Extending the view of brand alliance effects An integrative examination of the role of country of origin

Transcription

1 The current issue and full text archive of this journal is available at wwwemeraldinsightcom/ htm An integrative examination of the role of country of origin Christian Bluemelhuber Solvay Business School, Université Libre de Bruxelles, Belgium Larry L Carter Old Dominion University, Norfolk, Virginia, USA, and C Jay Lambe Albers School of Business and Economics, Seattle University, Washington, USA 427 Abstract Purpose The purpose of this paper is to broaden the external validity of the brand alliance theory, as it is set up by Simonin and Ruth, by analysing transnational brand alliances It aims to discuss the significance of country of origin in this context Design/methodology/approach Based on a broad literature review of the brand alliance and country of origin literature the authors conducted an empirical study that examined consumer attitudes towards cross-national brand alliances Findings The findings demonstrate the role that the relationship between country of origin fit and brand fit plays in predicting consumer attitude towards cross-border brand alliances; and that when brand familiarity decreases, the positive influence of country of origin fit on attitudes towards the brand alliance increases, and is greater than that of brand fit Research limitations/implications The degree of importance that consumers place on each product in the brand alliance was not taken into account Future research could also analyse product categories that have strong country of origin associations (eg German beer or French pastries) or that belong to the low involvement category Practical implications An interesting result for managers when they set up a cross-national brand alliance, as the study demonstrates the importance of brand familiarity and of country of origin fit Originality/value The findings replicate those of Simonin and Ruth, which is a useful result because their findings might be attributed also to cross-boarder alliances The study represents a noteworthy extension of previous research by introducing a new variable, the country of origin fit Keywords Country of origin, Brands, Strategic alliances Paper type Research paper As globalization continues to elevate competition in the marketplace, product introduction has become highly fraught with risk One cause of such risk is the incredibly high cost of building brands for (new) products, which in some cases can exceed $100 million (Khermouch et al, 2001; Voss and Gammoh, 2004) Therefore, to reduce the risk associated with brand building, firms are turning to brand extensions, line extensions, and other new product strategies that allow them to leverage existing brand equity with their new products However, triggered by alarming studies on possible harmful effects of these extensions on family brands (Loken and International Marketing Review Vol 24 No 4, 2007 pp q Emerald Group Publishing Limited DOI /

2 IMR 24,4 428 Roedder John, 1993; Romeo, 1991), new approaches have recently caught marketers attention One of these approaches are brand alliances, which are to be examined in this paper Defined as the short- or long-term association or combination of two or more individual brands, products, and/or other distinctive proprietary assets (Simonin and Ruth, 1998, p 30; Rao et al, 1999, p 259; Abratt and Motlana, 2002, p 43), in today s world brand alliances are an often chosen strategic option that take a variety of forms ranging from ingredient branding (Venkatesh and Mahajan, 1996), to simple advertising alliances (Samu et al, 1999) Prominent examples of such brand collaborations are found throughout consumers daily life spanning such diverse industries as airlines (eg Star Alliance), high technology (eg Sony Ericsson mobile phones), the automobile industry (eg Mercedes cars with Bridgestone tires), fast moving consumer goods (eg Katjes sweets with MTV), services (eg the Amex-Card by Air Brussels), and the fashion industry (eg Adidas designer sneakers co-branded by Yohji Yamamoto) Although brand alliances offer tremendous potential business performance advantages afforded by leveraging extant brand equity, they must be used with caution since an ill-conceived brand alliance, or a brand alliance that performs poorly, can significantly damage a firm s brand equity For example, BenQ lost brand equity because of an alliance with Siemens (Siemens BenQ) and Apple s and Dell s brand equity is expected to suffer because they had to recall millions of laptop batteries that were provided by their Japanese partner Sony Further, brand alliances are highly complex because they not only involve a multitude of branding considerations, but also all of the additional interfirm relationship factors that must be accounted for when firms ally with each other (Lambe, 2001; Lambe et al, 2002) As they offer significant competitive advantage potential, yet must be used with caution, and are highly complex brand alliances are a growing area of research investigation However, despite the increased research energy directed toward brand alliances, significant gaps remain about the circumstances under which a brand alliance strategy is appropriate, and the factors that influence brand alliance performance and success (Rao and Ruekert, 1994; Voss and Gammoh, 2004) Here, a notable example of such a knowledge gap can be found in cross-border brand alliances, a branding strategy that is increasingly employed by firms in an effort to address growing market globalization (Lee and Brinberg, 1995), yet a strategy that on the whole has had mixed results (Voss and Tansuhaj, 1999) Cross-border or transnational brand alliances like Fujitsu-Siemens & Intel, Adidas & Yamamoto or SonyEricsson are a specific form of brand alliances where one of the firms is headquartered in a different country than that of the host country firm and market Such a transnational brand alliance allows firms to permit marketing and learning beyond the domestic market scale while maintaining a high level of local responsiveness (Cooke and Ryan, 2000) Both parties can benefit by increasing the success rate of the product offering within local markets and strengthening the local brand, through technology transfer and foreign investment from its brand ally (Abratt and Motlana, 2002) Since, the firms in the alliance are from different countries, such an arrangement suggests that country of origin effects are in play These country of origin effects are generally defined as the impact which generalisations and perceptions about a country have on a person s evaluations of the country s products and/or brands Thus, it is posited that the image a person has about a country and its product

3 offerings influence buying intention (Lampert and Jaffe, 1998, p 61) Given this description, cross-border brand alliances pose additional challenges beyond purely domestic brand alliances Brand owners must consider the brand associations from both a local and global perspective, and the potential effect that such extended associations have on both the performance of a brand alliance, and each firm s brand However, though it seems likely that country of origin plays a significant, and perhaps central, role in the success of a product offered by a cross-border brand alliance, surprisingly the influence of country of origin in such a context has not yet been systematically examined Following the two kinds of research (Ehrenberg, 2002, p 37), namely repetition and innovation, the purpose of our study is twofold First, building upon traditional literature, we ask whether Simonin and Ruth s (1998) main findings can be hold up in the context of cross-boarder brand alliances Hence, we submit their work to a test of replication using a sub-set of their instruments for antecedents that influence consumer attitudes about a brand alliance in a comparable but different context Second, we extend the literature by exploring the role of country of origin within these antecedent influences on consumer attitude towards cross-border brand alliances As previous studies have demonstrated that consumers use country of origin information to develop product evaluations and form attitudes toward the product or brand (eg Ahmed and d Astous, 1996; Chawla et al, 1995; Han and Terpstra, 1988; Johansson et al, 1985), we propose that country of origin fit is an important determinant of consumer attitude towards this type of brand alliance Thus, our study can help marketers better determine conditions under which cross-border brand alliances will be favourably evaluated, and, in the process of doing so extends the central work of Simonin and Ruth (1998) 429 Background on brand alliances The foundation for this research lies within Simonin and Ruth s (1998) framework for evaluating consumer attitude towards a brand alliance The authors propose several factors that influence the favourableness of these attitudes and evaluate possible carryover effects toward consumer post-attitudes (attitudes toward each brand after exposure to the brand alliance) In addition to preexisting consumer attitude towards the brands, Simonin and Ruth suggest brand and product fit as two additional predictors of consumer attitudes towards the brand alliance: while product fit is referred to as the consumer s perception of the compatibility between the two product categories and tends to be analysed at a functional level (ie comparing the compatibility of each product s utility), brand fit is generally a quality-based assessment (ie comparing the level of quality for each brand) Brand fit refers to the consumer s perception of brand image cohesiveness and associative consistency between the brands of the marketing alliance (Simonin and Ruth, 1998; Park et al, 1996) The process of evaluating a brand typically evokes certain brand-specific associations stored within the consumer s memory that make up an overall brand image (Broniarczyk and Alba, 1994) These brand-specific associations include attributes that help consumers differentiate a brand from other competing brands, increasing the recallability of the brand over its competitors (MacInnis and Nakamoto, 1990) By comparing these associations for similarities across the partner brands a level of brand fit can be determined by the consumer For example, an alliance between

4 IMR 24,4 430 Rolex and Taco Bell would most likely elicit a perception of bad brand fit, since Rolex is associated with high quality products and exquisite taste while Taco Bell is known for inexpensive and hastily prepared food products Keller (1993) suggests that the different types of brand associations may include product-related and non-product-related attributes, consumers overall brand attitudes, and functional, experiential, or symbolic benefits of the brand Owing to the constantly changing nature of the market, consumers are forced to operate in a state of imperfect information In many situations, consumers existing brand associations are deficient in some way, therefore secondary brand associations may be leveraged to form the associations needed to bolster brand image (Keller, 2003a, b) According to Keller, secondary associations are established by linking the brand to information that is not directly related to the product or service By identifying the brand with this other entity, consumers may infer shared associations between the entity and the brand, leading to a transfer of global associations or specific attributes related to the product or service meaning Secondary associations are generally formulated through primary attribute associations that relate, eg to the company, the distribution channels, a spokesperson or endorser of the product, an event or cause, and the country of origin (Keller, 1993, 2003b) Background on country of origin Country of origin is considered as one of the initial constructs identified within business research as an important factor of marketing foreign products (Nagashima, 1977; Schooler, 1971) Research efforts have since been directed towards the effects of country of origin image upon consumers product evaluations, attitudes toward the product and purchase intentions The notion that country of origin information serves as an indicator for the quality of products from a country is strongly supported through research results (Gürhan-Canli and Maheswaran, 2000; Hong and Wyer, 1989, 1990; Hui and Zhou, 2001, 2002; Kaynak and Kara, 2002; Klein et al, 1998; Roth and Romeo, 1992) Although consumers use country of origin to infer the overall quality of goods within a particular product category (eg the relative superiority of Japanese electronics, French wines, Belgium chocolate, US action movies, and German automobiles), there is much debate about the: relative importance of country of origin with respect to other types of product information; and importance of country of origin information across product categories Following the literature, we cannot give a clear answer to the question whether country of origin has a stronger impact upon consumer evaluations of products than product attributes, or not On the one hand, we have results from Hong and Wyer (1989) and Okechuku and Onyemah (1999), who posit that the effects of country of origin and brand image upon consumer product evaluations are stronger than the consumers evaluations of the product s attributes However, others, like Elliott and Cameron (1994) contradict this suggestion, when they found out, that country of origin is the least important product attribute when determining consumer product evaluations, as product quality and price takes precedence in affecting these evaluations Studies have also found that country of origin effects may vary significantly across specific product categories For example, Huddleston et al (2001) stipulate that,

5 although country of origin image directly influences consumers product evaluations, this influence is substantially stronger for products that are not necessary for daily living Schweiger et al (1995) contend that the effect of country of origin upon consumer product evaluations is moderated by the perceived technical complexity of the product category Zhang (1996) reinforces the importance of product categories by arguing that the influence of country of origin image upon consumers evaluations of, attitudes toward, and purchases of foreign products is moderated by both product type and presentation format Despite these controversial and brand-specific results, country of origin remains an important and relevant topic within business research Within today s globalized market environment, country of origin information can be considered as an important secondary brand association (Keller, 1993, 2003b), as: It is generally available to consumers through business publications, databases, but also via word of mouth and/or discussions on the web It is trivial to state that the customer must be aware of the information in order to integrate this information in her associative network Following the constructivist approach of the branding literature, perception, awareness and recall of the country of origin information is essential for its impact More and more publications provide this information, as global issues are discussed broadly It allows customers to simplify the construction of their brand evaluation, especially in the absence of primary brand associations Country of origin information provides a heuristic basis for inferring the product quality without considering other attribute information (Hong and Wyer, 1989) Consumers, as cognitive misers, prefer shortcuts (or signals) for evaluating a product and therefore use country of origin as an overall basis for judging product quality (Gürhan-Canli and Maheswaran, 2000) 431 From the organization s perspective, a company may wish to accentuate their brand s country of origin if consumers can infer specific beliefs and evaluations from this association (Erickson et al, 1984; Hong and Wyer, 1989, 1990) Hypotheses As already stated, our contribution is twofold We will start with a replication of Simonin and Ruth s generally-accepted baseline model of brand and then, in a second step, extend this study by introducing a new concept, the country of origin fit Replicated hypotheses: antecedents of consumer attitudes towards brand alliances Simonin and Ruth s (1998) discussed: the attitudes towards the brands (consumer attitudes towards brand A and B prior to the brand alliance); the product fit (the consumer s perception of the compatibility between the two product categories, irrespective of the brands); and the brand fit (the consumer s perception of brand image cohesiveness and associative consistency between the brands of the marketing alliance) as the key antecedents of consumer attitudes towards a brand alliance

6 IMR 24,4 432 While these variables are posited to have a main effect upon consumer attitudes toward the brand alliance, brand familiarity does not directly affect the outcome variable We test these hypotheses again in a purely cross-border brand alliance context (Figure 1): H1 Consumer attitudes towards the brands (A and B) are positively related to consumer attitudes about a cross-border brand alliance H2 Product fit is positively related to consumer attitudes about a cross-border brand alliance H3 Brand fit is positively related to consumer attitudes about a cross-border brand alliance H4 Brand familiarity does not directly affect consumer attitudes about a cross-border brand alliance Extension hypotheses: country of origin and consumer attitudes about brand alliances As already discussed, previous research suggests that country of origin has a profound effect on product evaluations through consumers use of the information to stereotype (Maheswaran, 1994) the overall quality of the goods from that product category Many countries have established a belief of expertise among consumers in certain product categories and have conveyed a particular image of quality and superiority Choosing brands with strong national ties may reflect a deliberate decision to maximise product utility and communicate self-image based on what consumers Attitude towards Brand A Attitude towards Brand B Product Fit Attitude towards Cross-Border Brand Alliance of A and B Brand Fit Figure 1 Framework for consumer attitude towards cross-border brand alliances Country of Origin Fit Moderating Effect of Brand Familiarity

7 believe about products from those countries Thus, a number of brands are able to create a strong point of difference in part because of consumers identification of and beliefs about the country of origin (Keller, 2003a, p 355) Following suit with the notion of fit from previous literature (Aaker and Keller, 1990; Harlam et al, 1995; Park et al, 1991; Simonin and Ruth, 1998), we introduce a new variable that reflects the impact of country of origin in evaluating a brand alliance, namely the country of origin fit This variable is described as the consumer s perception of the overall compatibility of the two countries of origin involved in the brand alliance Compatibility is assessed by comparing the consumer s overall perceptions of the countries ability to produce quality goods within their respective product category For example, assume that a consumer is evaluating a brand alliance that involves a Bulgarian Skiwear label and an American fabrics manufacturer When analysing country of origin information, the consumer will rely on his or her perception of the overall quality of skiwear made in Bulgaria and high-tech breathable fabrics made in the USA If there is an inconsistency within this country of origin fit, the consumer may either weigh each country in terms of relative importance to the brand alliance or simply view the alliance unfavourably due to its dissimilarities of perceived product quality of the brands Therefore, and based on information integration theory (Anderson, 1981), we posit, that country of origin fit will directly influence consumer attitude towards a cross-border brand alliance for specific product categories: H5 Country of origin fit is positively related to consumer attitudes about a cross-border brand alliance As stated by Holt (2004, p 4), there is no room for one-size-fits-all -models in brand research and management All brands and brand alliances are not alike Previous research has shown that brand familiarity serves as an important moderator between consumer attitudes toward brands and their effect upon the brand alliance of these brands (Lukas et al, 2005; Simonin and Ruth, 1998) Therefore, we propose that the main effect of country of origin fit will be qualified by an interaction effect with brand familiarity We assume that consumers having higher levels of brand familiarity will have more developed brand associations with the familiar brand According to the hierarchy of brand associations (Aaker and Keller, 1990), the primary brand associations (eg brand- and product-related attributes, benefits, and attitudes) take precedence over secondary brand associations, like country of origin Consumers who are highly familiar with the brands are expected to compare the primary associations of each brand for fit prior to comparing country of origin information Within this condition, the effect of country of origin fit will be dominated by the stronger effect of brand fit upon consumer attitude towards the brand alliance Since, both brand fit and country of origin fit are both quality-based assessments, country of origin fit serves as a component of the overall brand fit for consumer evaluations of familiar brands Therefore, the effects of country of origin fit is expected to be mediated by brand fit under conditions of high brand familiarity, thus indirectly influencing consumer attitude towards the brand alliance While consumers with more brand familiarity tend to evaluate products based on attribute information, brand novices engage in a more wholistic approach by using limited information to help summarise their product evaluations (Han, 1989) Given that country of origin information tends to be more stereotypical in nature, it provides 433

8 IMR 24,4 434 brand novices a logical heuristic for evaluating across a product category, which leads to its influence towards forming brand attitudes Therefore, country of origin fit is posited to have more influence upon brand alliance evaluations than brand fit in situations where the consumer harbors low brand familiarity The mediation of brand fit between country of origin fit and consumer attitudes toward the brand alliance should not exist, therefore country of origin fit is expected to directly influence these attitudes toward the brand alliance: H6 Under conditions of high-brand familiarity brand fit mediates to a greater extent the degree to which country of origin fit is positively related to consumer attitudes about a cross-border brand alliance than it does under conditions of low-brand familiarity Study Our study examined consumer attitude towards a brand alliance consisting of a joint venture between a car brand and a stereo brand The decision to present this type of brand alliance was based on two precepts: (1) the alliance is realistic and products involved are of relative interest to the subject pool used; and (2) the alliance is comparable to the brand alliance presented in the study providing the theoretical foundation for this study (Baumgarth, 2004; Carter et al, 2002; Simonin and Ruth, 1998) To test the conceptual model and especially the moderating effects of brand familiarity, various levels of brand familiarity of at least one of the brands were needed Therefore, and to provide the study with genuine existing brand effects we decided to use real brands in the familiar conditions Fictitious brands were used in the unfamiliar conditions to ensure low levels of familiarity of these brands among the subjects Selection of stimuli Various levels of brand familiarity, country of origin fit and brand fit must be established in the study to compare the effects of each level on consumer attitude towards the brand alliance A pretest (Pretest A) was conducted to determine countries of origin for car and stereo brands that have high levels of familiarity among the subject pool of marketing undergraduates Pretest subjects (n ¼ 42) recruited at a major university were asked to list all countries which they felt made the highest and lowest quality vehicles overall After each list was completed, they were asked to prioritise the list by rating the countries of origin and providing brand examples for each listed country This procedure was repeated for high and low quality stereo systems In accordance with the literature (Nebenzahl and Jaffé 1989; Usnier and Lee, 2005) our respondents identified Germany among their top two choices for countries that produced the highest quality vehicles (29 respondents) and South Korea (13 students) as country producing the lowest quality automobiles BMW from Germany and Kia from South Korea were selected as the best examples of high/low quality car brands As for stereo systems, the top high-quality country of origin was Japan, accounting for 29 student votes The Japanese brand, Sony, was selected as the best example of high-quality stereos The lowest-quality country of origin identified by the pretest

9 respondents was Canada (earning 16 student votes) followed by Mexico and the USA The Canadian firm, Apex, was identified as the best example within this category Although the pretest identified the USA as a country that produces poor-quality automobiles (according to 11 respondents), and stereos (from 10 respondents) we did not include US brands in our study to alleviate potential ethnocentrism or home-country bias (Watson and Wright, 2000) due to the recent resurgence of American patriotism and national pride In summary, the pretest served its function by providing the car brands, stereo brands, and countries of origin for each product category used within the main study to ensure distinct levels of brand familiarity 435 Replication considerations We chose to conduct a close (Lindsay and Ehrenberg, 1993) but extended (Brown and Coney, 1976) replication, using a similar methodology and a similar, but different context With this kind of replication, a researcher does not expect different results, but rather attempts to determine whether a theory has the potential to be more widely generalisable (Lindsay and Ehrenberg, 1993, p 220) The new setting we introduced, was to examine the proposed relationships of key determinants of consumer attitudes toward brand alliances (and the moderating effect of brand familiarity on these relationships) in a cross-border brand alliance context This research provides a solid foundation for anticipating that the same relational dynamics will be found, regardless of the national composition of the brand alliance Though the conditions of any replication will vary in many ways from those of the original study (Lindsay and Ehrenberg, 1993), we sought to follow the methodological guidelines, set by Simonin and Ruth (1998) as closely as possible Dependent on and following our research interests, some variances were necessary We eliminated the use of US brands as stimuli, substituted microprocessor chips with integrated audio stereo systems (same variation as Baumgarth, 2004), and adopted a subset of the measures used by Simonin and Ruth (1998) by not measuring the post-brand alliance attitudes of consumers to assess spillover effects These procedural modifications of the Simonin and Ruth study were made to address our objectives and control for specific extraneous influences, but are not expected to account for significant variance from prior results Our expectation is based on the results of Baumgarths (2004) study that attested the original Simonin and Ruth study a high internal and external validity It is important to note here that though Baumgarth (2004) used cross-national brand alliances (eg BMW and Bang and Olufsen; Kellog s and Milka) as stimuli, he did not take this fact into account and did not analyse the impact of country of origin Study design Respondents (n ¼ 128) for the main study were undergraduate students from a major American university Each subject was randomly assigned to one of eight brand alliances differentiated by the car brand and stereo brand The respondent received the stimulus material as a print advertisement in its preliminary stages of development to decrease advertisement-based evaluation effects (Simonin and Ruth, 1998, p 35) The car brands used BMW (from Germany) and Kia (from South Korea) were held at a relatively constant level of high familiarity as a control while the stereo brands (Sony (from Japan), Apex (from Canada) and the fictitious brand name, Star Audio) varied in terms of brand familiarity Star Audio was associated with either Japan or

10 IMR 24,4 436 Mexico as its country of origin to allow for variations in consumers perceptions of product quality based on the country of origin Japan was presented as the country generally known for producing high quality stereo systems, while Mexico was used as the country known for poor quality stereo equipment The brand name Star Audio was represented for both countries to control for biases resulting from potential brand name assertions or existing discriminations A pretest (Pretest 2, n ¼ 8, McCracken, 1988) was conducted to ascertain the appropriateness of the name No respondent has heard this name before, could link the name to a special country, and had any (positive) connotations because of the brand name ( Star ) Respondents were given a booklet of marketing materials that included the stimulus embedded within the questionnaire They first answered a series of questions regarding familiarity with and attitude towards both brands and their countries of origin, as well as relevant fit perceptions After completing an unrelated cognitive task that lasted approximately seven minutes, the respondents observed the target stimulus They viewed the stimulus concerning the brand alliance between the car brand and the stereo brand and followed up by answering questions about their attitude towards the brand alliance, brand fit, product fit, country of origin fit, and general demographics For participating in the study, the respondents received extra credit towards a required undergraduate course they were currently enrolled in All measures were assessed through seven-point bipolar semantic differential scales Building on Simonin and Ruth s (1998) model, consumer attitude towards the brand alliance was the dependent variable, while product fit, brand fit, country of origin fit, and consumer attitude towards each brand were the independent variables Measures of attitude towards each partner brand and the brand alliance were anchored by negative/positive unfavourable/favourable and bad/good (Osgood et al, 1957) Brand fit, product fit, and country of origin fit were grounded by is/is not consistent and is/is not complementary (Aaker and Keller, 1990) Brand familiarity was measured by the degree to which respondents were familiar/unfamiliar recognized/did not recognize and had heard of/had not heard of the brand before (Simonin and Ruth, 1998) Cronbach s a is 098 for attitude towards the car brand, 098 for attitude towards the stereo brand, 095 for product fit, 092 for brand fit, 095 for country of origin fit, 098 for brand familiarity, and 095 for consumer attitude towards the brand alliance Consistent with the pretest results, car brand familiarity was uniformly high (M ¼ 578, SD ¼ 113) and stereo brand familiarity was variable (M ¼ 369, SD ¼ 251) Following Simonin and Ruth s (1998) methodology, a median split was used to divide the sample into two groups on the basis of stereo brand familiarity to develop a two-group comparison of brand familiarity conditions (M high ¼ 5867, SD high ¼ 1217, M low ¼ 1504, SD high ¼ 1235) Statistical comparisons were made of the data under conditions of high brand familiarity, low brand familiarity, and across both familiarity levels to assess brand familiarity s moderating effect in the model Results To test the hypotheses, multiple regressions were used to analyse the relationships between the predictor and the outcome (consumer attitude towards the brand alliance) variables (Table I) An interaction term, country of origin fit by brand familiarity, was created to test for moderation (Baron and Kenny, 1986) between the two variables (Table II)

11 Overall, the predictors explained a substantial amount of variance in the outcome variable (R 2 ¼ 0538) Attitude towards car brand, attitude towards stereo brand, brand fit, and country of origin fit were significant at the 005 level Product fit was marginally significant with a p-value of 0073 and brand familiarity was insignificant with a p-value of 0662 Thus, H1, H3, H4,andH5 are fully supported while H2 is only supported at the 01 level Country of origin information is hypothesized to have different influences on consumer attitude towards the brand alliance, depending on the level of brand familiarity that the consumer possesses at the time of the alliance evaluation Accordingly, H6 proposes that brand fit mediates this relationship under high brand familiarity conditions The series of regression analyses recommended by Baron and Kenny (1986) was conducted to test this hypothesis First, country of origin fit s (ie the independent variable) influence on brand fit (ie the mediator) was statistically significant with a reported beta weight of 0491 and p-value of 0000 Secondly, country of origin fit s influence on consumer attitude towards the brand alliance (ie the dependent variable) was significant with a beta weight of 0339 and a p-value of 0006 Finally, when both variables are regressed onto the dependent variable, the brand fit was significant with a beta weight of 0559 and a p-value of 0000 Brand fit also reduced the influence of the independent variable, country of origin fit The beta weight of 437 Predictor Items a b t-value p-value Attitude towards the car brand ** Attitude towards the stereo brand ** Product fit * Brand fit ** Country of origin fit ** Stereo brand familiarity Notes: ** Denotes significance at the 005 level; * denotes significance at the 010 level Table I Regressions of determinants of consumer attitudes b t-value p-value High brand familiarity condition COO fit (onto brand fit) ** COO fit (onto attitude towards the brand alliance) ** COO fit (with both regressors included in the equation) Brand fit (with both regressors included) ** Low brand familiarity condition COO fit (onto brand fit) ** COO fit (onto attitude towards the brand alliance) ** COO fit (with both regressors included in the equation) ** Brand fit (with both regressors included) Interaction COO fit brand familiarity Note: ** Denotes significance at the 005 level Table II Tests of mediation and interaction effects

12 IMR 24,4 438 country of origin fit decreased from 0339 to an insignificant 0045 ( p-value ¼ 0695), supporting the high brand familiarity condition within H6 The same test was used to analyse the second part of this hypothesis The results of the regressions (Table II) support that brand fit does not mediate the relationship between country of origin fit and consumer attitude towards the brand alliance under low brand familiarity conditions Both of the results collectively support H6 Baron and Kenny s test of moderation was administered to provide support for the notion that brand familiarity moderates the entire model rather than the relationships concerning country of origin fit and brand fit The interaction of country of origin by brand familiarity was insignificant with a beta weight of and a p-value of 0160 Discussion Implications In this study, we seek to determine the role of a most-likely central, yet under-examined determinant of consumer attitudes toward a brand alliance, and its role with respect to other determinants that have been well-established in the literature Findings from this research have implications that make both modest (yet useful) and groundbreaking contributions to the body of knowledge about factors that influence consumer attitudes towards cross-border brand alliances With respect to the former, our findings replicate similarly those of Simonin and Ruth (1998), which is a useful result because their findings might be attributed to unique elements of their brand alliance context Thus, our study is an important step toward confirming the generalizability of the main study in the brand alliance literature to other brand alliance contexts, as the important case of cross-border brand alliances Regarding the more significant contributions, our research represents a noteworthy extension of previous research It is the first to show that country of origin fit influences consumer attitudes toward cross-border brand alliances differently under various conditions of brand familiarity We find that: country of origin effect has a significant impact on evaluation of cross-border brand alliances; the effect of country of origin fit is stronger than that of brand fit, when consumers are unfamiliar with a brand; and when consumers are familiar with the brands, the brand effect of fit is stronger than that of country of origin fit Overall, these results are consistent with the notion that primary brand associations take precedence over secondary brand associations like country of origin information under conditions where the consumer has a high level of familiarity for the partner brands Alternatively, consumers must rely on secondary information to base their brand evaluations on when their level of brand familiarity is low In application, managers must consider both primary and secondary brand associations when assessing the potential impact of an alliance with a new partner brand on consumer attitudes By the same token, managers of less-known brands should search out other brands that are familiar to consumers and have a potentially high degree of product fit, brand fit and country of origin fit with their own brand and product line Though a high degree of product fit and brand fit is desirable between two brands that are highly familiar to consumers, a high degree of country of origin fit

13 is not necessary to facilitate positive consumer attitudes toward an alliance between the brands In a low familiarity situation, country of origin fit becomes more important To exploit this effect, it is necessary to actively communicate the origin of the brands Directions for future research As is the case with all research, this study has some limitations that can be addressed by future research To begin, it would be useful if future research related to this topic gathered data in countries other than the US to determine if our findings are generalisable in nature, or if systematic differences exist between respondents in different countries that warrant further investigation Further, we note that such a research should yield interesting and important insights about cross-border brand alliances Thus, the degree of importance that consumers place on each product in the brand alliance was not taken into account in this research In particular, respondents may tend to place more importance on the car, which is more expensive, than on the stereo when considering their attitudes toward the brand alliance For a future study, combining two brands with product categories that are similar in terms of monetary value (eg foods), functional importance, and substitutability would alleviate the dominating effect of one brand Similarly, product categories that have strong country of origin associations (eg German beer or French pastries) or that belong to the low involvement category (Ahmed et al, 2004) can be studied In addition, only one type of alliance (ie a physical brand alliance) was researched in this study Brand alliances can take on a symbolic form of co-branding, such as a joint promotion of the complementary use of each brand (Rao et al, 1999) or the co-sponsorship of events (Ruth and Simonin, 2003) Future research relating to consumer perceptions of these symbolic brand alliances is warranted within both domestic and cross-border contexts These alliance research extensions will help us gain a more comprehensive understanding of how consumers evaluate cross-border alliances As we provided our subjects with information on the country of origin, the (re-) formation of attitudes could be only preliminary Based on our study, we cannot argue that implicit attitudes (Wilson et al, 2000; Cohen and Reed, 2006) were established or changed It is interesting for future studies to go deeper into the different paths of attitude formation, as well as into the question of the temporal stability of attitudes towards the brand alliance To summarise, cross-border brand alliances offer fresh opportunities for companies to gain new markets that may otherwise be difficult to reach effectively Deciding which foreign brands to ally with is a managerial decision based on the alliance s potential to leverage resources and build brand equity Given the influence of both brand fit and country of origin fit upon consumer attitude towards the brand alliance, understanding how the two factors interact could help managers make important decisions about brand alliances from consumer perceptions By determining these interactions, managers can create effective marketing strategies to maximise the effects of consumer attitude towards these alliances, increasing the success rate of their brand alliance portfolio 439 References Aaker, DA and Keller, KL (1990), Consumer evaluations of brand extensions, Journal of Marketing, Vol 54 No 1, pp 27-41

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