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EXPOSÉ MASTER THESIS MARIJANA OLDEN EUROPEAN MASTER IN BUSINESS STUDIES COUNTRY OF ORIGIN ON FOOD LABELING: HOW DOES THE INFORMATION OF THE ORIGIN OF INGREDIENTS AND PRODUCTION SITE IMPACT THE BUYING INTENTION OF CONSUMERS OF DOMESTIC-BRAND PRODUCTS?
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Page 1: EXPOSÉ MASTER THESIS...Exposé Master Thesis – Marijana Olden 2 ABSTRACT Background Despite having less influence than other factors, as price or brand, previous research has shown,

EXPOSÉ MASTER THESIS MARIJANA OLDEN

EUROPEAN MASTER IN BUSINESS STUDIES

COUNTRY OF ORIGIN ON FOOD LABELING: HOW DOES THE

INFORMATION OF THE ORIGIN OF INGREDIENTS AND PRODUCTION SITE

IMPACT THE BUYING INTENTION OF CONSUMERS OF DOMESTIC-BRAND

PRODUCTS?

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Exposé Master Thesis – Marijana Olden 2

ABSTRACT

Background

Despite having less influence than other factors, as price or brand, previous research has

shown, that the country of origin of nutrition does have an important impact on consumer

buying decisions (Loureiro & Umberger, 2003). This influence is especially crucial when

purchasing low-involvement products (Ahmed, Johnson, Yang, Fatt, Teng & Boon, 2004).

Consequently, there is a high attention put on the origin of food, since consumers may even

be willing to pay more for products carrying this information (Skuras & Vakrou, 2008;

Verbeke & Ward, 2006).

At this moment, especially in Europe there is an increasing discussion about the origin of

food. Currently only for non-processed food, producers are obliged to indicate where the

different ingredients come from, for example for beef (European Union, 2011, para. 31), but

this might change in the future. A strong lobby does try to prevent harder rules on country of

origin labeling, mainly because it might hurt companies with a global supply chain

(Oltermann & Topham, 2014).

Purpose

The objective of this thesis is to find out how much the knowledge of country of origin of

ingredients and production site would change the buying intention of consumers when

considering domestic-brand products. A second objective is to understand how much

importance is given to country-of-origin of ingredients and production site respectively. It

can be assumed that the difference in buying intention between various countries is highly

impacted by the cultural differences and ethnocentrism that these countries present.

In order to assess, whether there are differences between countries regarding the country of

origin effect for food ingredients and production site, two European countries will be chosen

and compared. These are Germany and Spain.

Method

In a first step, the existing literature will be reviewed in order to understand the importance

of country of origin information for the consumers in general and how this information

might influence the buying intention. Furthermore, the construct of ethnocentrism will be

taken into account to devise hypothesis regarding if and how the country of origin effect will

differ in the selected countries. After the literature review and formulation of hypotheses, a

quantitative study will be conducted. The method is an online questionnaire in order to reach

a maximum number of respondents in different countries. The results of the questionnaire

will be analyzed and conclusions and recommendations derived.

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Exposé Master Thesis – Marijana Olden 3

TABLE OF CONTENTS

1.   INTRODUCTION  ......................................................................................................................  5  

2.   PROBLEM  STATEMENT  AND  RESEARCH  QUESTION  ..................................................  6  1.1   PROBLEM  STATEMENT  ........................................................................................................................  6  1.2   RESEARCH  QUESTION  ..........................................................................................................................  6  

3.   THEORETICAL  BACKGROUND  AND  HYPOTHESIS  .......................................................  6  1.3   CONSUMER  ETHNOCENTRISM  ............................................................................................................  7  1.4   COUNTRY-­‐OF-­‐ORIGIN  OF  INGREDIENTS  VS.  COUNTRY-­‐OF-­‐ORIGIN  OF  PRODUCTION  SITE  ....  9  

4.   REVIEW  OF  LITERATURE  .................................................................................................  11  

5.   METHODOLOGY  ..................................................................................................................  28  1.5   SETTING  ...............................................................................................................................................  28  1.6   PARTICIPANTS  ....................................................................................................................................  29  1.7   CONSTRUCTION  AND  DISTRIBUTION  ..............................................................................................  29  1.8   MEASUREMENT  AND  ANALYSIS  .......................................................................................................  30  1.9   BENEFITS  AND  POSSIBLE  PROBLEMS  .............................................................................................  30  

6.   OVERVIEW  OF  CHAPTERS  ................................................................................................  32  

7.   TIMELINE  ...............................................................................................................................  33  

8.   REFERENCES  .........................................................................................................................  34  

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Exposé Master Thesis – Marijana Olden 4

LIST OF ABBREVIATIONS

COO Country of Origin

CETSCALE Consumer Ethnocentrism Tendencies Scale

LIST OF TABLES

Table 1: Literature on COO and factors influencing it ........................................................... 11  Table 2: Literature on ethnocentrism and it's impact on the COO ......................................... 13  Table 3: Literature on ethnocentrism, it's measurements and factors influencing it .............. 17  Table 4: Literature on models that influence the country of origin effect .............................. 25  

LIST OF FIGURES

Figure 1: First Research Question .......................................... Error! Bookmark not defined.  Figure 2: First Research Question and Influence of EthnocentrismError! Bookmark not

defined.  Figure 3: Antecedents of Consumer Ethnocentrism ................................................................. 8  Figure 4: First Research Question, Ethnocentrism and it's Antecedents and Moderating

Factors ............................................................................ Error! Bookmark not defined.  Figure 5: Second Research Question ...................................... Error! Bookmark not defined.  Figure 6: Attributes and Levels for Conjoint .......................................................................... 30  

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Exposé Master Thesis – Marijana Olden 5

1. INTRODUCTION When consumers take consumption decisions about products, they evaluate the products

based on certain so-called cues, which can be intrinsic (inherent in the product) or extrinsic

(independent of the product itself). Companies are therefore concerned with optimizing these

cues and marketers have to be able to make the product attractive for the market. Country-of-

origin (COO) is an extrinsic cue that has been widely researched in the past. It is not only

influencing purchases for high-end and luxury products that use COO extensively to market

their goods, but also has an impact on low-involvement products (Ahmed, Johnson, Yang,

Fatt, Teng & Boon, 2004). In the past, domestic brands were preferred by customers,

because they assumed that the COO of the brand is the country in which production and

sourcing takes place (FutureBrands, 2014, p. 4). Nowadays, there is an increasing difference

in brand origin, production and sourcing due to the internationalization of the supply chain.

Since recently, especially in Europe there is an increasing discussion about the origin of food

and the need for companies to indicate this information on the label, the topic becomes more

and more important. Currently only for some non-processed products, producers are obliged

to indicate where the different ingredients come from, but this might change in the future.

Apart from this obligation, marketing often uses COO cues willingly to promote their

products (Aichner, 2014), even if these products are not made or sourced in the country they

indicate.

This thesis has the objective to analyze if and how the knowledge of COO of ingredients and

production site would change the buying intention of consumers for products produced by

domestic brands. Furthermore it is especially interesting to find out how high the acceptance

of foreign ingredients or place of production is in different countries. It can be assumed that

the difference in buying intention between various countries is highly impacted by cultural

differences and by ethnocentrism that these countries present. In order to assess, whether

there are differences between countries regarding the COO effect for food ingredients,

Germany and Spain have been chosen as countries to be analyzed.

The results of this work could lead to information that can be used by companies to decide

about ingredient sourcing and production locations. In case of alteration of the European

law, resulting in an obligation to disclose COO information to the consumers, this

information could be important. The results could also be used for marketing purposes. For

example which COO information to use on the label in different countries.

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Exposé Master Thesis – Marijana Olden 6

2. PROBLEM STATEMENT AND RESEARCH QUESTION

1.1 Problem Statement As above-mentioned, the COO effect is an important driver for consumer decisions and is

getting more and more important in the globalized world. Traditional domestic brands that

formerly were produced and sourced only in the home-country now employ global supply

chains (FutureBrands, 2014). However, there is no research yet on how a disclosure of the

information of COO of production and ingredients would impact these brands. Another

question regards the importance given to the COO of ingredients and production site

respectively. Are they both equally important, or is one factor more decisive? This could be

a crucial information for companies that try to make their products as attractive to the market

as possible and that are impacted by EU’s as well as their own country’s rules concerning

COO disclosure.

1.2 Research Question The three main research questions formulated are the following:

“Does the information about country-of-origin (COO) of ingredients and production

site impact the purchase intention of consumers regarding domestic brands?”

“How does consumer ethnocentrism impact the acceptance of foreign country-of-origin

(COO) of ingredients and production site in food from domestic brands?”

“Do the consumers have a preference for a country-of-origin (COO) product cue? If

yes, what is the trade-off between: Country-of-origin (COO) of ingredients or country-

of-origin (COO) of production?”

3. THEORETICAL BACKGROUND AND HYPOTHESIS The first research question could be graphically represented in the following way:

Figure 1: First Research Question

Source 1: Own creation

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Exposé Master Thesis – Marijana Olden 7

1.3 Consumer Ethnocentrism The main factor influencing how much importance consumers give to COO information is

the so-called consumer ethnocentrism. When dealing with COO information this is important

because from the perspective of ethnocentric consumers imported products should not be

purchased “because, in their minds, it hurts the domestic economy, causes loss of jobs, and is

plainly unpatriotic” (Balabanis & Diamantopoulos, 2004; Sanjay K Jain & Jain, 2013;

Shimp & Sharma, 1987, p. 280; John J Watson & Wright, 2006).

Therefore, when considering buying a product originally labeled as domestic, the hypotheses

to be tested regarding the first two research questions are the following:

H1a: The information about country-of-origin does impact the buying decision only if

the country of origin is (partly) foreign.

H1b: More ethnocentric consumers do accept a lower percentage of foreign ingredients

in food from domestic companies, than less ethnocentric consumers.

H1c: More ethnocentric consumers do accept a lower percentage of production in

foreign countries in food from domestic companies, than less ethnocentric consumers.

This may be graphically shown as follows:

Figure 2: First Research Question and Influence of Ethnocentrism

Source 2: Own creation

The answer to these hypotheses will fill a gap in COO research because they consider

products with two different COO, which is a characteristic of the supply-chain-management

of today’s companies.

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Exposé Master Thesis – Marijana Olden 8

Antecedents of Consumer Ethnocentrism

However, when analyzing ethnocentrism there are some other factors that influence

ethnocentrism positively or negatively. The demographic antecedents of consumer

ethnocentrism, which have been researched in many studies are the following:

Figure 3: Antecedents of Consumer Ethnocentrism

Source 3: Adapted from (Shankarmahesh, 2006)

These factors do not have a direct influence on the acceptance of foreign COO of ingredients

or production. However they will be analyzed regarding their influence on the ethnocentrism

in the study.

Additionally to the demographic factors there are socio-psychological factors working as

antecedents, which have also been studied by many researchers. The ones mentioned are:

Salience, animosity, patriotism, openness to foreign culture and conservatism as well as

collectivism/individualism. (e.g., Han, 1988; Howard, 1989; Olsen & Jacoby, 1993; Sharma

et al., 1995; Klein and Ettenson, 1999; Nijssen and Douglas, 2004).

Nevertheless, they will not be taken into account in this study. First of all, because the

studies present differing results. Secondly, they have been measured with various scales that

have not been standardized and thirdly, because measuring all of these factors would exceed

the scope of a master thesis and they are not crucial to the research question itself.

Moderating Factors of Consumer Ethnocentrism

Once the ethnocentrism is already established, there are also moderating factors, which have

been found to enhance or diminish the influence of ethnocentrism on the purchase intention.

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Exposé Master Thesis – Marijana Olden 9

The factors postulated are: 1) The perceived need for the product 3) the economic threat

(Shimp, Sharma, & Shin, 1995), 3) the product category (Balabanis & Diamantopoulos,

2004; Shimp et al., 1995) and 4) cultural similarity of the countries of origin (J. J. Watson &

Wright, 2000).

Since I will be using only one product category, the product category as a moderating factor

does not have to be taken into account. For all other factors, however, there are also no

standard measurement scales and only very few researchers have researched them.

This is the reason why I will not take them into consideration; therefore this will be one of

the limitations of this study.

Figure 4: First Research Question, Ethnocentrism and it's Antecedents and Moderating Factors

Source 4: Own creation

1.4 Country-of-Origin of Ingredients vs. Country-of-Origin of Production Site

This part concerns the third research question:

“Do the consumers have a preference for a country-of-origin (COO) product cue? If

yes, what is the trade-off between: Country-of-origin (COO) of ingredients or country-

of-origin (COO) of production?”

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Exposé Master Thesis – Marijana Olden 10

It could be graphically represented as follows:

Figure 5: Second Research Question

Source 5: Own creation

When talking about COO information, it mainly concerns the COO of ingredients,

production or brand. On the label we can mostly find information about where the

production took place and where the ingredients come from. Consumer polls have shown

that the broad majority supports COO labeling, especially on food products (Trans Atlantic

Consumer Dialogue, 2008). A recent study from Austria, France, Poland and Sweden, has

found that at least two-thirds of respondents in these countries want to know the COO of the

products they consume (Bureau Européen des Unions de Consommateurs, 2013). Despite

this, the information is by far not present on all products. Especially the “made-in” labels are

applied on a voluntary basis for most products in Europe (Oltermann & Topham, 2014).

Although COO labeling has been studied, until now there seems to be very limited research

on the distinction between the importance of COO of production and COO of ingredients. At

this moment consumers are not always sure what the COO information on the products

actually refers to, whether it refers to the origin of the raw materials or the processing

(Bureau Européen des Unions de Consommateurs, 2013).

There are only some studies that give hints about which COO information is more important

to consumers.

For example a survey from 2012 in Australia showed that 80% of consumers responded that

it is crucial or very important to them to be able to identify where the food is manufactured.

Therefore this information is almost as important as the possibility to know where the

ingredients come from. This was very important or crucial for 84% of the respondents

(Australian Consumers’ Association, 2012). The study by the Bureau Européen des Unions

de Consommateurs (BEUC) (2013) did investigate two product types (jam and other sauces,

and meat products). They found that for both product types between 53% and 69% of the

respondents in all countries found ingredients and sourcing COO information equally

important. Between 20% and 27% did care more about the raw-material sourcing and

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Exposé Master Thesis – Marijana Olden 11

between 5% and 15,3% were more interested in where the processing took place (Bureau

Européen des Unions de Consommateurs, 2013, pp. 8–10). Notwithstanding, this was just a

theoretical question posed to the consumers; they did not have to decide between products

with differing COO information on the label. Nevertheless, based on this information, the

next hypotheses are:

H2a: Consumers will prefer products with a bigger percentage of ingredients sourced

in their home country than production conducted in their home country.

H2b: The home country of the consumers does not have an influence on their

preference for country-of-origin of production or country-of-origin of ingredients.

Finding an answer to these hypotheses will give companies an indication about which COO

information is more important for the customer. They could use it for marketing purposes

and organization of the supply chain.

4. REVIEW OF LITERATURE Regarding the concept of ethnocentrism, which is, as mentioned, according to the literature

the main factor influencing the country of origin effect, there are several basic works. For

example the introduction of the consumer ethnocentrism tendencies scale (CETSCALE), a

tool to measure ethnocentrism by Shimp & Sharma (1987) as well as many articles and

studies in which ethnocentrism has been applied to - and tested in different countries. An

overview over the research in the field of COO and ethnocentrism is given in the following

tables.

COO and the factors influencing it has been researched in the following publications: Table 1: Literature on COO and factors influencing it

Topic Title Author Content

Country of origin

and influencing

variables

Impact of country-

of-origin on

product purchase

decision.

Javed, A.;

Hasnu, S. A. F.

(2013)

Researches impact of different

variables concerning COO on

consumer decisions for three

categories of products. Result:

product involvement and

product knowledge impact

consumer choices

Country of origin Do consumers Kuchler, F. Concerns the labeling of

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Exposé Master Thesis – Marijana Olden 12

labeling and

consumer

responses: Case

Seafood in the

USA

respond to country-

of-origin labelling?

Krissoff, B.

Harvey, D.

(2010)

seafood: when the information

of COO is on the label, does

that change the consumer

behavior? Result: The number

of people buying the seafood

products did not change

before and after the

implementation of COO

labeling

Country of origin

labeling and

consumer

responses: Case

Fresh Food in

New Zealand

Country of origin

labelling of fresh

produce: consumer

preferences and

policy implications.

Holdershaw, J.

Gendall, P.

Case, P.

(2013)

Fresh food: do consumers

prefer food from own country

or abroad? Consumers prefer

New Zealand labeled food to

non-labeled and overseas

labeled

Country of origin

labeling and

consumer

responses: Case

Beef in USA

Assessing

consumer

preferences for

country-of-origin

labeling

Loureiro, M. L.

Umberger, W. J.

(2005)

Assessment of consumer

willingness to pay for country

of origin labeling in the US.

Result: Willingsness is

relatively small, although

consumers are concerned for

food safety.

Country of origin

labeling and

consumer

responses: Case

Beef in USA

Hierarchical Bayes

approach for

analyzing the

impact of labeling

on the country of

origin effect

Zulauf, K.

Wagner, R.

Oswald, A. W.

(2013)

Study focused on COO,

price, fair trade and organic

labeling.

Result: strong relation of

the country image and

evaluation of individual

products. Negative effects

with regard to the country

image can be reduced by

positively associated

attributes such as fair trade

or organic labeling.

Country of origin

effect: Case

Selection criteria of

Lebanese

Zbib, I. J.

Wooldridge, B.

Studies correlation involved

between country of

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Exposé Master Thesis – Marijana Olden 13

Potatoe Chips in

Lebanon

consumers in the

global snack food

industry: country of

origin perceptions.

R.

Ahmed, Z. U.

Benlian, S.

(2010)

manufacture and consumer

behavior; purchase intent; and

product quality for potatoe

chips. Results: Potatoe chips

seem to be low-involvement

products, therefore there is no

change in purchasing behavior

COO and

consumer

preferences

Measuring the

relative importance

of preferences for

country of origin in

China, France,

Niger, and the

United States.

Ehmke, M. D.

Lusk, J. L.

Tyner, W.

(2008)

Measures consumer

preferences for country of

origin and compares the

relative importance of

consumer preferences for

origin to their preferences for

genetically modified food and

pesticide-free production.

Result: Consumers tend to

prefer food from their own

country, indicating

ethnocentrism, but country of

origin is less important than

genetically modified content

or pesticide use

Works that research the concept of ethnocentrism and it’s impact on the country of origin

effect in different countries are compiled in the following table:

Table 2: Literature on ethnocentrism and it's impact on the COO

Topic Title Author Content

Ethnocentrism/

Country of Origin

Effect generally

in retail service

The impact of

country of origin in

the retail service

context

Pecotich, A.,

Pressley, M.,

Roth, D.

(1996)

This study investigates the

impact of the country-of-

origin cue associated with a

change of ownership and

brand on service quality

perceptions, price and

purchase intentions, with

ethnocentrism and product

class knowledge as

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Exposé Master Thesis – Marijana Olden 14

covariates. Support was found

of the country-of origin effect

and ethnocentrism as a

covariate.

Ethnocentrism/

Country of Origin

Effect in China,

USA, South

Korea

For love of

country? Consumer

ethnocentrism in

China, South

Korea, and the

United States.

Tsai, W. S.

(2013)

Study on influence of

ethnocentrism of COO effect

on food products in China,

South Korea and USA and of

the changes with country of

origin or product category

Ethnocentrism/

Country of Origin

Effect in

Germany

Consumer

ethnocentrism in

the German market.

Evanschitzky,

H.

(2008)

In Germany consumer

preference rankings can best

be explained by a combination

of demographic variables and

country-of-origin effects.

Results indicate that domestic

firms in Germany can well

rely on a safeguarding effect

when marketing their

products. At the same time,

managers from foreign

countries cannot rely on

consumer ethnocentrism as a

reliable indicator of the

inclination of consumers to

downgrade their products.

Ethnocentrism/

Country of Origin

Effect in UK

Domestic country

bias, country-of-

origin effects, and

consumer

ethnocentrism: A

multidimensional

unfolding

approach.

Balabanis, G. ;

Adamantios, D.

(2004)

Analysis for eight different

products in the UK Result:

Preferences are linked to

consumer ethnocentrism, the

preferences are also dependent

both on the specific country of

origin and the particular

product category

Ethnocentrism/ The effects of Cumberland, F.; Assesses the level and impact

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Country of Origin

Effect in Poland

consumer

ethnocentrism and

country of origin on

Polish consumers’

evaluation of

foreign

manufactured

products.

Solgaard, H. S.;

Nikodemska-

Wolowik, A.M.

(2010)

of consumer ethnocentrism

and the effect of country of

origin on polish consumers’

evaluation of the buying

intentions toward foreign

manufactured products.

Results show consumer

ethnocentrism is present and

that more than one-fifth of

consumers are highly

ethnocentric but also that

ethnocentrism has no direct

effect on the evaluation of

product quality or on buying

intention for either of the

products.

Ethnocentrism/

Country of Origin

Effect in

Morocco

Consumer

ethnocentrism and

country-of-origin

effects in the

Moroccan market.

Hamelin, N.;

Ellouzi, M.;

Canterbury, A.

(2011)

To which extent does

consumer ethnocentrism

influence consumer choice in

Morocco

Ethnocentrism/

Country of Origin

Effect in India

Consumer

ethnocentrism:

Relevance and

implications for

marketers.

Khan, M. N.

(2008)

Explores the underlying

meaning and significance of

the concept of consumer

ethnocentrism with special

reference to India. Result:

CETSCALE is not

unidimensional but useful for

marketing

Ethnocentrism/

Country of Origin

Effect and

influencing

factors in

Vietnam

Consumer

ethnocentrism,

cultural sensitivity,

and intention to

purchase local

products—evidence

from Vietnam.

Nguyen, T. D.

(2008)

Analyzes ethnocentrism and

influencing factors in

Vietnam. Results show that

the impacts of consumer

ethnocentrism on imported

product judgment and on

intention to purchase local

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Exposé Master Thesis – Marijana Olden 16

products are not different in

terms of product categories,

gender, income, and education

levels. However, differences

exist between younger and

older consumers.

Ethnocentrism/

Country of Origin

Effect and

lifestyles in

Turkey

Consumer

perceptions of

foreign products:

An analysis of

product ‐ country

images and

ethnocentrism

Kaynak, E.;

Kara, A.

(2002)

Investigates product‐country

images, lifestyles and

ethnocentric behaviors of

Turkish consumers. Turkish

consumers had significantly

different perceptions of

product attributes of the

products coming from

countries of different levels of

socio ‐ economic and

technological development.

Results lend support to earlier

studies conducted in western

countries and also indicate the

robustness of the CETSCALE.

Ethnocentrism/

Country of Origin

Effect in China

Who are

ethnocentric?

Examining

consumer

ethnocentrism in

Chinese societies.

Hsu, J. L.

(2008)

This study examined

consumer ethnocentrism in

Chinese societies and further

to reveal whether more

ethnocentric consumers would

have higher preferences of

domestic products. Multi-item

CETSCALE was applied in

the study. Result:

ethnocentrism has a strong

influence on preferences of

domestic brands.

Ethnocentrism/

Country of Origin

Effect in Japan,

USA, France,

A cross-national

assessment of the

reliability and

validity of the

Netemeyer,

Richard G.

(1991)

CETSCALE was only

developed for US. Is it valid

for other countries? > The

results suggest that the

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West-Germany CETSCALE. CETSCALE is a reliable

measure across the countries

and afford some evidence of

validity as well

Ethnocentrism/

Country of Origin

Effect in Spain

Consumer

ethnocentrism

measurement An

assessment of the

reliability and

validity of the

CETSCALE in

Spain

Luque-Martinez,

T.; Ibanez-

Zapata, J. A.,

del Barrio-

García, S.

(2000)

Validates CETSCALE as a

measure of Spanish

consumers’ ethnocentric

tendencies. Results: prove that

the scale measures a

unidimensional construct and

that the measurement error is

quite acceptable

General research concerning ethnocentrism, ways of measurement (mainly the CETSCALE)

and other influencing factors, always concerning COO is listed in the following table:

Table 3: Literature on ethnocentrism, it's measurements and factors influencing it

Topic Title Author Content

Ethnocentrism

concept

Consumer

ethnocentrism: The

concept and a

preliminary empirical

test.

Shimp, T. A.

(1984)

Introduces the concept of

„consumer ethnocentrism“

and presents empirical

evidence from a

preliminary test of the

concept.

Ethnocentrism

and it’s impact

on purchase

decision

Exploring the impact of

consumer ethnocentrism

on decision making

process across the

product categories

Cutura, M.;

Kauffmann, R.

H.; Butigan, R.

(2012)

Explores the impact of

consumer ethnocentrism on

decision making process

across the product

categories. Result:

consumer ethnocentrism

provides stronger impact on

purchase intention than on

product beliefs and attitude.

Purchase behavior is

influenced by consumer

ethnocentrism in two of the

three product categories

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studied.

Ethnocentrism

vs. Global

orientation

Living in a global

world: Influence of

consumer global

orientation on attitudes

toward global brands

from developed versus

emerging countries.

Guo, X.

(2013)

Consumers’ global

orientation positively

influences their attitudes

toward global brands of

developed-country origin.

In addition, ethnocentrism

negatively influences their

attitudes toward these

brands, but this effect

diminishes for consumers

with high global identity

Ethnocentrism

in bicultural

consumers

Country of origin,

ethnocentrism and

bicultural consumers:

the case of Mexican

Americans.

Zolfagharian,

M.A.; Sun, Q.

(2010)

Bicultural Mexican

Americans are less

ethnocentric than either

American or Mexican

monoculturals; exhibit

more favorable quality

evaluation and purchase

intention toward American

brands than Mexican

monoculturals; and exhibit

more favorable quality

evaluation and purchase

intention toward Mexican

brands than American

monoculturals

Ethnocentrism

in immigrants

Ethnocentrism and

country of origin effects

among immigrant

consumers.

Zolfagharian,

M.

(2014)

Examines how country of

origin and consumer

ethnocentrism pertain to

first-generation immigrants,

who often identify with two

or more countries. Non-

ethnocentric immigrants

favor the products of

economically advanced

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countries. Ethnocentric

immigrants favor the

products of their home and

host countries relative to

foreign products, regardless

of the economic standing of

foreign countries. When

home and host countries

represent significantly

different degrees of

economic advancement,

both ethnocentric and non-

ethnocentric immigrants

favor the products of the

more advanced country.

Ethnocentrism

and local

integration of

brand

‘They don’t want us to

become them’: Brand

local integration and

consumer ethnocentrism

.

Kipnis, E.;

Kubacki, K.;

Broderick, A.

J.; Siemieniako,

D.; Pisarenko,

N. L.

(2012)

The results indicate that

foreign brand identities that

integrate ‘localised’ appeals

communicating respect of

local traditions (through the

use of local images,

symbols, and recipes) and

contribution to the local

society’s well-being

(through local manufacture,

employment, use of local

ingredients) lead to more

favourable

consumer perceptions. In

distinguishing between

‘purely foreign’ and

‘locally integrated foreign

brands’, consumers perceiv

e the latter to be more

acceptable for consumption

Ethnocentrism

and regional

Regional ethnocentrism:

antecedents,

Fernández-

Ferrína, P.;

Presents the construct of

consumer regional

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preferences consequences, and

moderating effects

Bande-Vilela,

B.

(2013)

ethnocentrism, which

relates to consumer

opinions over whether or

not it is acceptable and

ethical to purchase products

from other regions. Results:

consumer ethnocentrism is

an important factor

regarding the intention to

purchase not only foreign

products but also non-

regional products.

Ethnocentrism

and product

knowledge

Effects of consumer

ethnocentrism and

product knowledge on

consumers ‚ utilisation

of country-of-origin

information

Moon, B.

(2004)

Concerned with the effects

of consumer ethnocentrism

and product knowledge on

consumers’ utilization of

country-of-origin

information for their

product evaluation. Result:

low-knowledge consumers

pay more attention to

country of origin.

Consumer ethnocentrism

strengthens the country of

origin effect for domestic

products perceived as

higher in quality.

Ethnocentrism

and it’s

antecedents and

moderators

Consumer

ethnocentrism: A test of

antecedents and

,odmrators

Sharma, S.;

Shimp, T. A.;

Shin, J.

(1995)

This article identifies

theoretical antecedents of

consumer ethnocentricity

and the effect

ethnocentricity has on

evaluations toward

importing products.

Ethnocentrism

and it’s

antecedents and

Consumer

ethnocentrism: A

literature review

Abdulrahman

A.

(2013)

Literature review of

consumer ethnocentrism

with a focus on antecedents

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moderators and consequences.

Ethnocentrism

and it’s

antecedents and

moderators

Consumer

ethnocentrism: an

integrative review of it’s

antecedents and

consequences.

Shankarmahesh

, M.

(2006)

Provides an integrative

review of the antecedents

and consequences of

consumer ethnocentrism

Ethnocentrism

and it’s

antecedents and

moderators:

Case China and

USA

A cross-cultural study

of consumer

ethnocentrism between

China and the U.S.

Tsai, W. H.

(2013)

Consumers’ ethnocentric

tendencies heighten in

intensity when a country is

threatened This study aims

to understand how the

recent global financial

crisis may have influenced

the phenomenon of

consumer ethnocentrism

(CE). Comparison of levels

of CE in the U.S. and

China. Analyzed

antecedents: patriotism,

nationalism,

internationalism, and

demographic factors.

Results indicate that

American consumers are

more ethnocentric than

Chinese consumers, while

nationalism has the

strongest impact on CE in

both countries.

Ethnocentrism

and it’s

antecedents and

relationship

with

cosmopolitanis

m and

Cosmopolitanism,

consumer

ethnocentrism, and

materialism: An eight-

country study of

antecedents and

outcomes.

Cleveland, M.

(2009)

Examines similarities and

differences with respect to

the nature of three

consumer attitudinal

dispositions:

cosmopolitanism, consumer

ethnocentrism, and

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materialism materialism. Empirical

findings broadly support

the cross-cultural

applicability to the

constructs, though the links

between various

demographic antecedents

vary considerably from

sample to sample.

Ethnocentrism

and social

desirability bias:

analyzed in

USA and

Sweden

The impact of a social

desirability bias on

consumer ethnocentrism

research: A cross-

national perspective.

Hult, G. T. M.;

Keillor, B. D.

(1994)

Different factors may

intervene to prevent

accurate assessment of

consumer ethnocentrism.

Here the social desirability

bias is analyzed. Utilizing

cross-national samples, this

study explores the

relationship between the

measurement of consumer

ethnocentrism and social

desirability bias. Result:

there might be some

influence of the social

desirability bias, and it is

stronger for males.

Ethnocentrism

and personal

cultural

orientation:

Case

USA/Japan

The effect of personal

cultural orientation on

consumer

ethnocentrism:

evaluations and

behaviors of U.S.

consumers toward

Japanese products.

Yoo, B.

Donthu, N.

(2005)

The article focuses on a

research study. which

examines the relationship

between cultural orientation

and consumer

ethnocentrism. The findings

of the study reveal that

consumers' attitudes and

behaviors toward foreign

products are explained by

consumer ethnocentrism.

Ethnocentrism Consumer Watson, John Investigates the relationship

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Exposé Master Thesis – Marijana Olden 23

and cultural

similarity

ethnocentrism and

attitudes toward

domestic and foreign

products.

J.; Wright, K.

(2006)

between consumer

ethnocentrism and

consumer attitudes toward

foreign manufactured

products in product

categories in which

domestic alternatives are

not available. Results

suggest that cultural

similarity is an important

consideration for highly

ethnocentric consumers in

the evaluation of foreign

products.

Measurement of

consumer

ethnocentrism:

CETSCALE

Consumer

ethnocentrism:

Construction and

validation of the

CETSCALE.

Shimp, T. A.;

Sharma, S.

(1987)

The concept of consumer

ethnocentrism is introduced

and a corresponding

measure, the CETSCALE,

is formulated and

validated.

CETSCALE

revision

Consumer

ethnocentrism:

Reconceptualization and

cross-cultural validation

Sharma, P.

(2014)

This note addresses gaps

about construct validity,

dimensionality and cross-

cultural measurement

invariance by

reconceptualizing CE as an

attitude construct consisting

of three dimensions: (1)

affective reaction, (2)

cognitive bias and (3)

behavioral preference.

CETSCALE

validity in

developing

countries: South

Africa

Measuring consumer

ethnocentrism in a

developing context: An

assessment of the

reliability, validity and

dimensionality of the

Pentz, C.

(2013)

This study was conducted

in response to calls by

several researchers to

investigate the validity,

reliability, and

dimensionality of the

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CETSCALE. CETSCALE, in developing

markets. Result:

CETSCALE can be used

CETSCALE

validity in

developing

countries: India

Understanding

consumer ethnocentrism

in developing countries:

Case Bangladesh.

Chowdhury, T.

A.

(2013)

This article argues that the

traditional belief that

„consumer ethnocentrism is

a phenomenon of

developed countries only“

is no longer true.

Statistically significant

results show that for three

chosen sociodemographic

groups, namely, students,

job holders, and

businesspersons, the

original CETSCALE is to

large extent applicable.

Only some restrictions.

CETSCALE in

transitional

economies

Extending the construct

of consumer

ethnocentrism: When

foreign products are

preferred

Klein, J.G.;

Ettenson, R.;

Krishnan,

Balaji C.

(2006)

The study evaluates the

psychometric properties of

the consumer

ethnocentrism scale

(CETSCALE) in the

transition economies of

China and Russia. Findings

show that the scale can be

used effectively in these

transitional economies.

Influence of

language in

evaluation of

ethnocentrism

through

CETSCALE

Conducting

international consumer

ethnocentrism surveys.

Luthy, Michael

R.

(2007)

Does the presentation

language of the

CETSCALE influence the

level of ethnocentrism?

Result: Statistical analysis

showed that native

language presentation did

not have an impact on the

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respondent's level of

consumer ethnocentrism.

Other models that influence the country of origin effect are the consumer disidentification

model, the consumer affinity model and the animosity model. Scientific papers that treat

these topics are the following:

Table 4: Literature on models that influence the country of origin effect

Topic Title Author Content

Disidentification

model

Consumer

Disidentification

and its effects on

domestic product

purchases: An

empirical

investigation in the

Netherlands.

Josiassen, A.

(2011)

Analysis of consumer

disidentification model =

repulsion against domestic

country > negative influence

on domestic product

purchases. Structural

equation modeling supports

the model and shows that

consumer disidentification

model has a significant

impact on buying decisions

beyond the effect of

consumer ethnocentrism.

Affinity model Consumers'

emotional bonds

with foreign

countries: Does

consumer affinity

affect behavioral

intentions?

Oberecker, E. M.

Diamantopoulos,

A.

(2011)

Advances the construct of

consumer affinity, which

captures country-specific

favorable feelings toward

particular foreign countries.

The findings indicate that

consumer affinity is more

powerful than consumers'

ethnocentric tendencies in

explaining both perceived

risk and willingness to buy.

Animosity model Consumer

animosity: A

literature review

Riefler,

P.;Diamantopoulos,

A.

Conducts a review of

consumer animosity

research raises specific

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and a

reconsideration of

its measurement

(2007) issues for future research on

consumer animosity.

Potential problems

associated with the

measurement of consumer

animosity are highlighted

and an alternative

perspective for

operationalizing the

construct is proposed.

Animosity

model: example

China / Japan

Implicit consumer

animosity: A

primary validation

Cai, H.

Fang, X.

Yang, Z.

Song, H.

(2012)

Validates implicit animosity

as a unique determinant of

consumer behavior in the

context of Chinese

animosity toward Japan. The

Implicit Association Test

(IAT) was employed to

measure implicit Chinese

animosity toward Japan.

Results: (a) implicit

animosity was distinct from

consumer ethnocentrism; (b)

implicit animosity was

significantly correlated with

war animosity, but not with

economic animosity; and (c)

implicit animosity exerted

negative impacts on

purchase intention,

independent of explicit

animosity, consumer

ethnocentrism, and product

judgment.

Animosity

model: Case

China

The animosity

model of foreign

product purchase:

An empirical test

Klein, J. G.;

Ettenson, R;

Morris, M.D.

(1998)

The authors provide an

initial test of the animosity

model of foreign product

purchase in the People's

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in the People's

Republic of China

Republic of China

Ethnocentrism

and animosity

model

Consumer

animosity and

consumer

ethnocentrism: An

analysis of unique

antecedents

Klein, J. G.;

Ettenson, R.

(1999)

The study provides

empirical evidence for

discriminant validity

between this construct and

consumer

ethnocentrism. Results show

that the profile of the

ethnocentric consumer is

different from the consumer

holding animosity towards a

specific exporting nation.

Ethnocentrism

and animosity

model

New perspectives

on the animosity

model of foreign

product purchase:

Are animosity and

ethnocentrism

distinct constructs?

Richardson, Jr., C.

W.

(2012)

Investigates linkage of

ethnocentrism and animosity

by having significant impact

on consumer's judgments of

product quality. Results

indicate that animosity does

indeed impact product

judgments, implying that the

constructs of ethnocentrism

and animosity represent

greater consistency of

consumer attitudes than

previously described.

Ethnocentrism

and animosity

model

Us versus them, or

us versus

everyone?

Delineating

consumer aversion

to foreign goods.

Klein, Jill Gabrielle

(2002)

This paper presents evidence

that international animosity

and consumer ethnocentrism

are distinct constructs that

play different roles

depending on the set of

products available to

consumers. Result:

animosity toward a foreign

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nation is related to choices

between foreign goods,

while consumer

ethnocentrism is related to

choices between domestic

and foreign goods. Further,

the study finds animosity

effects even though anger

levels are generally low,

thus extending the

boundaries of the animosity

model of foreign purchase.

5. METHODOLOGY

1.5 Setting The first part of the thesis will be a literature research in the field, to have an overview over

the results of previous research and articles.

In the second part, an empirical quantitative study will be conducted. The study will consist

of a questionnaire that will be distributed to participants in the two targeted countries.

A conjoint analysis with a rating of profiles will be conducted to analyze how much impact

COO (domestic or foreign) of ingredients and production has on the purchasing intention of

consumers. Additionally a self-explicated conjoint analysis will be done, in order to answer

hypothesis H1b and H1c.

The product that will be used to carry out the study is beer. It has been chosen for several

reasons. They are the following:

• It has one main ingredient and is produced in one process. Therefore a conjoint

analysis can easily be carried out, because there are two factors with a variety of

characteristics that have to be considered.

• Food generally could be considered as rather low involvement product, but it is one

of the instruments to convey cultural expressions (Cleveland et al., 2009) and beer

often seems to have an emotional attachment to it. Especially the “choice of

beverage may also be a statement of affiliation, a declaration of membership in a

particular group, generation, class, ‘tribe’, sub-culture or nation and its associated

values, attitudes and beliefs” (Social Issues Research Center, 1998, p. 23).

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Exposé Master Thesis – Marijana Olden 29

• It is a product that is produced locally and consumed in all countries that are being

compared, with Germany and Spain being on the first and second place respectively

in Europe (Statista, 2013).

The survey will consist of the following sections:

1) Ethnocentrism: Measuring consumer ethnocentrism with the new version of the

CETSCALE, developed by Sharma (2014). It measures three dimensions of

ethnocentrism. This has been adapted in consequence of the differing results that the

application of the former CETSCALE has shown.

2) Self-explicated conjoint: Consumers have to evaluate levels and attributes.

3) Conjoint rating: The participants have rated the possible product profiles. A full-profile

analysis is conducted.

4) Socio-demographics: The socio-demographic background of participants is determined.

Since the newly developed CETSCALE is unfortunately not available in other languages

than English, the survey will be only conducted in English. Changes in language might

impact the evaluation of the consumer ethnocentrism if they are not applied correctly.

1.6 Participants The participants for the survey will be coming from the analyzed regions: Germany and

Spain. Personal and educational/community networks will be used to contact and invite

participants to the study. The target group segmentation in a first instance will only be done

by country. Concerning an estimate of how many participants are needed, according to

Raosoft (2004) with a margin of error of 5%, a confidence level of 95% and a population

size of over 20000 per country, a sample size of 377 respondents per country is needed.

1.7 Construction and Distribution For the construction of the questions for the two conjoint analysis, product attributes and

their levels that will be evaluated. The relevant attributes and levels are the following:

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Exposé Master Thesis – Marijana Olden 30

Figure 6: Attributes and Levels for Conjoint

Source 6: Own creation

The number of possible profiles is 16. A full profile analysis will be conducted, because with

only two attributes, there can be no reduction done. The online questionnaire will be either

designed with help of the software Sphinx. The finished questionnaire will then be

distributed to the participants via email and social media channels.

1.8 Measurement and Analysis The software SPSS will be used to do the statistical analysis of the data, which will consist in

different statistical analysis, since the survey will most probably consist of different kind of

questions (e.g.: open questions, closed questions). The data obtained with the conjoint

analysis will probably be analyzed using a linear model. Whereas the data from the self-

explicated conjoint attribute importance scores can be weighted to produce so-called “self-

explicated utility values” for each attribute level, which indicate the utility for each

respondent and can also be averaged for all. It also has to be considered, that there is not

always a scale equivalency between different countries. Especially when using formative

measurement models, a “basic premise for establishing scale equivalence for formative

constructs is the availability of generic effects or consequences” (Wagner, Wetzels, &

Winklhofer, 2005, p. 5). A different sequential testing procedure has to be applied, than for

reflective constructs (ibid). In order to obtain valid results, the cross-cultural scale

equivalence has to be measured after obtaining the final data.

1.9 Benefits and Possible Problems The benefits of the online survey are that it is a quick and easy way to contact people in the

different countries. The fact that it is done with software enables the use of an interactive

design, without which a self-explicatory conjoint analysis would not be possible. Since

participants from two countries will be answering the questions, this will allow a more

general conclusion arising from the results. However, there will be limitations to the study

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Exposé Master Thesis – Marijana Olden 31

because the moderating factors between ethnocentrism and purchase intention will not be

taken into account. These might be different between the countries and therefore are an

unknown factor.

Possible problems could be presented by a low number of participants or the fact that only

people with internet access and considerable English skills will be able to answer to the

survey. That may result in a focus on a certain age group or a certain level of economic

wealth, which is not intended and would influence the result.

Generally, since only two countries are analyzed, the results are not globally representative

but can only show a trend in these European countries.

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6. OVERVIEW OF CHAPTERS 1. Introduction

1.1. Relevance of the Subject

1.2. Research Question and Objective of the Thesis

1.3. Basics and Preliminary Definitions

1.4. Overview over Structure and Contents in Following Chapters

2. Theoretical Part

2.1. Consumer Perception of COO of Domestic Brands over Time

2.2. Concept of Country-of-Origin

2.3. Concept of Consumer Ethnocentrism

2.3.1. CETSCALE

2.3.2. Antecedents of Ethnocentrism

2.3.3. Moderating Factors of Ethnocentrism

2.3.4. Other Models Influencing Country-of-Origin Effect

2.4. Product Cue Importance

3. Empirical Study

3.1. Methodology

3.1.1. Research Design

3.1.2. Research Question & Hypothesis

3.1.3. Attributes and Levels

3.1.4. Construction of Tasks

3.1.5. Target Group

3.1.6. Instrument Design

3.1.7. Data collection

3.1.8. Statistical Analysis

3.1.9. Results

4. Conclusion

4.1. Managerial Implications

4.2. Limitations and Future Research

5. Bibliography

6. Appendix

7. Personal affirmation in lieu of oath

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7. TIMELINE Weeks Phase Subject

01.09.14 – 13.10.14 Research Create Exposé

14.09.14 – 09.11.14 Theory I Work on theory part

10.11.14 – 30.11.14 Survey I Create the survey, pre-test,

send to participants

01.12.14 – 14.12.14 Theory II / Intermediate

report draft

Finish theory and prepare

intermediate report draft

15.12.14 – 01.01.15 Buffer / Survey II Buffer – Send reminder, find

new participants

02.01.15 – 11.01.15 Survey III Start analyzing survey

12.01.15 – 30.01.15 Intermediate report Improve intermediate report

after feedback

01.02.15 – 09.02.15 Buffer Buffer

10.02.15 – 30.04.15 Survey VI Draw conclusions on survey

and finalize thesis

01.05.15 – 30.05.14 Final Report Create final report

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Exposé Master Thesis – Marijana Olden 34

8. REFERENCES

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