A NORMATIVE FRAMEWORK FOR ANALYSING
THE COUNTRY OF ORIGIN EFFECT

 

 

 

Rajendra Mulye
Lecturer in Marketing
School of Marketing
Royal Melbourne Institute of Technology
GPO Box 2476V
Melbourne 3001

Phone (03) 9578-7039
Fax (03) 9654-7483

rajum@mailcity.com

 

 

A NORMATIVE FRAMEWORK FOR ANALYSING
THE COUNTRY OF ORIGIN EFFECT

 

 

Based on the theory of social normative conduct, this paper proposes a framework for understanding the country of origin effect. The proposed framework extends Osterhus's (1997) prosocial framework and argues for a stronger role of social norms in country of origin research. Several hypotheses and scale items are proposed to operationalise the constructs of the proposed framework

 

Introduction

Globalization has provided numerous opportunities and challenges to both the domestic and the international marketer. New countries have emerged as leading suppliers of goods, providing intense competition to established domestic manufacturers and, in some instances, displacing an entire local industry. One outcome of this has been the proliferation within the domestic marketplace of products from different countries and the availability of a wider range of products for the consumer to choose from. To remain competitive domestic marketers have adopted various strategies such as investing in technology to improve quality, decreasing cost through complex global sourcing networks and appealing to the 'moral duty' of consumers to support local industry. This paper is concerned with the later aspect of the marketing strategy - the attempts by marketers to appeal to the 'moral duty' of the consumers through the promotion of various 'buy local' campaigns. A conceptual framework is proposed that specifies the condition under which a consumer will purchase domestic products. The framework builds on the contribution of the general COO literature as well as from the literature on social norms to enrich the theoretical foundation underlying this relatively unexplored area of international marketing.

 

Theoretical background

More than 30 years of research in the international marketing area has shown that consumers evaluate a product not only on the basis of its physical attributes but also on the basis of where the product is manufactured. This is commonly referred to as the country-of-origin (COO) effect. This paper deals with part of the COO effect related to the preferences consumers often express for domestic products, referred to as the home country bias. Although most COO studies include a respondent's home country as a base against which foreign products are compared, very few studies have comprehensively studied the home country bias or offered any theoretical explanation for its existence. Maronick (1995) notes that "while the amount of research on the information processing cue side of the issue has been examined, almost all of these studies have examined consumers' perceptions of foreign cues (e.g.. "Made in Japan"). Few authors have examined what "made in USA" means to consumers and little or no research has examined the "made in USA" claim in terms of the characteristics of the product itself." The only explanation that has been put forth so far relate to the personality type trait of consumer ethnocentrism.

Consumer Ethnocentrism

Consumer ethnocentrism is operationalised by Shimp and Sharma (1987) to "represent beliefs held by American consumers about the appropriateness, indeed morality of purchasing foreign-made products (p. 280)." They propose a 17 - item scale referred to as the CETSCALE (Consumer Ethnocentric Tendency Scale) to represent this construct. The scale attempts to measure the extent to which consumers feel that buying foreign products is unpatriotic or immoral because of its adverse economic impact. Shimp and Sharma (1987), as part of the scale purification process, tested the scale on a separate sample from four US cities and reported high reliability and construct validity for the scale. Successive studies using the CETSCALE have reported good correlation of the construct with consumer preference for domestic products (Netemeyer, Durvasula and Lichtenstein 1991, Herche 1992, Sharma, Shimp and Shin 1995), but not necessarily with actual purchase decisions (Mulye, Rickard and Higginson 1997).

Although the construct shows good promise as a predictor of home country bias, recent studies have found the trait to be unstable. First, the originators of the concept themselves (Shimp and Sharma 1987, Sharma et al. 1995) as well as others (Herche 1992) have shown that the effect of consumer ethnocentrism varies geographically within the same country, presumably with the level of perceived threat from foreign competition experienced in that region. Second, the construct is found to be product specific, affecting some products more than others as in Herche’s (1992) study that found higher effect for automobiles than for personal computers. Third, the reliability of the construct itself is brought in to question by Mulye et al. (1997) and Klien et al. (1998) in their study of Australian and Chinese consumers respectively. Mulye et al (1997) found two dimensions of consumer ethnocentrism, which they termed as emotional and rational consumer, whereas Klien et al (1998) found 10 of the 16 CETSCALE items unfit for inclusion in their structural model. Finally, the ethnocentric tendencies may selectively operate only against certain countries as a result of "remnants of antipathy related to previous or ongoing military, political, or economic events" (Klien et al. 1998). It is conceivable that certain transient factors may be operational that moderate the effect of consumer ethnocentrism on actual behaviour. One such factor may be related to normative pressures experienced by consumers to buy domestic products or avoid products from specific countries. The COO literature has generally paid little attention to this aspect of consumer influence as most theoretical development in COO research has been influenced by the cognitively oriented information processing paradigm.

Information Processing Paradigm

According to this paradigm, consumers make decisions based on a systematic process of acquisition, evaluation and integration of product information or cues. Each of these cues, which can be intrinsic (taste, design, colour) or extrinsic (price, brand name. warranty), provide a basis for developing impressions of a product. Although both types of cues are used in product evaluation, extrinsic cues are more likely to be used when intrinsic cues are absent or cannot be easily assessed (e.g. Olson & Jacoby 1972). Country-of-origin researchers using this paradigm have attempted to explain how an extrinsic cue, such as a product's country-of-origin, is integrated with other intrinsic and extrinsic product cues to arrive at product evaluation and ultimately a purchase decision.

Hong and Wyer's (1989) study is probably one of the earlier studies based on the information processing paradigm. They show that when consumers are presented with the country-of-origin cue along with other product cues, many direct or indirect manifestations of country-of-origin effects might be observed as follows:

Hong and Wyer (1989) empirically examined the relative influence of the above country-of-origin effects in the context of four information processing hypothesis (encoding, heuristic, primacy-recency, and cognitive elaboration) and found stronger support for the latter two effects than for the first two effects. Country-of-origin not only had a direct influence on product evaluations but also appeared to stimulate subjects to think more extensively about other product attribute information, thus augmenting its effect. This however does not mean that the first two effects are irrelevant or never occur, as others (e.g.. Johansson, Douglas & Nonaka 1985, Erickson, Johansson & Chao 1984, Han 1989) have argued that certain conditions are necessary for the two effects (also known as halo and summary construct effect respectively) to manifest in product evaluation. When a consumer is not familiar with a country's product, a halo effect is said to operate whereby country-of-origin information is used to infer the merits of a product's intrinsic attributes, which is turn affects the overall evaluation of the product (country image--beliefs--brand attitudes). Alternately, when a consumer is familiar with a country's product, Han (1989) has shown that, a summary construct model operates in which consumers make abstraction of product information into country image, which then directly influences brand attitude (beliefs-country image-brand attitude). Although these are simple models of what is essentially a multifaceted phenomenon, such studies have been instrumental in setting the groundwork for more comprehensive frameworks that capture a range of influences on product evaluation.

Comprehensive models of COO effect

Obermiller and Spangenberg (1989) were probably the first to propose a comprehensive theoretical framework for studying the COO phenomenon. They draw a distinction between considering the country-of-origin label at the level of operational variables - an approach taken by most country-of-origin studies, as opposed to considering it at the level of the theoretical construct. Noting the lack of generalisability of many country-of-origin studies as a result of their inattention to the constructs at a theoretical level, they propose a theoretical framework that integrates the key findings from the country-of-origin research. The country-of-origin effect is modeled as a combination of cognitive, affective and normative influences. In a cognitive response a product's country-of-origin does not influence product evaluation directly, but instead affects evaluation of some other attribute that determines global attitude or assessment of quality. Most country-of-origin studies have followed this conventional thinking. More recent studies have supported an affective reaction to the country-of-origin label. The resulting emotional response to a country-of-origin label is believed to circumvent the purely cognitive inferential evaluation, and is often used to explain the inconsistency observed between positive product evaluation and intended behaviour in country-of-origin studies. Some of the new explanations of the country-of-origin effect, such as consumer ethnocentrism fall within this category. The normative influence is modeled as a third route through which country-of-origin effect can be manifested without any change in the overall product beliefs or attitudes. This factor is shown to have a direct structural impact on purchase intention without changing attribute beliefs or attitude, such as when country-relevant norm dictates avoidance of product from a specific country. In essence this framework can be viewed as an extension of the popular Fishbein and Ajzen (1975) attitude model that posits that purchase intention is directly and equally influenced by a consumer's attitude towards a product and the subjective norm.

From the perspective of the proposed framework, this is probably the first paper to explicitly recognise the influence of social norms in the COO literature. However, the suggested framework is a broad system model and the authors did not empirically test the full model or suggest how it might be operationalised. It was only in 1998 that Brodowsky operationalised a part of the Obermiller and Spangenberg framework in the context of consumer choice of purchasing a car with hybrid COO cues. This is probably one of the few COO studies that has recognised the limitations of cognitive explanations of the COO effect and have explicitly recognised the role of social normative belief in forming consumer attitudes. Even Fishbein and Ajzen (1975), have acknowledged the limited and sometimes ambiguous results of their theory of reasoned action due to external factors. For example, a person may evaluate a Japanese car highly on quality and value but may still have a negative attitude towards purchasing it due to strong social norms against using foreign products or due to social concern about unemployment in the automotive sector. Nevertheless, Brodowsky's model follows the Fishbein and Ajzen (1975) approach of measuring the subjective norm. This approach involves taking the product of an individual's perceived likelihood that a salient referent wishes him/her to perform the behaviour and his/her general motivation to comply with the salient referent, summed over all referents. This approach has been criticised (Brodowsky 1998; Schwartz 1977) on theoretical and practical grounds. This paper presents a more detail framework for understanding the influence of social norm on purchase intentions that also incorporates specific conditions under which norm-driven behaviour shift surpasses traditional economic self interest explanation of consumer behaviour.

Proposed Framework

A norm may be defined as an expectation about how one ought to act, enforced by a threat of sanctions. Attitude-behaviour theorists, such as Fishbein and Ajzen (1975) discussed above, have long recognised the combined influence of normative pressure and motivation to comply with norms as a mediator of the effect of attitude on behaviour. The government or trade union sponsored "buy local" campaigns in many countries, are in fact attempts to initiate the normative process at the expense of subrogating consumer attitude and attribute beliefs. After all the popular slogans of -"buy your kids a job," or "because the buck stops here" are not espousing superior value of domestic products but are in fact perpetuating a social value of collectivism - a prosocial norm of looking after your country men in times of economic difficulty. Despite the theoretical and practical support for the significance of norms in purchase behaviour, the COO literature seems to be ambivalent in its treatment of normative explanations of the COO effect.

While it is certainly not true that social norms are always the best or the only strategy to get people to buy domestic products, it can be argues that norms can and do have important effects on a person's decision to purchase domestic product and that they deserve far greater research attention than they have received so far. COO studies in which consumers have shown preferences in favour of domestic product in spite of better value offered by competing foreign brands have usually attributed the effect to personality based constructs such as consumer ethnocentrism, nationalism and dogmatism rather than to the prevalence of social norms. Mulye, et al. (1997) has shown that such a bias may not be entirely justified. There is considerable ambivalence, at least in Australia, on how a personality based construct such as consumer ethnocentrism, which has received some support in the COO literature in recent years, is conceptualised. The Mulye et al. (1997) study did not support an unidimensional factor structure for the construct found in several previous US based studies. Two dimensions of consumer ethnocentrism - emotional and rational ethnocentrism were identified. It can be argued that what is referred to as a personality construct is in fact a measurement of a social value with the emotional component akin to a person's agreement of the social norms in relation to buying domestic products and the rational component referring to the personal economic sacrifice involved in restricting the importation of foreign goods. It is this duality that the proposed framework intends to capture. The framework is modeled after Osterhus's (1997) study of energy conservation behaviour. In the style of the work conducted by Osterhus (1997) the main driver of behaviour in this model is the social normative belief in regards to supporting domestic products. Social norms help in shaping personal norms, which in turn affect behaviour. Social norms can also affect behaviour directly if the perceived sanctions are high and the respondent has a high motivation to comply with the subjective norm, which plays a moderating role. Four other moderators proposed are responsibility attribution, awareness of consequences of one's action, consumer efficacy and feelings of trust. Consumer efficacy is shown to play a dual role of also strengthening a person’s personal norms. Finally, the personal cost benefit to the consumer is shown to translate purchase intention into actual behaviour.

 

 

Hypothesis

H1: The perception of the existence of ethnocentric social norms will impact the formation of personal norms.

H2: The influence of ethnocentric social norms on personal norms will be moderated by a respondent's attribution of responsibility for the management of the domestic economy.

H3: Consumer efficacy - belief that personal action can make a difference- will strengthen personal norms as well as moderate its effect on behaviour intention.

H4: Awareness of consequences of one's action will strengthen personal norms as well as moderate its effect on behaviour intention.

H5: Consumer self interest - personal cost and benefits of buying domestic products, will moderate ultimate behaviour.

H6: Social norms can affect behaviour directly for conspicuous products but not for privately consumed products.

H7: Trust will indirectly moderate the effect of personal norms on behaviour intention by strengthening or weakening the influence of consumer efficacy on personal norms.

 

Measurement of constructs

The following scale items are suggested to operationalise the constructs. Some of the items are based on Osterhus's (1997) study which were changed to suit the study context. The psychometric properties of the scale are yet to be tested.

A Personal Cost

  1. Buying only Australian-made products will severely restrict my freedom of choice.
  2. I will have to sacrifice quality and variety if I only purchased products made in Australia.
  3. I don't want to be bothered reading labels just to find out where the product is made.
  4. In general, Australian-made products are more expensive than foreign products.
  5. The best quality goods are nearly always imported.

B Personal Benefit

  1. I feel good about buying Australian-made products.
  2. I feel assured of good after sales service if I buy Australian-made products.
  3. Spare parts for Australian-made products are cheaper and easily available.
  4. Australia-made products are better suited to Australian conditions.
  5. In general, Australian-made products provide good value for money.

C Personal Norms

  1. I feel an obligation to purchase Australian-made products wherever possible.
  2. I should do what I can to create employment and reduce our national debt.
  3. I feel I must do something to help employment prospects of future generations of Australians.

D Ethnocentric Social Norms

  1. Much more fuss is being made about 'buying Australian' than is really justified. (reversed)
  2. Australian products, first, last and foremost.
  3. Purchasing foreign-made products in un-Australian.
  4. It is not right to purchase foreign products, because it puts Australians out of jobs.
  5. We should purchase products manufactured in Australia instead of letting other countries get rich off us.
  6. We should buy from foreign countries only those products that we cannot obtain within our own country.
  7. Australian consumers who purchase products made in other countries are responsible for putting their fellow Australians out of work.

E Responsibility Attribution

  1. Every person should give some of his time to the good of his town or country.
  2. It is the governments' responsibility to take care of issues such as unemployment and foreign debt.
  3. Tariffs are the more effective means of restricting foreign goods.
  4. Australian companies should clean up their act and come out with better products before they ask me to buy them.
  5. If Australian workers affected by foreign competition were to make some effort, I am sure they could improve their situation.
  6. It's the whole system which has to change, how will it matter if I alone forego my right to purchase better quality foreign products.

F Self Efficacy

  1. It is no use worrying about unemployment or foreign debt; I can't do anything about them anyway.
  2. There is not much that any one individual can do about the problems created by foreign products.
  3. The efforts of one person are useless as long as other people refuse to buy Australian products.

G Trust

  1. The 'Made in Australia' label does reflect that the goods are genuinely made in Australia.
  2. I trust that the proceeds from my purchase of Australian-made goods will stay within our country.
  3. I trust that the profits of Australian-made products will be reinvested back in Australia.
  4. Australian companies are doing every thing possible to improve the Australian economy.
  5. I trust the Government to act in the best interests of the nation, its economy and its society.
  6. Australian companies pass savings back to the community.
  1. Awareness of Consequences

1 Buying Australian-made goods creates jobs for Australians

2 Buying Australian-made goods helps in reducing foreign debt.

3 Buying Australian-made goods is an investment in the future of our industries.

4 Buying Australian-made goods promotes innovation in Australia.

5 Buying Australian-made goods helps Australian companies to compete in overseas markets.

 

 

References

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