British consumers evaluations of US versus Chinese goods A multi-level and multi-cue comparison

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1 The current issue and full text archive of this journal is available at EJM 786 Received August 2005 Accepted April 2006 British consumers evaluations of US versus Chinese goods A multi-level and multi-cue comparison Leonidas C. Leonidou University of Cyprus, Nicosia, Cyprus Dayananda Palihawadana Leeds University Business School, Leeds, UK, and Michael A. Talias International University Bremen, Bremen, Germany Abstract Purpose The article aims to identify differences in consumers evaluations of goods made in either the USA or China at different levels of analysis; to trace variations in consumers evaluations with regard to various cues characterizing US or Chinese goods; and to provide a comparison of consumers evaluations between US and Chinese goods at different levels of analysis and across different product cues. Design/methodology/approach The study builds hypotheses that correspond to each of the three research objectives. Information was received through personal interviews from a sample of 404 British consumers, aged 18 years and above. Respondents were randomly selected at central locations using a systematic stratified procedure. Data were gathered using a structured questionnaire, with questions focusing separately on the USA and China, at five different levels of analysis, and in six different categories of product cues. Using confirmatory factor analysis, the reliability and validity of the scales were found to be satisfactory. The hypotheses were tested using either student-t or ANOVA statistics. Findings The results provide support to all three hypotheses, revealing that there are significant differences in consumer evaluations across the various levels of analysis, caused mainly by the brand, which overshadows country-of-origin effects in the case of the USA, but emphasizes these effects in that of Chinese goods. Research limitations/implications The results of the study have serious implications for corporate and public policy-makers, especially for the countries involved in the analysis. These implications should be seen within the context of various geographical, product, time, and other limitations, which provide the basis for undertaking future research on the subject. Originality/value As opposed to extant research on country-of-origin effects, the study offers a multi-level and multi-cue comparison for products manufactured by two major actors in the international trade arena (USA and China), as these are perceived by consumers living in an important developed market (the UK). Keywords Country of origin, Consumer behaviour, China, United States of America, United Kingdom Paper type Research paper European Journal of Marketing Vol. 41 No. 7/8, 2007 pp q Emerald Group Publishing Limited DOI / The authors would like to thank the editors and the anonymous reviewers of the European Journal of Marketing for their valuable insights and constructive comments on previous versions of the article.

2 Introduction Recent decades have seen a growing globalization of the world economy, this being attributable to the existence of monetary stability, adoption of liberalization policies, improved standards of living, the prevalence of relatively peaceful conditions, and advances in transportation, communication, and information technologies (Keegan and Green, 2000; Czinkota and Ronkainen, 2004). This has been responsible, on the one hand, for intensifying competition on a global scale among supplying firms originating from various countries, and, on the other hand, for increasingly exposing consumers in markets worldwide to a wider range of foreign products (Douglas and Craig, 1995; Cateora and Graham, 2005). This change in the international marketplace has led to a rising interest, on the part of both academics and practitioners, in investigating the effect of the product s country of origin on consumers attitudes, preferences, and behavior (Verlegh and Steenkamp, 1999). In fact, the country-of-origin phenomenon has been one of the most widely studied in international business, marketing, and consumer behavior fields, resulting in dozens of manuscripts since the mid-1960s, when the first reference was made to the subject[1]. Overall, these studies have revealed that consumers have significantly different perceptions of products made in different countries and that consumer evaluation can be seriously affected by knowing where these products are made (Bilkey and Nes, 1982; Peterson and Jolibert, 1995) (for a summary of recent empirical studies on country-of-origin effects see Table I). Hence, a favorable (or unfavorable) country image may facilitate (or inhibit) the quick introduction, recognition, and acceptance of products in overseas markets (Agarwal and Sikri, 1996). This will subsequently help (or prevent) international firms to gain a competitive advantage and improve their business performance (Al-Sulaiti and Baker, 1998). Country-of-origin evaluations are not static, but are subject to variations, caused by various factors, such as:. changes in the socio-political and economic conditions in both selling and buying countries;. alterations in the comparative advantage of nations, as well as in the competitive advantage of firms;. introduction of new manufacturing technologies, as well as movements along the various stages of the international product life-cycle;. changes in the way goods are marketed and communicated by both selling countries and organizations; and. emergence of regional and/or global buyers (Terpstra and Sarathy, 2000). US versus Chinese goods 787 These changes have been intensified recently, as a result of the high speed of globalization, proliferation of free trade, and internationalization of production. A case in point is Japan, whose products, although considered of inferior quality in the past, have managed to improve significantly over time, and gain a favorable image in foreign consumers minds. Obviously, consumers positive (or negative) evaluations of foreign products can have a serious impact on various strategic marketing decisions, such as the determination of the country-site for installing the company s manufacturing operations, the formulation of appropriate segmentation and positioning strategies

3 EJM 788 Table I. Summary of recent empirical studies on country-of-origin effects Authors Study objectives Research methodology Major findings Results indicated that the combined effects of country of design and country of assembly cues have a stronger impact than brand name on consumer evaluation of quality and purchase of automobiles, VCRs and shoes. Magnitude of priori cue differentiation played a strong role in product evaluation. Favorableness of a brand or country-of-origin cues was considerably modified when a consumer was provided with additional product-related information The data in the study were collected from 365 Canadian male respondents through two separate studies at two different time periods using two different formats in relation to three product categories: automobiles, video-cassette recorder, and shoes. The studies were carried out in two cities, namely Sherbrooke and Quebec To study the relative salience of global brand names versus countries of origin in explaining consumer judgments about the quality and purchase value of products Ahmed and d Astous (1996) The study findings revealed that both the factor structure and the structural model relationships are invariant, thus providing support for the hypothesis of the model s cross-national generalizability. It was also found that both brand name and country of origin turned out to have a significant impact on consumers evaluations of the automobile. While the effect of brand name on the attitude towards the new automobile turned out to be composed of a direct route, the country-of-origin effect was found to be predominantly indirect The study uses a multi-group structural equation modeling approach to assess the invariance of the proposed model across countries. To test the effects of a new automobile s country of origin and brand name on consumers relevant attitudes in connection with the vehicle, a cross-national study based on face-to-face interviews was carried out among 309 car owners in Germany and 313 car owners in France Haubl (1996) To examine the cross-national applicability of a model of the effects of country of origin and brand name on consumers evaluation of a product. Specifically, to investigate the structures of country-of-origin and brand effects on the evaluation of a new automobile by German and French car owners Results indicated that it is possible to draw a picture of the uses of nationality in the marketing of Danish products abroad. Although no clear-cut answers were found as to when it is appropriate to use national image in international marketing, a pattern nevertheless emerged from the empirical data, which showed that as a product moves along its life cycle towards the maturity and decline stages, a shift occurs in the positioning strategies employed by many of the companies interviewed, from the use of national image as a differentiation tool to the building of international brands and product images The study included mail questionnaires and personal interviews. The mail survey was carried out among 100 Danish exporting companies, which produced a response rate of 58 per cent. For follow-up, 20 individual interviews were carried out in order to discuss in more detail attitudes towards using nationality for international promotion purposes Hanne (1996) To determine the marketing strategies underlying the use of national images by companies of different nationalities. Also, to examine how the designation of origin may influence consumers and industrial buyers in their product evaluations and how a nation s general image may influence its product image and vice versa (continued)

4 Authors Study objectives Research methodology Major findings Results of the study indicate that consumers perceptions of new products from a given country are related to the image they hold for well-known products for that country. Further, the extent of transferability of beliefs is moderated by the degree of perceived similarity between the well-known and the new product categories. It was also found that transference of beliefs to the new products was greater when the perceived similarity between the Data for this study were collected using a sample identified through systematic sampling, using the telephone book of the metropolitan area closest to the university where the pretests were conducted as the sampling frame. This method was selected to ensure a high degree of correspondence between the geographical sub-culture of the pretest and main study samples, as well as to obtain a sample that included a wide variety of demographic profiles. Of the 800 questionnaires mailed, 198 were returned To investigate the transferability of country images from well-known products to new product categories. Also, to examine whether, which, and to what extent the various dimensions of country image for a well-known product category transfer to influence perceptions of new products Agarwal and Sikri (1996) well-known product and the new product was higher The results show that Canadian consumers are more favorable toward products made in Mexico than American consumers. American consumers, on the other hand, are more nationalistic than the Canadians. While country-of-origin cues have a much greater impact of consumer reactions than other cues, including brand name, this impact is significantly attenuated when other pieces of information are present The study was based on a survey of 219 US and 175 Canadian consumers. Their judgments of the quality and purchase value of automobiles, VCRs and shoes were obtained in a multi-cue, ad-based setting Ahmed et al. (1997) To manipulate country-of-origin information along two dimensions, namely country of design and country of assembly The results of the experiment indicated that the test-retest stability of attribute-based and entity-based multi-entity image ratings of the target country, Germany, as a producer of small automobiles, were lower than the test-retest stability of single entity scaling image ratings of the target country when the rating context (another country being rated) changed between the test and retest. The study also found that at least a portion of the instability of multi-entity scaling found in previous studies may be due to an inherent instability associated with multi-entity scaling that is dependent of changes of context entities An experiment involving survey respondents ratings of small automobiles produced in various countries was used. Automobiles produced in Germany were selected as the target entity. The dependent variable in the experiment consisted of the stability of the German automobile ratings under various survey conditions created by manipulating the experimental variables according to a 5 2 full-factorial experimental design. Complete sets of responses were received from 537 respondents To examine, via a controlled experiment, the issue of measurement context effects in multi-entity scaling of country images Agarwal et al. (1997) The findings revealed that upper-income Mexicans prefer foreign products, but this was mediated by age, education, and household size. No significant differences in malinchismo were found for gender, marital status, employment status, and for two of the lifestyle questions Personal interviews among Mexican consumers (200 in Mexico City, 100 in Monterey, and 100 in Guadalajara) representing upper-middle class socio-economic groups were conducted and, as part of the larger study, the brief ten-item CETSCALE was added to evaluate the general attitude toward imported goods To determine the degree to which upper-class Mexicans have a positive attitude toward foreign-made products, using the CETSCALE to ascertain socio-demographic characteristics associated with malinchismo and to evaluate if malinchismo influences Mexican consumers Bailey and Pineres (1997) (continued) US versus Chinese goods 789 Table I.

5 EJM 790 Table I. Authors Study objectives Research methodology Major findings Results from both countries support the CETSCALE s unidimensionality, reliability, discriminant and nomological validity. US sample had a significantly greater mean value on the scale than the Russian sample. The Russians had significantly more favorable beliefs and attitudes toward foreign products than the USA A questionnaire survey administered among 204 students, of which 144 from a major, Midwestern US university and 60 from two major universities in the Russian Federation To establish the dimensionality, reliability and validity of the CETSCALE and its related measures in both Russia and the USA and to examine the mean differences between the two countries Durvasula et al. (1997) The results invoked country images for both the country-of-brand origin and the country-ofmanufacture, and found that both cues are important in consumer evaluations of product quality, product value, and willingness-to-buy. The relative salience of the country-of-manufacture and country-of-brand origin cues were found to vary according to whether the product is a non-technical fashion product (e.g. sneakers and jeans) or it is a low-technology, technical product (e.g. stereos and watches) The study used a subjects design with price (high and low), two country-of-origin brand levels (USA and an appropriate European country) and three country-of-manufacture levels (USA, an NIC, and a developing country). A within-subject design was used not only to assess how subjects evaluated differences in price, brand origins and manufacture information, but also to exclude extraneous between-subject differences that may confound the results. Subjects were 275 undergraduate business students of a large Northeastern US city To study: (a) the impact of price, country-of-brand origin, and country-of-manufacture cues on consumer evaluations of quality and value; (b) the degree to which value perceptions follow quality considerations rather than mere price, and (c) the willingness-to-buy products that are manufactured in the NICs and developing countries Iyer and Kalita (1997) Results offered preliminary evidence that Garvin s taxonomy has met a number of key validity criteria and demonstrated its direct relevance to COO research. Results also confirmed that the adoption of Garvin s taxonomy in the COO research can facilitate A4(COO) 2 (brand) between-subject experimental design, with each respondent answering questions corresponding to only one of eight experimental situations and rating the quality of dress shirts based on Garvin s eight quality dimensions. The final sample comprised 776 consumers Li and Dant (1997) To adopt Garvin s (1984) taxonomy in conceptualizing and operationalizing product quality dimensions for COO research theory-building or generalizations across studies The results reveal that product evaluations were highest for highly-developed countries, followed by newly-industrialized, newly-marketizing, and developing-country groups. Further, the product-category and country-of-origin effects interacted, showing that, depending on the country group, different product categories received more, equal, or less favorable evaluations compared with other product categories The sample comprised 63 juniors and seniors enrolled in the business school of an East Coast US university. There were 42 females and 21 males in the sample. The subjects were asked to evaluate 18 products based on their knowledge, assuming that the products described were made in each of 21 given countries Manrai et al. (1998) To examine the effects of country of origin and product category on product evaluations for 21 countries and 18 products. Also, to assess if different product categories are evaluated differently depending on in which group of countries they are sourced (continued)

6 Authors Study objectives Research methodology Major findings The findings provide several levels of support for the animosity model of foreign product purchase. Animosity toward Japan and consumer ethnocentrism (measured by CETSCALE) were found to be distinct constructs. Discriminant validity was demonstrated, and each construct had different consequences in the model. Chinese consumers animosity toward Japan was related negatively to their willingness to purchase Japanese products, and more important, this effect was independent of their judgments about the quality of Japanese products Data for the study were collected from adult consumers in the Chinese city of Nanjing, China s 11th largest city. A total of 487 consumers were approached randomly on the street and asked to complete a survey. Solicitation was carried out at several locations around Nanjing. Of these 244 agreed to participate. Respondents were asked to indicate their agreement with statements regarding four general constructs: (a) Japanese product quality, (b) willingness to buy Japanese products, (c) consumer ethnocentrism, and (d) animosity towards Japan generally and war and economic animosity in particular Klein et al. (1998) To understand how attitude toward a country in particular, remnants of antipathy left by previous military, political, or economic conflict might affect willingness to buy its products. Specifically, to test the theory that animosity toward another nation can be an important and powerful predictor of foreign product purchase, even when this enmity is unrelated to beliefs about the quality of products produced in that country The study shows that product specific image place a mediating role between overall country image and consumer evaluation. With product and brand familiarity, moderate familiarity consumers utilize country-of-origin information less than low or high familiarity consumers. Likewise, with country familiarity, low familiarity consumers rely more on country-of-origin information than high familiarity consumers Hypotheses of the study, based on categorization theory, are developed and tested using a mail survey of a random sample of 1,536 US households, identified from a reputed vendor. A total of 16 versions of the questionnaire were mailed, each to 96 households (16 96 ¼ 1; 536) To examine the effects of grand image, country image, and familiarity with both brand and country on consumer evaluation of bi-national brands. Two sub-constructs of country image: familiarity, brand familiarity and country familiarity are identified and utilized Lee and Ganesh (1999) Results revealed that the most common source of information for evaluating products from Asian Pacific countries was experiential knowledge, coupled with opinions from friends. Among the country origins investigated, products made in Japan appeared to be liked most, while Indian products received the most negative comments. Japanese products were also ranked first in terms of overall assessment, followed by products from Hong Kong, Singapore, Indonesia and India. In general, consumer demographics did not play a serious differentiating role in the evaluation of products from these countries The study was conducted among 135 indigenous consumers from Bulgaria. The sample consisted of individuals aged 18 or above who resided in the capital of the country. The sample comprised 60 males and 75 females. Data were collected by means of personal interviews To identify: (1) the sources of information used by Bulgarian consumers evaluating products originating from Asian Pacific countries; (2) positive or negative attitude on the part of these consumers towards Asian Pacific products; and (c) their overall assessment of products made in Asia Pacific and how this differs according to the consumer demographics Leonidou et al. (1999) Salesmen ranked COO (design and assembly) as the least important attribute, but considered brand reputation to be the most important when considering purchasing electronic equipment. It was also found that consumers give the greatest importance to price followed by brand reputation and warranty in that order Using an area sampling procedure, 194 retail salesmen of electronic equipment in three Canadian cities (Montreal, Quebec and Sherbrooke) and 190 consumers in the Canadian city of Sherbrooke were surveyed To evaluate and compare consumer and salesman COO information in the context of a specific purchase, and to assess whether brand evaluations are affected by country-of-origin perceptions d Astous and Ahmed (1999) (continued) US versus Chinese goods 791 Table I.

7 EJM 792 Table I. Authors Study objectives Research methodology Major findings Results revealed the fact that a brand is manufactured in its home country lifts its quality rating significantly above the level expected based solely on brand and COP main effects. Findings illustrated the powerful impact of brand-cop congruity on consumers product evaluations. The empirical evidence also suggests that manufacturing a brand outside its home country will often have a double negative effect on consumers judgments An empirical study was conducted among consumers judgments about the quality of each of a number of products that vary systematically in terms of brand-cop congruity. A four (brands) by four (COPs) within- subjects full-factorial design was used, yielding four products with, and 12 products without, brand-cop congruity. Data were collected at the start of the ski season from a sample of 284 Austrian skiers To focus on interaction effects between brand and country of production Haubl and Elrod (1999) about the brand s quality Results suggest that country of manufacture and product quality strongly influence consumer decision making in globally available product categories. Specifically, compared with imported goods, consumers appeared to prefer domestically manufactured goods and are often willing to pay a higher price for them. It is usually only when imported goods are of significantly superior quality that consumers will pay more to obtain them Respondents in Japan evaluated the product that originated in the home country (versus foreign country) more favorably regardless of product superiority. In contrast, respondents in the USA evaluated the product that originated in the home country more favorably only when the product was superior to competition. The results are explained on the basis of the cultural principles of individualism and collectivism Results of the study suggested that country image cognitive processing is significantly more complex than previously thought, and that culture appears to play an important role in purchase decisions. The flexible model represents a substantive improvement in the depiction of cognitive processing regarding country-of-origin image A non-probability random sample among 87 shoppers at two public markets in a large US city (42 for dishes and 45 for microwave ovens). The study employed conjoint techniques and considered products from Japan to test the research hypotheses and address the related issues. Consumers were asked to select their favorites from among several product features and hypothetical, multi-attribute Knight (1999) To compare consumer preferences for goods made abroad and in the home country by both foreign and home country firms products 168 undergraduate students (86 from the US and 82 from Japan) were randomly assigned to small group sessions in a 2 (country of origin: US versus Japan) 2 (product description: superior versus inferior) between-subjects design To examine the extent to which cultural orientation influences country of origin effects on product evaluations in two countries a collectivist country (Japan) and an individualistic country (USA) Gurhan-Canli and Maheswaran (2000) A flexible model is devised and tested to represent country image processing, using data from large samples of US and Japanese consumers. The questionnaire survey produced 349 usable responses that reflected a response rate of 58 per cent Totest a new model of country-of-origin image (COI) cognitive processing which is both comprehensive and flexible and which extends and improves prior work by Han (1989) Knight and Calantone (2000) (continued)

8 Authors Study objectives Research methodology Major findings The results of the experiments supported hypothesized linkages between (a) each of the four experimentally manipulated extrinsic cues and perceived quality, (b) price and perceived sacrifice, (c) perceived quality and perceived value, and (d) perceived sacrifice and perceived value. The results also indicate that the linkages between the extrinsic cues and perceived value are mediated by perceived quality and sacrifice The study used experiments based on a between-subjects full-factorial design. The experimental manipulations involved two brand image levels (high and low), two store-image levels (high and low), two country-of-origin image levels (high and low) and three price levels (high, medium, and low). The participants in the experiment consisted of 530 undergraduate students attending a major To examine a conceptual model which suggests that quality and sacrifice perceptions mediate linkages between (a) antecedents of consumers quality and sacrifice perceptions (e.g. brand, store and price) and (b) consumers perceptions of value Teas and Agarwal (2000) The findings suggested that cultural similarity is an important consideration for highly ethnocentric consumers in the evaluation of foreign products. It was also concluded that the use of country-of-origin information may be strategically advantageous to foreign importers for countries classified as culturally Midwestern US university The values classification of Schwartz was used to establish cultural similarity and the attitudes of a representative sample of New Zealand consumers. The study used a nation-wide mail survey targeted at 1,000 New Zealanders which produced a response rate of 42 per cent To investigate the relationship between consumer ethnocentrism and consumer attitudes toward foreign manufactured products in product categories in which domestic alternatives are not available Watson and Wright (2000) similar The results showed that the country-of-origin image of NICs is less negative for technologically simpler products (i.e. televisions) than for technologically complex products (i.e. computers). In addition NICs are perceived more negatively as countries of design than as countries of assembly, especially for technologically complex products, but their negative image may be attenuated by making consumers more familiar with products made in these countries and/or by providing them with other product-related information such as brand name and warranty Results revealed that the Thai sample ranked the COO cue higher than the US sample, but neither group ranked COO as the most important attribute. All students were similar in their emphasis on color and design for clothing, and both groups chose price and brand as their key concerns for electronic goods, although ranks were inverted. Durability, then color and design were the next most important attributes for electronic goods by both groups, with COO ranked last by US students, and next to last by Thai students The study was based on the responses of 151 male consumers, residing in the Canadian city of Sherbrooke. Two product categories were chosen for the study: computers (a technologically complex product) and television (a technologically less complex product) To examine the COO perceptions of consumers in the context of increasing trade flows between North America and NICs. The study centered on an in-depth examination of consumer perceptions of products varying in their level of technological complexity Ahmed et al. (2002a, b) Data were collected using a structured questionnaire that was administered during face-to-face interviews, with 321 students (192 US and 129 Thai). Question formats included ranking of product attributes and preferred countries of origin, a dollar preference scale, and a graphic scale. Consumers were asked to plot a position for their answers To focus on consumer nationality to see how it impacts country preference and willingness to buy. Further, to study whether COO effects are not absolute for a given country Amine and Shin (2002) (continued) US versus Chinese goods 793 Table I.

9 EJM 794 Table I. Authors Study objectives Research methodology Major findings Results indicated that human values can predict better country-of-origin images than other variables. However, the predictive ability of different human values was inconsistent across the two samples, suggesting that the context within which values are developed is important. The results have provided insights into the country-of-image determinants across two culturally and economically different countries and showed that relational context is important. In addition, results provided information on the likely effects of direct contact with the country and language fluency on such evaluations The study was based on two samples of consumers, located in Turkey (303) and the Czech Republic (480) respectively. Data were collected by local collaborators using mall-intercepts in the main streets and/or squares of the respective cities main shopping districts To examine how culture may influence consumers evaluations of a country and its products that could help to better: (a) understand the controlling factors underlying a country-of-image, and (b) shape or manage the use of a product s country of origin as a marketing tool Balabanis et al. (2002) The results of the study indicated that Turkish consumers had significantly different perceptions of attributes for products coming from countries of different levels of socio-economic and technological development. It was also revealed that there were several lifestyle dimensions apparent among the Turkish consumers, which were closely correlated with their ethnocentric bases Data were collected through personal interviews in the fourth largest Turkish city of Konya, among 2,490 consumers, which has a rather cosmopolitan demographic, socio-economic and cultural makeup To investigate product-country images, lifestyles and ethnocentric behavior of Turkish consumers and provide suggestions to marketers about the implications of the study results Kaynak and Kara (2002) The results of confirmatory factor analysis of country-of-origin image perceptions regarding two different products from two different source countries endorsed the potential value of assimilation/acculturation as a segmentation dimension. Findings also indicated that the assimilation process is more gradual than can be expected based on the melting-pot theory A questionnaire survey among the adult population of a large Midwestern metropolitan area in the USA that is highly heterogeneous produced 678 usable returns. The countries represented in the sample were Mexico, Iran, Greece, Turkey, Scandinavian countries, African countries, and the USA To study the extent of assimilation evident in the adaptation to host culture country-of-origin image stereotypes Parameswaran and Pisharodi (2002) Results of the study show that when there is congruence between brand origin and country-of-manufacture (e.g. a Sony television made in Japan), the latter information has no significant effect on product beliefs and global product attitude. When country-of-manufacture information indicates that a branded product is made in a country with a less reputable image than that of the brand origin (e.g. a Sony television made in Mexico), this produces more negative effects on product evaluations for low equity brands than high equity brands An experimental design, a 2 3 between-subjects factorial design was used, with two levels of brand equity (high and low) and three levels of country-of-manufacture information (made in Japan, made in Mexico and no made-in information control). A sample of 192 undergraduate students at a major North American university participated in the study To compare the effects of country-of-manufacture information on product evaluations between high and low equity brands while controlling for the effects of brand origin (by comparing brands sharing the same national origin) Hui and Zhou (2003) Results indicated that the observed variability in preferences is linked to consumer ethnocentrism. However, the latter s capability in explaining consumer bias in favor of domestic products was found to be dependent on both the specific country of origin and the particular product category The study was based on six of the most economically developed countries and eight product categories. A self-completion questionnaire survey was administered among 465 UK consumers To examine the relationship between consumer ethnocentrism (CE), domestic country bias (DCB), and country-of-origin (COO) for different product categories and different COOs in an integrative manner Balabanis and Diamantopoulos (2004)

10 in overseas markets, and the adjustment of the marketing mix program in accordance with the perceptual and behavioral idiosyncrasies of consumers in various countries (Martin and Eroglu, 1993; Samiee, 1994)[2]. They can also have a serious effect on public export promotion programs, as demonstrated by the fact that in many countries there are special schemes aiming to improve country image in order to attract foreign direct investment and promote national exports (Balabanis et al., 2002). Although the sizeable research on country-of-origin evaluations has produced a wealth of useful knowledge on international consumer behavior, it has been criticized on several grounds[3]. One of these criticisms refers to the fact that, with a few exceptions, empirical research has independently focused on the country, product, or brand level, although there are indications that country-of-origin effects may be different at each level (Ahmed and d Astous, 1996). Another criticism, relating particularly to early studies on the subject, centers on the treatment of country-of-origin as a single cue, as opposed to the multiple dimensions of which it is composed (Bilkey and Nes, 1982; Peterson and Jolibert, 1995). A third criticism refers to the limited investigation of country-of-origin effects of products made in the so-called new manufacturing countries, like China, and their comparison with countries with a long tradition in the export of manufactured goods, like the US (Zeng and Williamson, 2003)[4]. This manuscript aims to remedy these criticisms by providing a multi-level and multi-cue comparison of US and Chinese goods, as these are perceived by British consumers[5]. Specifically, it has three major research objectives: (1) To identify differences in consumers evaluations of goods made in either the US or China at the country, industry, product, brand, and model levels. (2) To trace variations in consumers evaluations with regard to various cues characterizing US or Chinese goods. (3) To provide a comparison of consumers evaluations between US and Chinese goods at different levels of analysis and across different product cues. US versus Chinese goods 795 Following this section, the remaining parts are organized as follows:. first, the extant literature on country-of-origin effects is reviewed;. second, hypotheses corresponding to each of the three research objectives are formulated;. third, the methodology adopted in designing and executing the study is explained;. fourth, the study findings, with reference to each hypothesis, are presented, analyzed, and discussed; and. finally, several conclusions and implications are derived, while the limitations of the study, together with directions for future research, are presented. Review of the literature Country-of-origin is defined as the country where the headquarters of the company that manufactures and markets the product or brand is located (Johansson et al., 1985). Although in the past this coincided with the home country of the company, the recent trend by multinational firms to identify more cost-effective geographic locations for

11 EJM 796 manufacturing, designing, assembling, and producing parts for their products, has been responsible for the introduction of more specialized terms, such as country-of-manufacture (Iyer and Kalita, 1997), country-of-design (Chao, 1998), country-of-assembly (Ahmed and d Astous, 1996), and country-of-parts (Ulgado and Lee, 1993). Country-of-origin is a complex phenomenon, which was found to affect product evaluations at the country, product category, individual product, or brand level (Bilkey and Nes, 1982; Al-Sulaiti and Baker, 1998). This may act as an intangible inhibitor (or facilitator) for a firm to enter international markets, because of the negative (or positive) bias toward certain imported goods by consumers residing in foreign countries (Wang and Lamb, 1983; Schooler et al., 1987). From an information theoretical perspective, consumers evaluate a product on the basis of both intrinsic (e.g. taste, design, fit) and extrinsic (e.g. price, brand, warranty) cues (Szybillo and Jacoby, 1974). Country-of-origin is regarded as an extrinsic cue an intangible product attribute, which is widely used by consumers, especially when they have only limited familiarity with products of foreign origin (Han, 1988; Han and Terpstra, 1988; Hanne, 1996). This is because, in the absence of information about tangible traits of products, consumers tend to rely on extrinsic cues as indirect indicators of quality and risk (Han, 1988; Papadopoulos and Heslop, 1993; Maheswaran, 1994). Hence, country-of-origin is not merely a cognitive cue providing, for example, a signal of product quality, but is also an affective one with a symbolic and emotional meaning, in the sense that it relates to the identity, pride, and memories of consumers (Batra et al., 1999). Apart from cognitive and affective aspects, country-of-origin also has normative connotations, in the sense that the consumer s decision to purchase or avoid buying a country s products can be regarded as a vote in favor or against the policies, practices, or actions of a country (Verlegh and Steenkamp, 1999). In fact, consumers can reward sympathetic countries by purchasing their products (buycott), but punish antipathetic countries by refraining from buying their goods (boycott) (Smith, 1993). Another common salient norm of country-of-origin relates to the consumer s inclination to purchase domestic, as opposed to foreign, products, which is largely based on consumers judgment of the morality of purchasing foreign-made goods (Shimp and Sharma, 1987). This norm is usually harnessed by the buy domestic campaigns sponsored by governments, employers associations, and trade unions in several countries. The convergence of opinion among researchers in the field is that country-of-origin effects on product evaluations can occur in two different ways: halo and summary (Han, 1989). Under the halo hypothesis, consumers make inferences about product quality from the image they have of its country-of-origin, which in turn indirectly forms positive or negative consumer attitudes through product attribute rating (country image! beliefs! brand attitude). In the summary hypothesis, consumers make abstractions of the product information into a country image[6], which subsequently directly affects consumer attitude toward a brand (beliefs! country image! brand attitude). Thus, whatever the mechanism adopted, country-of-origin leads to a greater cognitive elaboration about tangible product attributes, thus shaping consumer attitude and intention to purchase (Cordell, 1992; Verlegh and Steenkamp, 1999). Country-of-origin has a risk element, this being measured in terms of performance, financial, or social risk associated with the purchase and use of the foreign product by the consumer in the foreign country (Cordell, 1992; Amine and Shin, 2002; Ahmed et al.,

12 2002a, b). Products made in countries characterized by high-risk cause consumers to spend more time and effort in evaluating its attributes and performance before taking a final decision (Alden, 1993). Moreover, in high-risk countries, it is more likely for the consumer to form a negative attitude about the product, which will subsequently reduce his/her willingness to buy it (Thorelli et al., 1989). Furthermore, there are indications that products made in more-developed countries are considered less risky, compared to their counterparts manufactured in less-developed countries (Hampton, 1977). The effects of country-of-origin on consumer behavior tend to vary from country to country, due to differences in economic, socio-cultural, political-legal, and other factors (Cattin et al., 1982). Within a specific country, they also tend to vary by time, because of changes in marketing sophistication, degree of industrialization, and lifestyle patterns (Papadopoulos and Heslop, 1993). Consumers also have different attitudes toward various product categories from a given country, this being the result of the existence of associations/previous experience with the foreign country, beliefs about its manufacturing system, knowledge about specific brands, and so on (Etzel and Walker, 1974; Kaynak and Cavusgil, 1983; Roth and Romeo, 1992). Notably, the nature of the product seems to play an important moderating role in shaping consumer evaluations based on country-of-origin information: the greater the degree of involvement in the buying-decision process for a specific product, the more likely it is for the consumer to use country-of-origin information in his/her evaluation (Johansson, 1993). Consumer demographics also have a moderating impact on country-of-origin responses. The relationship of gender with country-of-origin evaluations showed relatively consistent results, with female consumers generally evaluating foreign products more favorably compared to males (Schooler, 1971; Dornoff et al., 1974). Age was found to be strongly correlated with country-of-origin perceptions, with older persons inclining to evaluate foreign products more positively compared to younger persons (Schooler, 1971; Smith, 1993). With regard to education, most studies have established that the higher the level of education reached by consumers, the more positive the attitude toward imported products (Anderson and Cunningham, 1972; Schooler, 1971; Dornoff et al., 1974; Wall and Heslop, 1986). Income level was also shown to be associated with consumer attitudes toward foreign products, with the better-off more positively predisposed to foreign products, as opposed to lower income groups (Wall et al., 1990). Finally, the psychographic characteristics of consumers were found to influence country-of-origin evaluations. For instance, people who are very dogmatic tend to have a less favorable attitude toward foreign products (Anderson and Cunningham, 1972). Conservatism (as opposed to liberalism) was also inversely associated with positive foreign product evaluation (Anderson and Cunningham, 1972). Individuals who are strongly concerned about their status were found to show a greater preference for foreign-made products (Anderson and Cunningham, 1972). US versus Chinese goods 797 Research hypotheses This section develops the research hypotheses corresponding to each of the set research objectives in a systematic way, based on theoretical argumentation and empirical evidence extracted from country-of-origin literature.

13 EJM 798 Country-of-origin as a multi-level phenomenon Country-of-origin evaluations have traditionally centered on consumers general perceptions of products manufactured in a specific foreign country. In this way, country-of-origin comprises perceptions formulated at the country, industry, product, brand, or model levels. However, it is important to draw a distinction between country-of-origin effects at each level, mainly because each represents a different chunk of information with a different impact on consumer perceptions (Cordell, 1992; Samiee, 1994). In fact, the more specific the level of the country-of-origin analysis, the larger the chunk of available information with a more precise meaning, and the greater the likelihood of variations in consumer evaluations (Han, 1989). For instance, as opposed to the country level, the brand may be a more powerful summary construct, because of its association with more information about the quality, price, warranty, and other characteristics of the product (Dodds et al., 1991; Ettensen, 1993; Tse and Gorn, 1993; Lin and Sternquist, 1994). Thus, a strong brand may overshadow the country-of-origin effects identified at the country level, although the opposite may occur in the case of a weak brand (Ahmed and d Astous, 1993; Kim, 1996). This is because consumer evaluations will be influenced by such factors as awareness of, knowledge of, or loyalty to brand (Ettensen and Gaeth, 1991). In any case, one would expect differences in consumer evaluations of a foreign product before and after its brand name is disclosed, mainly because the brand itself is an important source of origin information (Johansson, 1993; Leclerc et al., 1994; Thakor and Kohli, 1996). In a similar vein, country-of-origin perceptions may also differ between the country and the industry level, between the industry and the individual product level, as well as any other level of analysis. Country-of-origin effects are also expected to vary in the case of imaginary, as opposed to actual, models (Bilkey and Nes, 1982). This is because perceptions of the origin of a product tend to vary according to whether the consumer is unaware, aware, or knowledgeable about a product/brand. These differences in country-of-origin evaluations across different levels of analysis are expected to exist irrespective of the country evaluated, that is, whether the US or China, because in both cases consumers make use of an increasing amount of information as the analysis becomes more specific. Based on the previous argumentation, we may hypothesize the following: H1a. There are significant differences in the evaluation of cues for goods made in the US by British consumers among different levels of analysis, namely country, industry, product, brand, and model. H1b. There are significant differences in the evaluation of cues for goods made in China by British consumers among different levels of analysis, namely country, industry, product, brand, and model. Country-of-origin as a multi-dimensional construct Country-of-origin has been characterized as a multi-dimensional construct, which spans the range of all salient product cues with varying degrees of importance (Cordell, 1992; Samiee, 1994). These cues are used by consumers when forming attitudes and beliefs about a foreign product, which subsequently affects their behavior with respect to it. Such cues include, for example, product design, technological advancement, product quality, price attractiveness, product availability, and brand recognition (Kim and Chung, 1997). Thus, country-of-origin is associated with numerous cues that are

14 perceived and interpreted differently by individuals within a specific country. In fact, these cues tend to be evaluated by consumers in a different way for each foreign country, this being the outcome of contacts, associations with, or previous experiences of the country, its people, and its products (Eroglu and Machleit, 1989; Hanne, 1996). Country-of-origin evaluations consist of positive evaluations for certain cues and negative evaluations for others, the combined effect of which conveys the image of a specific product. Moreover, the significance of each product cue for the consumer tends to change over time, due to increased exposure to a foreign country, information received from various sources, or an actual improvement/deterioration in goods in the source country (Nagashima, 1970, 1977). Furthermore, consumer attitudes toward country-of-origin tend to be influenced by various marketing tools, such as aggressive promotion, attractive store presentation, and price concessions (Chao, 1998). Firms originating from more-developed economies, like the US, are in a better position to provide adequate marketing support for their products abroad, as opposed to their counterparts from less-developed countries, like China, which lack proper management and marketing skills (Zhang, 2002; Dollan and Hardy, 2002). However, as opposed to US-made goods, Chinese products have the advantage of being sold at a lower price, due to the cheap labor force, abundance of raw materials, and government subsidies (Zhang, 2002). The different emphasis attached by consumers to each cue is expected to prevail at different levels of analysis (i.e. country, industry, product, brand, and model), irrespective of country. The previous discussion leads to the following propositions: H2a. There are significant differences among the evaluations of British consumers of the various cues of goods made in the US at the country, industry, product, brand, or model levels. H2b. There are significant differences among the evaluations of British consumers of the various cues of goods made in China at the country, industry, product, brand, or model levels. US versus Chinese goods 799 Country-of-origin and environmental similarity Country-of-origin evaluations seem to be affected by the similarity perceived by consumers with their home countries in terms of economic, socio-cultural, political-legal, and other environmental aspects (Papadopoulos et al. 1990a, b). Moreover, empirical evidence have shown that there is a positive relationship between product evaluations and degree of economic development, with products made in less-developed countries usually rated by consumers as inferior to those manufactured in more-developed countries (Schooler, 1971; Hampton, 1977; Wang and Lamb, 1983; Bannister and Saunders, 1978). This is more likely to be the case of products with a large technological content, as well as those requiring a high level of consumer involvement. Even new manufacturing countries, like China, often have a reputation for lower quality, despite efforts to imitate the products of more-developed countries, like the US, which have a long-established and a widely-proliferated manufacturing sector (Zhang, 2002; Dollan and Hardy, 2002). This can be attributed to the fact that industrialized countries have long histories in the manufacture of quality products, are the source of most innovations, and have expertise in producing a wide variety of technologically advanced goods (Nagashima, 1970; Gaedeke, 1973; Etzel and Walker, 1974). Socio-cultural similarity between a purchasing country and a selling country