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Country of Origin Effectson PurchasingManagers Product
PerceptionsSadrudin A. AhmedAlain dAstousMostafa El Adraoui
INTRODUCTIONAs the manufacture of products and the search for
sup-
pliers become increasingly global activities, the understand-ing
of buyers attitudes and behavior with respect to globalproducts
takes on greater importance. One very activestream of research in
the area of consumer/buyer purchas-ing behavior, the study of
country-of-origin effects, seeksto understand how individuals
perceptions of products areaffected by knowledge of the country
where the productswere made. The interest in the study of
country-of-origin
This research was funded by the Social Sciences and Humanities
ResearchCouncil of Canada. The authors acknowledge the support f
the CanadianAssociation of Purchasing Managers during the data
collection phase of the study.
Address correspondence to Alain dXstous, Faculty of
Administmtion, Universityof Sherbrooke, Sherbrooke (QuCbec), Canada
JlK 2Rl.
effects eflects the increasing complexity of the
marketplace.Current country-of-origin research attempts to examine
suchimportant question as, What do organizational buyers thinkof a
product designed in a country, manufactured in an-other, and
carrying a brand name associated with a thirdcountry (e.g., a Honda
car designed in the United Statesand assembled in Mexico)?
Past research indicates that both household and indus-trial
buyers evaluations are based on their assessment ofproduct cues,
which may be intrinsic (taste, design, per-formance) or extrinsic
(brand name, country of origin).Buyers often make judgments about
product quality andpurchase value on the basis of extrinsic cues,
particularlywhen it is not easy to assess the intrinsic value of a
product[19]. This is why country of origin, an extrinsic cue,
isoften used to judge foreign products.
Industr ial M arketi ng M anagement 23, 323-332 1994)o Elsevier
Science Inc., 1994655 Avenue of the Americas, New York, NY
10010
3230019-8501/94/$i.O
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Give prospects a reason to buyIn the marketing literature,
attention has been given toexamining the extent to which
country-of-origin knowledge
influences product purchase decisions. Several issues havebeen
considered, including buyers involvement and/orfamiliarity with a
product category, knowledge of a partic-ular country, experience
and expertise in purchase deci-sion making, and the presence of
other extrinsic productinformation cues. By relating industrial
buyers perceptionsof product quality and purchase value to country
imagesin a context where information on other cues such as
brandname, price, and warranty is also available, decision
makerscan better understand how preferences for their productsare
formed. Research like this provides insight into whatunderlines
industrial buyers attitudes towards productsmanufactured in
different countries. Industrial marketingmanagers can benefit by
knowing when promoting a prod-ucts country of origin is helpful and
when it is not.
Research has shown that a products country of originaffects the
perceptions of industrial buyers [6,23,3 I]. How-ever, the number
of country-of-origin studies that have beenconducted with
industrial buyers is very limited in com-parison with those that
have focused on household buyers[5, 261. Since the buying behavior
of these two types ofbuyers is somewhat different 1321, the
empirical findingsfrom consumer research may not be readily
applicable toindustrial buyers. There is therefore a need for more
re-search on the role of country-of-origin cues in the
purchasebehavior of industrial buyers.
In order to meet global competition, many corporationsare
manufacturing and assembling and sometimes even con-ceiving,
designing, and engineering products abroad, innewly industrialized
countries. However, past and recentstudies have shown that products
made in newly industri-
SADRUDIN A. AHMED is Professor of Marketing at theUniversity of
Ottawa.ALAIN dASTOUS is Professor of Marketing at the University
ofSherbrooke.MOSTAFA EL ADRAOUI is a Ph.D. student at the icole
desHautes Etudes Commerciales, Montreal.
324
alized countries are evaluated negatively [II]. Workers insuch
countries are perceived to be technologically un-sophisticated
[25]. In the context of the North AmericanFree Trade Agreement
(NAFTA) and the inclusion of Mex-ico, a newly industrializing
country, it seems important forinternational industrial marketers
to examine the reactionsof Canadian and United States industrial
buyers towardmade-in-Mexico products. This may also prove
interest-ing for those firms in other developed countries that
manu-facture products in newly industrialized countries for ex-port
to North American markets. For example, Japanesecompanies planning
to manufacture products in Mexicoto take advantage of the gradual
elimination of U.S. andCanadian trade barriers coming out of NAFTA
should takeinto consideration buyers reactions to the
made-in-Mexicolabel. Although because of lower labor costs, lax
environ-mental regulations, and tax concessions, it may appear
ad-vantageous for developed country firms to implementmanufacturing
facilities in newly industrializing countries,negative attitudes
toward a country of origin can adverselyaffect the perceived
quality and purchase value of products.
In planning the present study, special attention was givento
some important considerations emanating from past re-search.
Firstly, country-of-origin studies have often assessedthe impact of
country image along a single attribute, thatis product quality.
Recent research indicates, however, thatcountry image is really a
multi-attribute construct 1271. Thisstudy therefore incorporates
two attributes of country im-age perceptions, namely perceived
quality and purchasevalue. Secondly, as Bilkey and Nes [5] and
others havepointed out, in order to avoid an overestimation of the
effectsof country of origin, it is necessary to present other
ex-trinsic information cues such as brand name, price, andwarranty
along with the country-of-origin cue. A few re-cent
country-of-origin studies have followed this advice [28].Thirdly,
country of origin is not a unidimensional concept.Many products are
designed in one country and manufac-tured in another [8]. This
hybrid nature of products mayor may not be inferred directly from
knowledge of brandname, which is often associated with a companys
countryheadquarters [26]. It is therefore important to
distinguishbetween two dimensions of country or origin, namely
de-sign (conception, engineering) and assembly. Fourthly,
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studies have shown that country-of-origin effects vary
acrossdifferent product categories [16]. The importance of
thecountry-of-origin cue seems to depend on such product
char-acteristics as technological complexity, financial risk,
andcountry specialization (e.g., French perfumes, Turkish
car-pets). For this reason and also because of the need to
gener-alize findings, country-of-origin effects must be
studiedacross different types of products. Finally, among
research-ers who have used a multi-cue approach to examining
made-in effects, very few have used Mexico as a country of ori-gin
(but see [15]). As mentioned previously, Mexico is ofspecial
interest for industrial marketers in the context ofNAFTA.In this
article, we present results from a study conductedwith members of
the Canadian Association of PurchasingManagers. The first objective
of the research was to geta better understanding of the impact of
country of originon purchasing managers product perceptions by
distinguish-ing between country of design and country of
assembly.The second objective was to examine how purchasingmanagers
perceptions of products made in Mexico areaffected by a change from
a single cue setting to a multiplecue setting.DEVELOPMENT OF
RESEARCH PROPOSITIONS
Research indicates that knowledge of country of origindoes
indeed influence buyers perceptions of products [ I.A major
criticism of early studies is that country of originwas the only
information respondents received about theproducts they had to
evaluate. Recent studies [2,28] haveaddressed this problem and
confirmed the significant im-pact of country of origin on the
subjective evaluation ofconsumer products when other information
concerning var-ious product characteristics is available.The few
studies that have examined country-of-origineffects on industrial
buyers evaluations have reached simi-lar conclusions [l, 6,9,30].
Three studies have also exam-ined the impact of additional
information cues besides coun-try of origin on the evaluations of
industrial buyers [17,22,3 11. The findings of these studies have
enhanced our un-derstanding of the role of information cues in
industrialbuying and have also provided insights about the
mediat-ing role of individual characteristics such as education,
in-come, and age.In most studies, country of origin has so far been
treatedas a unidimensional concept, i.e., the country where
theproduct is made.As Oszomer and Cavusgil[26] have notedhowever,
the concept of country of origin has not been
clearly defined by the great majority of researchers. Dueto the
globalization of markets, for many firms the designand assembly
operations associated with the making of aproduct may not take
place in the same country. Accord-ing to Chao (81, hybrid products
will be more and morepresent in the global marketplace because of
the changingstrategies of global corporations. Research must
thereforeadopt a multidimensional perspective on country of
originby distinguishing between the country of design and
thecountry of assembly.According to Johansson [19], country of
origin is extrinsicinformation allowing buyers to make inferences
about theintrinsic value of a product. Hastak and Hong [18]
arguethat the relative importance of country of origin
diminisheswhen additional information regarding the product suchas
brand name, price, warranty, etc. is provided. Brandname is
commonly used by buyers when making judgmentsabout quality and
purchase value and has been shown tomoderate the effects of country
of origin [20]. In addition,brand names carry some of the
information usually as-sociated with countries of origin with their
implicit refer-ence to corporate headquarters. In general though,
for in-dustrial buyers who have a greater expertise in
purchasedecision making and who have a greater willingness to
de-vote cognitive efforts to this task, brand name would beless
informative, since it would not serve as a good proxyfor country of
origin. Quality assurance programs such aswarranty reduce purchase
risk and may also have a posi-tive impact on perceived quality.
Price information shouldaffect the perceived purchase value of
products. In lightof these considerations, our research design
includes rele-vant extrinsic cues (brand name, price, quality
assurance)to moderate the impact of country of origin on buyers
per-ceptions.
In general, the importance of a summary cue such ascountry of
origin is directly related to its ability to reducethe uncertainty
surrounding a decision. When there arc per-ceived differences
between countries regarding their com-petency in the design and
production of products, the effectof made-in should be stronger. On
the other hand, whendesign and production technologies are
standardized andmarkets are relatively homogenous, buyers are less
likelyto use country of origin as a proxy for quality and pur-chase
value. Inversely, when markets are heterogeneousand there is a
noticeable variability in manufactured prod-ucts, one should expect
significant country-of-origin effects.When a product is at the
beginning of its life cycle, withunstandardized design and
production technologies, vari-ability in the quality of design and
production between coun-
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Looking for ver ge needs inevitably leadsto false
estimations
tries is more likely, and buyers perceptions should beaffected
by knowledge of country of origin [19].
To summarize, this study seeks to understand how buyersproduct
perceptions are affected by knowledge of countryof design and
country of assembly when other informa-tion concerning such
attributes as brand name, price, andwarranty is also available. It
seeks also to find out if country-of-origin effects vary across
categories of products differ-ing in terms of technological
complexity. With the precedingdiscussion in background, the
following three propositionsare put forward:
PI:
P2:
PA
Organizational buyers perceptions of the quality andpurchase
value of products are more favorable whenthese products are
designed and/or assembled in de-veloped countries than when they
are designed and/orassembled in a newly industrializing
country.Information concerning brand name, price, and war-ranty has
a significant impact on buyers perceptionsof the quality and
purchase value of products.The effects of country of design and
country of as-sembly on buyers perceptions will be attenuatedwhen
other information concerning brand name,price, and warranty is
available.
METHODResearch Design and Questionnaire
The methodology used to estimate the impact of coun-try of
origin and the other informational cues is conjointanalysis. This
methodology uses product profiles con-structed by combining in a
factorial manner the attributeschosen for the analysis. Subjects
provide evaluations of allproduct profiles on rating scales. Figure
1 shows an exam-ple of one of the profiles employed in the study.
Percep-tions on perceived quality and purchase value in this
studywere measured with two nine-point bipolar scales.
Table 1 presents the conjoint research design. Three cat-egories
of products were selected for study: computer sys-tem, fax machine,
and ballpoint pens. The choice of these
products was guided by our desire to include
productsrepresenting different levels of financial risk,
technologi-cal complexity, purchase difficulty, and organizational
in-volvement [29], so as to increase the generalizability ofthe
findings. Each product profile comprises five cues: coun-try of
design, country of assembly, brand name, price, andguarantee (or
delivery for pens). The cues themselves areoperationalized using
three levels chosen to correspond tothe market conditions
prevailing at the time the data werecollected. Canada (developed
country) and Mexico (newlyindustrializing country) were included as
countries of de-sign and assembly along with a third prestigious
country(Japan for the computer system and the fax machine, Ger-many
for the ballpoint pens). Brand names were chosenso as to create
differences in prestige and reputation. Pricesand levels of
warranty (or delivery) also show significantvariations.
Combining all attribute levels results in 243 (37profiles for
each product category. In order to make theprofile evaluation task
possible for respondents, a one-ninthconfounded block fractional
factorial was constructed [lo],so that only nine profiles had to be
evaluated for eachproduct.
Computer designed in CanadaAssembled in Mexico
Brand name is SeikochaPrice is 12,000
Warranty is 3 yearsYour Evaluation:
Very bad Very goodquality 1 3 4 5 6 7 8 9 qualityVery bad Very
goodbuy 1 2 3 4 5 6 7 8 9 buy
FIGURE I Example of conjoint profile.
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In addition to the conjoint task, the questionnaire com-prised a
first part where 13 countries had to be evaluatedas locations for
the conception, design, and engineering(country of design); and
manufacturing and assembly (coun-try of assembly) of industrial
products using a nine-pointscale (mediocre/excellent). In order to
make sure that theconcepts of country of design and country of
assembly wereclear for all respondents, these were explained in
detail.This was followed by a series of questions concerning
prod-uct familiarity, product involvement, purchase
expertise,purchase experience, and company and personal
charac-teristics.Data Collection
The data were collected with the collaboration of theCanadian
Association of Purchasing Managers (CAPM)in the province of Qukbec.
The questionnaire was writtenin French language. At the time the
study was conducted(between June 23 and July 23 1992), the Qu6bec
divisionof the CAPM comprised 1,193 members. A total of
943telephone calls were made to contact these individuals and332
were reached. In order to be eligible for the survey,the individual
had to be personally involved in the pur-chasing function. A total
of 306 persons directly involvedin purchasing accepted to answer
the questionnaire. Com-pleted questionnaires were received by mail
from 175 pur-chasing managers. Only two questionnaires were
discardedbecause they were not filled out properly. The final
samplethus comprises 173 purchasing managers representing 14%of the
Qukbec division of the CAPM.TABLE 1Study Design
Country of design
Country of assembly
Brand name
Price
Warranty or delivery
Computer FaxSystem Machine
Canada CanadaJapan JapanMexico MexicoCanada CanadaJapan
JapanMexico MexicoIBM XeroxFujitsu ToshibaSeikocha Samsung$16,ooO
$1,300$12,ooo $1,000
$8,000 $7003 years 24 months2 years 18 months1 year 12
months
BallpointPens
CanadaJapanMexicoCanadaJapanMexicoPaper-MateStaedlerBit$1.20$0.80$0.40FastMediumS
OW
RESULTSSample Description
Table 2 presents some descriptive statistics about the sam-ple.
The mean age of the organizations to which membersof the CAPM
belonged is 42 years, with average annualsales and purchasing
budgets of $63 and $30 million (Cana-dian dollars), respectively.
These firms employ on average500 employees, and 50 % of them are
involved in manufac-turing operations.The mean age of the
respondents is 43 years, and theirpurchasing experience is 14 years
on average. About three-fourths of the respondents are male, and
56% occupied amanagerial position at the time the study was
conducted.The respondents who occupied a managerial position
tendedto be from smaller-size firms. Comparisons between thesample
and the membership population on characteristicswhere information
was available indicated that there wereno systematic sampling
biases. By and large, the sampleappears to be representative of the
population.Direct Evaluations of Countries
Table 3 presents the mean evaluations of the 13 coun-tries as
locations for the design and assembly of industrialproducts. As
mentioned before, these evaluations concernindustrial products in
general. As can be shown, developedcountries are better evaluated
in general than newly indus-trializing countries as locations for
the design and assem-
TABLE 2Sample Characteristics
CharacteristicsOrganizational
Mean ageMean yearly salesSector of activity
ManufacturingGovernmentOther
Mean number of employeesMean purchasing budget
PersonalMean ageMean purchasing experienceSex
MaleFemale
FunctionManagerialBuyerOther
42 years$63 million50%14%36%500$30 million43 years14
years76%24%56%35%9%
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Customer analysis must precedecompetitor analysis
bly of industrial products. This result supports our first
re-search proposition. It is interesting to note also that
newlyindustrializing countries are consistently better evaluatedas
locations for the assembly of industrial products thanas countries
of design. The average evaluation of newlyindustrializing countries
increased from a mean of 3.6 forcountry of design to 4.2 for
country of assembly, the lowestdifference being associated with
India (0.3) and the highestwith Mexico (0.9). Interestingly, South
Korea, which isa newly industrialized country, rated almost as well
as
TABLE 3Evaluations of Countries of Origin
Countries
Country of Country ofDesign Assembly
Mean Rank Mean Rank DifferenceDeveloped countries
JapanGermanyUnited StatesCanadaFranceItalyBelgiumOverall
mean
Newly industrializedcountry
South KoreaNewly industrializing
countriesBrazilMexicoMoroccoIndiaRussia
Overall meanComparisons
Japan/MexicoCanada/MexicoGermany/MexicoJapan/CanadaGermany/CanadaDeveloped/newly
industralizing
1.6 1 8.6 1 (1.0)7.6 1 7.6 2 -6.8 3 6.6 4 0.26.7 4 6.9 3
(0.2)6.1 5 6.1 5 _5.8 6 5.9 6 (0.1)5.2 7 5.4 7E E (0.2)(0.2)
5.1 8 5.8 7 (0.7)
4.2 9 4.9 9 (0.7)3.9 10 4.8 10 (0.9)3.5 11 4.0 11 (0.5)3.3 12
3.6 13 (0.313.2 13 3.7 123.6 c
(0.5)(0.61
3.1 3.82.8 2.13.7 2.80.9 1.70.9 0.72.9 2.5
* Mean values range from 1 to 9.
328
France and Italy as a country of assembly. It rated
slightlyhigher than Belgium as a country of assembly and almostas
well as a country of design.Manipulation Checks
A series of repeated-measures analyses of variance [24]were
conducted in order to verify that there were significantdifferences
between the three product categories in termsof importance of
purchase, search for information, anddifficulty in decision making,
as well as significant differ-ences between the brands and
countries of origin makingup the conjoint design. All differences
were statisticallysignificant and in the predicted
direction.Evaluation of Product Profiles
Table 4 presents the analysis of variance results for thethree
product categories. The two dependent variables areperceived
quality and purchase value. The mean squaresindicate that for both
dependent variables, country of de-sign explains a larger
proportion of common variance thancountry of assembly. This result
holds across the three prod-uct categories. Also, country of design
explains a relatively
TABLE 4Analysis of Variance Results: Mean Squares and
StatisticalSignificance Levels
Computer Fax BallpointSource of Variation System Machine
Pens
Perceived qualityCountry of design 437* 354* 316*Country of
assembly 174* 157* 129*Brand name 50* 36* 1Price 1 5
3Warranty/delivery 14* 2 13*Total of the five cues 676 554 462
Purchase valueCountry of design 301* 229* 170*Country of
assembly 189* 206* 137*Brand name 45* 48* 2Price 165* 73*
271*Warranty/delivery 47* 8 130*Total of the five cues 747 564 710*
Significant at p < 0.01.
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larger proportion of variance for perceived quality than
forpurchase value. Moreover, the greater the
technologicalcomplexity of the product, the larger the statistical
effectof country of design.
Although brand name has a statistically significant im-pact on
the perceived quality and purchase value of the com-puter system
and the fax machine, its explanatory poweris much smaller than that
of the country-of-origin cues. Onaverage, the mean squares
associated with brand name is13 times smaller than that of the
country-of-origin cues takentogether. Brand name has no significant
effect when it comesto the evaluation of ballpoint pens. The
largest proportionof common variance explained by brand name is for
thepurchase value of a computer.
Price and warranty/delivery have almost no impact onperceived
quality, On the other hand, they have a substan-tial and
statistically significant impact on the purchase valueof the
computer and the ballpoint pens. When consideringthe purchase value
of ballpoint pens, purchase managersare more influenced by price
than by country of design orcountry of assembly.
Taken together, these results partially support our sec-ond
research proposition. The impact of brand name, price,and warranty
(delivery) on purchasing managers evalua-tions of products is
contingent upon the product categoryand the type of judgment
considered (quality versus pur-chase value).Additional Analyses
Additional analyses were conducted to assess the impactof the
firmk sector of activity on purchasing managers evalu-ations of
product profiles. Sector of activity was operation-alized as a
two-level variable, manufacturing versus other,and included as a
supplementary factor in the analyses ofvariance. Results indicated
that sector of activity was notsignificantly related to the
evaluations. Some statisticallysignificant interactions with the
other cues were found, butin none of the analyses did the
interactions explain morethan 2 % of the common variance. It was
thus concludedthat the firms sector of activity had a minimum
impact onthe results.Comparison of Single Cue and Multiple
CueEvaluations
Table 5 presents the marginal means associated with coun-try of
design and country of assembly as well as the corre-sponding
single-cue means obtained from direct ratings (seeTable 3). The
marginal means come out of the conjointdesign. They reflect the
evaluation of each country (Canada,
Mexico, and Japan or Germany), taking into account theother
informational cues, i.e., brand name, price, and
war-ranty/delivery. As can be seen, for both perceived qualityand
purchase value, intercountry differences between
mar-ginal/multiple-cue means are much narrower than thosebetween
direct/single-cue means. These differences aresomewhat greater for
country of design than for countryof assembly.
For purpose of comparison, Table 5 shows the differ-ences in
single-cue and multiple-cue ratings between Ja-pan (or Germany) and
Mexico, Canada and Mexico, andJapan (or Germany) and Canada.
Looking at the Ja-pan/Germany-Mexico and Canada-Mexico differences,
itcan be seen that purchasing managers negative perceptionsof
Mexico are attenuated when other informational cuesare present. For
instance, the single-cue difference betweenJapan/Germany and Mexico
for the design of industrialproducts in general is 3.7. The
corresponding differencesin marginal means for the purchase value
of a computersystem are 1.5, 1.3 for a fax machine, and 1.5 for
ball-pointpens. As for the Japan/Germany versus Canada
ratings,Table 5 shows a similar attenuation of differences from
TABLE 5Single Cue Versus Multi Cue Evaluationsof Countries of
Origin
Japan or (1) (4 (1)Germany Canada Mexico minus minus minus(1)
(2) (3) (3) (3) (2)
Country of designComputer qualityComputer valueFax qualityFax
valuePen qualityPen valueAverage qualityAverage valueSingle-cue
mean*
Country of assemblyComputer qualityComputer valueFax qualityFax
valuePen qualityPen valueAverage qualityAverage valueSingle-cue
mean
JapanGermany
6.8 6.5 5.16.1 5.8 4.66.9 6.6 5.36.3 6.1 5.07.0 6.6 5.56.0 5.8
4.96.9 6.6 5.36.1 5.9 4.87.6 6.7 3.96.6 6.4 5.55.9 5.8 4.86.7 6.4
5.66.3 6.0 5.16.7 6.6 5.85.8 6.0 5.06.7 6.5 5.66.0 5.9 5.08.6 6.9
4.87.6 6.9 4.8
1.7 1.4 0.31.5 1.2 0.31.6 1.3 0.31.3 1.1 0.21.5 1.1 0.41.1 0.9
0.21.6 1.3 0.31.3 1.1 0.23.7 2.8 0.91.1 0.9 0.21.1 1.0 0.11.1 0.8
0.31.2 0.9 0.30.9 0.8 0.10.8 1.0 0.21.1 0.9 0.21.0 0.9 0.23.8 2.1
0.12.8 2.1 0.9
*The single-cue evaluations of Germany and Japan as countries of
designwere the same.
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There is no single best wayof segmenting markets
single-cue to multiple-cue situations. For instance,
thedifference in single-cue evaluations between Japan andCanada for
the assembly of industrial products in generalis 1.7. In multi-cue
situations, this difference practicallydisappears.
These results support our third research proposition. Itappears
that in multi-cue situations, prejudice against anewly
industrializing country is reduced considerably andthat differences
between developed countries are
practicallynonexistent.DISCUSSION
The results presented in this article must be examinedin light
of a number of limitations. The data were collectedthrough a
questionnaire rather than through monitoring ofa real life purchase
situation. Only a limited number ofproducts, brands, and countries
were included in the re-search design. Finally, the survey
participants come froma single Canadian province. Therefore,
interpretation ofour findings must be done with great care.
If, however, some credence can be given to this research,the
results should be of interest to industrial marketers.They show
that country of design is a more important cuein organizational
purchase decisions than country of as-sembly and brand name. In
this study, newly industrializ-ing countries were rated quite
poorly as countries of as-sembly and even worse as countries of
design. It seemsthat purchasing managers feel that there is a
significant dis-crepancy between newly industrializing and
developedcountry skills in sheer assembly or manufacturing of
prod-ucts and an even greater discrepancy in the
conceptualiza-tion, design, and engineering of industrial
products.Country of design is a more important indicator of
prod-uct quality and purchase value than country of assembly,and
its importance is positively related to product com-plexity. For
purchase managers, the more complex the prod-uct technology, the
greater the perceived importance of de-sign skills.
The fairly good ratings obtained by South Korea as a
330
country of assembly in this study are quite interesting. Itis
possible that Canadian purchase managers have little buy-ing
experience of products assembled in Belgium, France,and Italy,
which would lead to less well-informed opin-ions about these
countries. It may also be the case that thequality of products
assembled in South Korea is just as highas in some developed
countries like Belgium and that Cana-dian purchasing managers
judgments are just reflecting thisfact.
Unlike several studies conducted among household buyerswhere
brand name was found to be an important predictorof quality and/or
purchase value [2, 7, 131, in the presentstudy brand name played a
very limited role. In thesestudies, country of origin was defined
as simply the loca-tion where the products were made. Perhaps by
incorporat-ing the notion of country of design in the research
design,we were able to isolate that part of the brand image thatis
related to the companys headquarters and the implicitassociation to
product design. Thus, in this study brandname would reflect only
the prestige of different manufac-turers. But it may also be
possible that purchasing managers,being more rational and informed
than household buyers,are less likely to be swayed by brand names.
In recent studiescarried out with Canadian [14] and Belgian [3]
householdbuyers that have distinguished between country of
designand country of assembly, brand name was found to havemuch
greater importance. In both studies in fact, brandname was a
stronger predictor of the quality and purchasevalue of automobiles
than either country of design or coun-try of assembly. Further
evidence in favor of the rational-ity explanation comes from the
fact that in comparison withhousehold buyers, purchasing managers
in this study gavemore weight to price and warranty/delivery when
evaluat-ing profiles.
The greater importance attached to country of designby
purchasing managers as compared to household buyersis another
interesting difference. In previous householdstudies [2, 131,
country of design received just as muchweight as country of
assembly. It appears that purchasingmanagers are more willing to
buy a product that is assem-
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Team members are responsible forthe entire process
bled in an newly industrializing country, provided it is
de-signed in a developed country.
The differences between the perceptions of different coun-tries
of origin are substantially reduced when other infor-mation is
provided along with made-in. Although the per-ceptual differences
between newly industrializing countriesand developed countries
remain statistically significant,those between developed countries
virtually disappear.Thus, when purchasing managers are presented
with othercues such as brand, price, and warranty (or delivery),
de-veloped countries are treated homogenously, and the prej-udice
toward newly industrializing countries diminishes.It seems that in
the case of a newly industrializing country,appropriate pricing,
warranty, and delivery policies maycounter the negative perception
of a country of origin.IMPLICATIONS
The results presented in this article have strategic
impli-cations for industrial marketers. The implications
concerninternational sourcing, branding, pricing, quality
assurance,and promotion policies. Our results show that country
oforigin is a very important extrinsic cue used by purchas-ing
managers, especially when judging the quality of a tech-nologically
complex product. Moreover, country of designhas more impact than
country of assembly on purchasingmanagers perceptions. Thus, an
industrial marketer sell-ing a technologically complex product
designed in a pres-tigious country will be well advised to promote
this infor-mation to his/her customers in order to influence
theirdecision-making process.
Countries of origin such as Germany and Japan hold greatprestige
among North American household and organiza-tional buyers. However,
if a North American corporationis able to reassure its customers by
improving the qualityof its products and communicating this
information throughbrand name promotion, quality assurance
programs, andattractive pricing policies, it should be able to
counter theprestigious image of some foreign countries of origin.
Dur-ing the 1980s the quality of North American products im-
proved considerably. Corporations having undertaken pro-grams of
quality improvement should be heartened by ourresults, which
indicate that purchasing managers appearto treat developed
countries equally when presented withmultiple cues.
North American firms are facing enormous price com-petition from
foreign firms in domestic markets. Shiftingmanufacturing facilities
to a newly industrializing countrysuch as Mexico in order to reduce
production costs is aninteresting competitive strategy. Our results
show, however,that country of assembly is a significant cue used by
pur-chasing managers. Therefore, North American firms
withproduction facilities in less prestigious countries of
originshould be ready to implement appropriate pricing and
war-ranty/delivery strategies to counter negative biases.
Ourresults indicate that there is less bias against a newly
in-dustrializing country when it is an assembly location thanwhen
it is a design location. Therefore, to enhance the qual-ity image
of their products and counteract the negative im-age of a country
of assembly such as Mexico, domesticindustrial marketers should
emphasize country-of-designinformation through advertising and
sales promotion. Thisadvice also applies to firms from other
developed coun-tries marketing in North America products assembled
inindustrializing countries.
The negative perceptions that purchasing managers holdtoward
products (especially technologically complex prod-ucts) conceived,
designed, or engineered in newly indus-trializing countries is
rather disheartening for those cor-porations located in such
countries. However, perceptionsof countries as producers of
consumer and industrial goodscan change over time, as the example
of Japan has shown[12]. One strategy for dealing with the problem
is to as-semble products designed in newly industrializing coun-try
in developed countries, just like Hyundai, a South Kor-ean
automobile manufacturer, does by assembling someof its cars in
Canada. Perhaps, this may in part explain therelatively positive
attitudes that Canadian purchasingmanagers have toward products
made in South Korea.
As this study has shown, organizational and household
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buyers appear to have somewhat different reactions
tocountry-of-origin cues. Given the small number of
studiesconducted with organizational buyers and the
apparentdifficulty in generalizing results from studies conducted
withhousehold buyers, it is recommended that further researchbe
conducted with industrial buyers. Such studies wouldbe of great
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