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Country of Origin: A Competitive Advantage?

Intern. J. of Research in Marketing 16 1999. 255-267

13 Pages Posted: 15 Feb 2014  

Jagdish Agrawal

California State University, East Bay

Wagner A. Kamakura

Rice University

Date Written: 1998

Abstract

Country of origin has been identified in the literature as an important cue that might be used by global marketers to influence consumers’ valuation of the brand. Its effect on consumer perceptions, affect and behavioral intentions has been widely documented, based on consumer surveys and laboratory experiments. Despite this empirical evidence, we argue that country of origin is only one extrinsic cue among many extrinsic and intrinsic cues available to the consumer in a real purchase situation. Furthermore, in real life, consumers are likely to engage in some level of information search, which would further dilute the country of origin effect in the marketplace. Based on these arguments, we conclude that country of origin might not necessarily lead to a competitive dis.advantage in terms of a price premium or discount. For a sample of products, we show that the objective product quality varies significantly by country of origin, and that these differences are consistent with extant research on country of origin effects on consumers’ perceptions. After controlling for quality differences across brands, we demonstrate that marketers from different countries charge prices that are justified by differences in product quality. Price premiums or discounts are therefore explained by differences in product quality rather than the image effect produced by the country of origin cue.

Keywords: Country of origin, Meta-analysis, Hedonic regression, Competitive advantage, Objective quality of brands

Suggested Citation

Agrawal, Jagdish and Kamakura, Wagner A., Country of Origin: A Competitive Advantage? (1998). Intern. J. of Research in Marketing 16 1999. 255-267. Available at SSRN: https://ssrn.com/abstract=2395395

Jagdish Agrawal

California State University, East Bay ( email )

25800 Carlos Bee Boulevard
Hayward, CA California 94542
United States

Wagner A. Kamakura (Contact Author)

Rice University ( email )

6100 South Main Street
P.O. Box 1892
Houston, TX 77005-1892
United States
(713) 348-6307 (Phone)

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