emerging markets. Thesefindings support Hypotheses 7 and 8.

To further validate these findings, all the hypoth-eses were also tested with the data about the actualchoice of car brand owned by the participants.Table 7 summarizes the car ownership data. Adependent variable CAR was created, and assignedvalues of 0 for participants who did not own a car,1 for cars imported from emerging markets, 2 forthose imported from developed markets, and 3 forcars manufactured domestically. A multinomiallogistic regression model with CAR as the depen-dent variable and all the predictors (includingthe interaction terms) shows a good fit (NagelkerkeR2¼0.41, �2 log likelihood¼3438.84, w2¼830.34,df¼198, po0.001). Table 8 shows the detailedoutput of this analysis.

HC has a significant influence on the choice ofdomestic cars (B¼1.27, Wald¼49.23, po0.001) andon those imported from the developed markets(B¼0.83, Wald¼25.34, po0.001), but not onthose imported from emerging markets (B¼0.17,Wald¼5.56, p40.01). These findings supportHypothesis 1 by showing a greater preference for

Table 7 Actual car ownership summary

Home country Country of origin Sample size Car owners (%)

Developed Emerging Domestic Total

Developed 279 (32.6%) 154 (18.0%) 422 (49.4%) 855 (100%) 1,015 84.3

Emerging 156 (32.3%) 144 (29.8%) 183 (37.9%) 483 (100%) 737 65.5

Overall 435 (32.5%) 298 (22.3%) 605 (45.2%) 1338 (100%) 1,752 76.4

Note: Figures in brackets show the percentage of cars in a COO category for each home-country category.


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cars imported from developed markets amongconsumers in emerging than among those indeveloped markets. However, Hypothesis 2 wasnot supported, as consumers in both emergingand developed markets seem to have a lowerpreference for cars imported from emerging mar-kets, as reflected in actual car ownership.

CET has a significant influence on the choiceof domestic cars (B¼0.78, Wald¼21.57, po0.001),MAT on the choice for cars made in developedmarkets (B¼1.16, Wald¼48.16, po0.001), and VCon the choice for cars made in emerging markets(B¼0.89, Wald¼27.33, po0.001). However, thereis no significant difference between consumers inemerging and developed markets in the influenceof CET on their choice between domestic cars(B¼0.07, Wald¼4.21, p40.10) and those importedfrom either emerging markets (B¼�0.06, Wald¼0.84, p40.10) or developed markets (B¼0.32,Wald¼2.72, p40.10), supporting Hypothesis 3and Hypothesis 4 partially.

In contrast, MAT has a stronger negative effect(B¼�0.83, Wald¼25.44, po0.001) on the choice ofcars imported from emerging markets for consu-mers in developed markets, and a stronger positiveeffect (B¼0.98, Wald¼28.84, po0.001) on the choiceof cars imported from developed markets foremerging-market consumers, supporting Hypoth-eses 5 and 6. Finally, VC has a stronger positiveeffect (B¼0.68, Wald¼18.74, po0.001) on thechoice of cars imported from emerging marketsfor developed-market consumers, and a strongernegative effect (B¼�0.76, Wald¼23.67, po0.001)on the choice of cars imported from developedmarkets for emerging-markets consumer, support-ing Hypotheses 7 and 8.

DISCUSSION AND CONCEPTUALCONTRIBUTION

Whereas early research on COO effects focused onconsumers in developed markets, recent studieshave also examined these effects on consumers in

Table 8 Multinomial logistic regression output

Independent variable B s.e. Wald df Sig. Exp (B)

DV: Car (¼1, emerging COO)

Constant 1.03 0.68 29.81 1 0.00

CET �0.14 0.17 1.56 1 0.48 1.12

MAT �0.18 0.20 1.72 1 0.57 1.23

VC 0.89 0.13 27.33 1 0.00 1.42

HC (0¼emerging, 1¼developed) 0.17 0.05 5.56 1 0.13 1.08

CET�HC �0.06 0.11 0.84 1 0.89 1.01

MAT�HC �0.83 0.33 25.44 1 0.00 1.59

VC�HC 0.68 0.25 18.74 1 0.00 1.33

DV: Car (¼ 2, developed COO)

Constant 1.28 0.79 31.18 1 0.00

CET �0.11 0.13 1.27 1 0.48 1.10

MAT 1.16 0.27 27.33 1 0.00 1.73

VC �0.19 0.03 1.63 1 0.53 1.02

HC 0.83 0.24 25.34 1 0.00 1.55

CET�HC 0.32 0.18 2.72 1 0.29 1.19

MAT�HC 0.98 0.42 28.84 1 0.00 1.65

VC�HC �0.76 0.31 23.67 1 0.00 1.41

DV: Car (¼3, domestic COO)

Constant 1.41 0.97 34.73 1 0.00

CET 0.78 0.37 21.57 1 0.00 1.61

MAT 0.09 0.02 1.06 1 0.57 1.03

VC 0.35 0.15 3.72 1 0.09 1.34

HC 1.27 0.31 49.23 1 0.00 1.77

CET�HC 0.07 0.03 0.91 1 0.78 1.09

MAT�HC 0.13 0.06 1.53 1 0.66 1.05

VC�HC 0.39 0.12 2.97 1 0.21 1.39

Note: Figures in bold represent significant results.


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emerging markets (e.g., Amine & Shin, 2002; Batraet al., 2000; Klein et al., 2006; Ozretic-Dosen, Skare,& Krupka, 2007; Wang & Yang, 2008). However,most of these studies seem to assume that COOeffects are similar for consumers in both developedand emerging markets, despite growing evidenceof the divergence in their attitudes and perceptions(Batra, 1997; Cui & Liu, 2001; Sharma et al., 2006).This paper hypothesizes and examines the differ-ences in COO effects between consumers in emer-ging and developed markets, using a commonconceptual framework (Figure 1) incorporatingthree relevant constructs (CET, MAT, and VC).

First, the findings from the empirical studywith consumers in four countries (two developedand two emerging) show a significant main effectof both COO and HC on PEs and purchaseintentions, as well as an interaction between thesetwo constructs. Compared with consumers indeveloped markets, those in emerging marketshave more favorable PEs of and BIs for productsimported from developed markets (Hypothesis 1).In contrast, consumers in developed markets haveless favorable PEs of and BIs for products importedfrom emerging markets, compared with consumersin emerging markets (Hypothesis 2).

Thus consumers in both developed and emergingmarkets seem to prefer products imported from thedeveloped markets rather than from the emergingmarkets, which supports the main effect of COO,as shown in numerous prior studies (Ahmed &d’Astous, 2008; Verlegh & Steenkamp, 1999). How-ever, this study also shows that the preference forproducts imported from developed markets isstronger for consumers in emerging markets,whereas the negative perceptions of productsimported from emerging markets are stronger forconsumers in developed markets. The actual carpurchases by consumers in both emerging anddeveloped markets show a preference for domesticbrands, followed by imports from the developedand emerging markets, respectively.

Next, this study examines the role of CET (apopular construct, used extensively in COO research),which has a negative impact on the PEs of andpurchase intentions for imported products amongdeveloped-market consumers (Ahmed & d’Astous,2008). Its influence on consumers in emergingmarkets is inconclusive. Some studies show a nega-tive effect (e.g., Klein et al., 2006); others show noeffect (e.g., Huddleston et al., 2001), or differencesbased on product type (Hamin, 2006), perceptions ofdomestic products and conspicuous consumption

tendencies (Wang & Chen, 2004), and attitudestowards brands and advertising (Reardon et al., 2005).

This paper extends this research by showing thatCET on its own has only a weak negative effect onPEs, and no significant effect on BIs. Moreover, itdoes not interact with the COO or the HC; instead,there is a three-way interaction between CET, COOand HC. Specifically, CET has a negative influenceon the PEs and BIs of emerging-market consumersfor products imported from developed markets,but there is no such difference for consumersin developed markets (Hypothesis 3). Similarly,CET has a negative influence on the PEs and BIsof developed-market consumers for productsimported from emerging markets, but there is nosuch difference for consumers in emerging markets(Hypothesis 4). However, no significant differencewas found between the participants from emergingand developed markets in the influence of CET ontheir actual choice for domestic cars (Table 8).

These findings help us understand the complexmanner in which CET may influence consumers’perceptions, intentions, and behavior towardsimported products. Specifically, it seems to have anegative influence on the evaluations and purchaseintentions of consumers in the developed marketsonly towards products imported from emergingmarkets, and on the evaluations and purchaseintentions of consumers in the emerging marketsonly towards products imported from developedmarkets. However, it also seems to have a negativeinfluence on the actual purchase decision ofimported products in both developed and emergingmarkets. Hence CET seems to have a significanteffect on consumer choice, irrespective of the HC orthe COO. These findings are in line with the largebody of research on CET, which shows its signifi-cant negative impact on consumer attitudes andbehaviors towards foreign products across a widerange of product categories and countries (e.g.,Cleveland et al., 2009; Sharma, Shimp, & Shin,1995; Shimp & Sharma, 1987).

Next, this paper uses two constructs (MAT andVC) to highlight the differences in COO effectsbetween consumers from the developed and emer-ging markets (Figure 1). MAT has a direct positiveinfluence on both PE and BI for imported products,whereas VC affects only BI positively. These find-ings support the results reported in the smallamount of prior research exploring the influenceof these variables on COO effects (e.g., Clarke,Shankarmahesh, & Ford, 2000; Usunier, 1994).Interestingly, MAT and VC also have a significant


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interaction with COO, such that their influence isstronger for products imported from developedthan from emerging markets. Moreover, theirinteraction with HC is significant for PE but notfor BI: hence materialistic and value-consciousconsumers in the emerging markets may evaluateimported products more favorably, but may notnecessarily buy them.

This study also shows a significant three-wayinteraction for MAT and VC with COO and HC(Figure 1). MAT has a positive moderating influenceon the PEs and BIs of emerging-market consumersfor products imported from developed markets, anda negative moderating influence on the PEs and BIsof these consumers for products imported fromemerging markets, but there is no such differencefor consumers in developed markets (Hypotheses 5and 6). In contrast, VC has a negative moderatinginfluence on the PE and BI of emerging-marketconsumers for products imported from developedmarkets, and a positive moderating influence onthe PE and BI of such consumers for productsimported from emerging markets, but there is nosuch difference for consumers in developed markets(Hypotheses 7 and 8). MAT and VC also have astronger influence on the actual choice of carspurchased by consumers in emerging markets thanin developed markets.

These findings suggest that consumers in theemerging markets are becoming more materialistic,but many of them remain quite value consciousand price sensitive. These mixed motivations mayexplain the dichotomy of their continued prefer-ence for status goods imported from developedmarkets, owing to their greater perceived qualitycompared with their domestic products, and at thesame time a higher preference for cheaper goodsimported from other emerging markets, owing toa smaller perceived difference between the qualityof these goods and of those manufactured in theirown countries (Batra et al., 2000; Hu et al., 2008;Kinra, 2006; Wang & Yang, 2008). In contrast,this research also shows that neither MAT nor VCseems to have a significant effect on perceptionsof imported products for consumers in the deve-loped markets. This is possibly because, on the onehand, they do not perceive a big difference betweenthe quality of their domestic products and that ofproducts imported from other developed markets;and, on the other hand, they may have generallyunfavorable perceptions of products importedfrom emerging markets, irrespective of their ownmaterialistic or value-conscious tendencies.

This study found no significant influence of ANIon any of the dependent variables, nor anysignificant interaction with other independentvariables. Prior research shows that, in productcategories with a wide variety of domestic andforeign brands, CET may play a larger role inproduct choice than ANI, whereas in productcategories with fewer domestic options available,ANI may play a predictive role (Klein, Smith, &John, 2002). The passenger car category used in thispaper is typically characterized by both strongdomestic and foreign players in all four countriesincluded in the empirical study: hence it is notsurprising that CET had a more significant rolethan ANI.

Companies can also mitigate ANI and transformnegative home-COO effects on the sales of theirproducts in international markets by making useof appropriate competitive marketing strategies(Amine et al., 2005). In all four countries includedin this study, foreign car companies use localmanufacturing and assembly of some components,along with local themes and appeals in advertising,and local celebrities to endorse their brands. Thefindings of this study show that such marketingstrategies seem to be working for the foreign carcompanies in mitigating the effect of ANI.

Finally, recent research draws a distinctionbetween situational and stable ANI, showing thatboth these types of ANI may influence consumers’purchase intentions, but only situational ANI has adirect negative influence on affective evaluationsand cognitive judgments (Leong et al., 2008).Others show that the intensity of ANI may varyover time (Amine, 2008). In view of these findings,the lack of any significant influence of ANI in thisstudy suggests that the intensity of emotionsrelated to past political conflicts among the fourcountries may have reduced over the years, whereasthe more recent economic conflicts may notgenerate quite the same level of strong feelingsof ANI.

Thus, using a new conceptual framework incor-porating three important constructs (CET, MAT,and VC) to explain the differences in COO effectsbetween consumers in developed and emergingmarkets, this paper aims to make an importantcontribution to the existing research in this area.By conducting a study with consumers from fourdifferent countries including two developed andtwo emerging markets, using a rigorous methodol-ogy and data analysis procedure, this paper pro-vides a strong test for its conceptual framework.


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MANAGERIAL IMPLICATIONSBesides its conceptual contribution, this researchalso has some important business implicationsfor international marketers, because a betterunderstanding of consumer characteristics andmotivations would help them understand theindividual differences among their consumers.Specifically, this study shows that consumers inboth developed and emerging markets tend toprefer products imported from developed marketsto those from emerging markets, but the preferencefor products imported from developed marketsis stronger for consumers in emerging markets,whereas the negative perceptions of productsimported from emerging markets is stronger indeveloped markets.

These are important findings, because they showthat it may be relatively easier for companies fromboth emerging and developed markets to sell theirproducts in the emerging markets than in thedeveloped markets. On the one hand, this may bedue to the burgeoning middle-class consumerswith growing purchase power in the emergingmarkets, and on the other it may be becauseconsumers in the developed markets may bebecoming more discerning and demanding. Ineither case, companies from the emerging marketsneed to invest in improving their product qualityas well as their brand image, whereas those fromthe developed markets probably need to invest inproduct development and differentiation in theirexisting markets.

Next, the findings show that CET has only a weaknegative effect on PEs, and no significant effect onBIs. Moreover, it has a stronger negative influenceon the PEs and BIs of emerging-market consumersfor products imported from developed markets,and on developed-market consumers for productsimported from emerging markets. These findingsshow that marketers from both developed andemerging markets planning to target each other’smarkets may have to overcome strong ethnocentrictendencies, using different strategies.

First, they may try to target less ethnocentricconsumers, who tend to be younger, better edu-cated, and upper income (Klein et al., 2006;Shankarmahesh, 2006; Sharma et al., 1995). Next,they may underplay the foreign element in theirmarketing mix (product, packaging, pricing, andpromotions), use domestic manufacturing as faras possible, and develop localized advertisingcampaigns. Finally, these companies may alsoattempt to educate ethnocentric customers,

through public relations efforts and media cam-paigns, about their contribution to the localeconomies by way of employment, investment,and long-term commitment. All these efforts maynot completely eliminate the negative impact ofCET on the demand for their products, but theymay at least help mitigate its negative effects tosome extent.

Finally, the findings also show that both MATand VC have a stronger positive influence on theevaluations of and purchase intentions for productsimported from developed markets than for thosefrom emerging markets, and this influence issignificantly higher for consumers in the emergingcompared than for those developed markets.Hence international marketers may benefit fromthe increasing materialistic tendencies of consu-mers in the emerging markets, but they also needto ensure that their products offer good value formoney. In the developed markets they possiblyneed to look for other important factors, besidesMAT and VC, which may influence customers, suchas product differentiation, customization, andsuperior service.

To conclude, all these insights may help interna-tional marketers segment their markets better,based on the differences in the ethnocentric,materialistic, and value-conscious tendencies oftheir target consumers, and direct their marketingactivities and promotional inputs accordingly. Amore thorough understanding of consumer percep-tions and preferences would help them not onlyretain their existing consumers, but also gainmarket share by attracting conversions from bothlocal and foreign competitors. Multinational mar-keters may be well advised to incorporate theseinsights into their global marketing plans andstrategies, covering both developed and emergingmarkets.

LIMITATIONS AND DIRECTIONS FORFUTURE RESEARCH

Despite throwing some fresh light on the well-researched COO effects, this research has somelimitations that future work may address. First, ituses a single product category (passenger cars)with employees of a single company across fourdifferent countries. This approach helps minimizethe influence of various confounding variables,and allows the comparison of relationships amongall the variables across different groups, but thefindings may not generalize to the overall popula-tions in these four countries. Moreover, consumers


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possess varying levels of product knowledge of andinvolvement with different product categories.Future research, using other product categorieswith consumers from diverse socio-economicbackgrounds in different countries, may generalizethese findings.

Prior research argues against using COO as theonly cue, because it may inflate its importance, andsuggests using other intrinsic cues (taste, design, fit,and other product features) and extrinsic cues(price, brand, warranty, and after-sales service)(Ahmed & d’Astous, 2008; Bilkey & Nes, 1982;Josiassen, Lukas, & Whitwell, 2008). This study usesCOO as the only cue, but this may not be animportant concern, because the objective is tocompare the differences in COO effects betweenconsumers in developed and emerging markets,and not to compare its importance with that ofother cues (e.g., brand, price) within a singlesample. Future research might explore the differ-ences in the importance attached to various cues(including COO) as well as the socio-psychologicalprocess underlying consumer perceptions of andintentions towards products imported from devel-oped and emerging markets.

Finally, there are several constructs that may haveinfluenced the results reported in this paper, suchas consumer affinity (Oberecker et al., 2008),consumer racism (Ouellet, 2007), and home-coun-

try bias or national identification (Verlegh, 2007).However, all these constructs seem to relate withCET in one way or the other, and hence theireffects are likely to overlap with those of CET.Moreover, they may not even interact with MATand VC, just as in this study CET did not haveany such interaction. Since this study could notmeasure all such variables to be able to controltheir effect, future research might address thislimitation.

NOTES1The use of the ‘‘value for money’’ item in the PE

scale raises the possibility of a confound with the VCconstruct. However, VC has no significant direct effecton PE (b¼0.03, p40.10), as shown in Table 7: hencethis may not be a major concern. This item was alsoremoved from the PE scale, and no significantdifference was found in the results.

2To gauge the impact of the language of thequestionnaire, the data from the Chinese participantswere divided into two parts, based on the languageused (English or Chinese): no significant differenceswere found in the scores for any of the variables, nor intheir correlations with each other. The completeanalysis was also run again treating the Chineseparticipants using Mandarin and English as twoseparate groups, and no significant differences werefound.

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ABOUT THE AUTHORPiyush Sharma ([email protected]) isan Associate Professor in the Department ofManagement and Marketing and Deputy Director(MBA Program) at The Hong Kong PolytechnicUniversity. His research interests include servicesand international marketing, cross-cultural consu-mer behavior, exploratory purchase behaviors, andself-regulation. He research appears in the Journal ofthe Academy of Marketing Science, Journal of ServiceResearch, Journal of Business Research, Journal ofServices Marketing, Journal of International ConsumerMarketing and Journal of Marketing Managementamong others.

Accepted by Daniel Bello, Area Editor, 25 November 2009. This paper has been with the author for two revisions.


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Country of origin effects in developed and emerging markets: Exploring the contrasting ... · 2017-09-09 · Country of origin effects in developed and emerging markets: Exploring