The Impact of Ethnocentrism and Country-of-Origin on Russian Consumers’ Attitude towards Swedish Airline Services

MASTER'S THESIS

The Impact of Ethnocentrism and

Country-of-Origin on Russian Consumers’ Attitude

towards Swedish Airline Services

Tatiana Axelsson

Veronika Vakhrameeva

2016

Master (120 credits) Business Administration

Luleå University of Technology

MASTER’S THESIS

The Impact of Ethnocentrism and

Country-of-Origin on Russian Consumers’ Attitude

towards Swedish Airline Services

Tatiana Axelsson

Veronika Vakhrameeva

Lulea University of Technology Master Thesis in International Business

Department of Business Administration and Social Sciences Division of Economy, Technology and Society

ABSTRACT

Purpose of this research is to describe the constructs of consumer ethnocentrism and country-of-origin on the Russian market and to investigate their impact on attitude towards services provided by Swedish airline services. For obtaining the research objectives, the data was collected using online survey of Moscow inhabitants. A questionnaire was developed using 6-item version of the CETSCALE, multidimensional country image scale and attitude and beliefs scales. The data from 85 structured questionnaires was analyzed with the following statistical techniques: descriptive analysis, regression analysis, independent-samples t-test and analysis of variants. The results of the research demonstrate that consumer ethnocentrism does not have a significant impact on attitude of Russian consumers towards services of Swedish airlines. However, the positive impact of country-of-origin on it has been revealed. We also have found that the level of consumer ethnocentrism in Russia shows a tendency to decrease during the last 20 years. The findings also suggest that there is no significant difference in level of consumer ethnocentrism, country-of-origin and attitude between various demographic groups (gender, age, education and occupation).

Key words: consumer ethnocentrism, CETSCALE, country-of-origin, attitude towards foreign

SAMMANFATTNING

Syftet med uppsatsen är att beskriva konstruktioner av konsumentetnocentrism och ursprungsland på den ryska marknaden samt att undersöka deras effekter på konsumenternas attityd till tjänster som tillhandahålls av svenska flygbolag. För att uppnå syftet i studien samlades data in med hjälp av en online-enkät, vilken skickades till olika Moskvabor. I uppsatsen används ett frågeformulär som utvecklats med hjälp av en sexpunktsversion av CETSCALE, som på ett flerdimensionellt sätt reflekterar ett lands attityd och övertygelser i olika skalor. Data från åttiofem strukturerade enkäter analyserades med följande statistiska metoder: beskrivande analys, regressionsanalys, t-test och analys av varianter. Resultaten av undersökningen visar att konsumentetnocentrism inte har en signifikant inverkan på de Ryska konsumenternas attityd till tjänster som tillhandahålls av svenska flygbolag. Däremot har ursprungslandet en positiv effekt på de Ryska konsumenternas attityd. I uppsatsen redovisas en upptäckt att nivån på konsumentetnocentrism i Ryssland visar på en tendens att minska under de senaste tjugo åren. Resultaten visar att det inte finns någon signifikant skillnad i nivån på begreppen konsumentetnocentrism, ursprungsland och attityd bland olika befolkningsgrupperna, vilka delades efter kön, ålder, utbildning och yrke.

Nyckelord: consumer ethnocentrism, CETSCALE, country-of-origin, attitude towards foreign

ACKNOWLEDGEMENT

This master thesis is written at the division of Industrial Marketing and E-commerce at Lulea University of Technology and concludes two years of study in the field of international business. Working on the thesis has been challenging, but interesting and positive. We would like to take an opportunity to thank all the people, who have contributed to this thesis and without whom, the purpose of this study would not be obtained.

First and foremost, we sincerely appreciate the assistance and support of our supervisor and mentor Professor Joseph Vella from the University of Malta. His valuable comments and insight gave us inspiration and direction throughout the thesis.

Of course, we would like to thank all the respondents, who took time out of the daily work and participated in the survey. They gave us valuable material for this research.

Last but not least, we are grateful to our families for their support and encouragements to write the thesis.

Tatiana Axelsson Veronika Vakhrameeva

TABLE OF CONTENTS

1. INTRODUCTION ... 1

1.1 Background ... 1

1.2 Problem Discussion ... 2

1.3 Purpose of the Research ... 4

1.4 Research Questions ... 4

1.5 Delimitations ... 5

2. LITERATURE REVIEW ... 6

2.1 Consumer Ethnocentrism ... 6

2.2 Country-of-Origin ... 13

2.3 Review of the Literature Pertaining CE and COO ... 19

2.4 Differences between Consumer Ethnocentrism and Country-of-Origin ... 20

2.5 Review of the Literature Pertaining Investigations of CE and COO in Russia ... 21

2.6 Review of the Literature Pertaining Investigation of Air Transport Services ... 22

2.7 Theoretical Framework ... 24 3. METHODOLOGY ... 25 3.1 Research Approach ... 25 3.2 Literature Search ... 26 3.3 Research Instrument ... 26 3.4 Sample ... 28 3.5 Data Collection ... 28

3.6 Statistical Analysis of Data ... 29

4. RESULTS ... 35

4.1 Sample Characteristics ... 35

4.2 Descriptive Analysis ... 35

4.3 Reliability ... 37

4.4 Correlations between CE, COO and Consumers’ Attitude ... 37

4.5 Demographic Factors Affecting Consumer Ethnocentrism ... 40

4.6 Demographic Factors Affecting Country-of-Origin ... 43

4.7 Demographic Factors Affecting Consumer’s Attitude ... 45

5. DISCUSSION ... 49

5.2 Impact of Demographic Factors on CE, COO and Consumers’ Attitudes towards

Swedish Airline Services ... 49

5.3 Consumer Ethnocentrism ... 51

5.4 Country-of-Origin Effect ... 51

5.5 Theoretical Significance of the Research ... 51

5.6 Practical Significance of the Research ... 52

5.7 Limitations and Proposals for Future Research ... 52

REFERENCES ... 53 APPENDICES Appendix 1 ... 63 Appendix 2 ... 64 Appendix 3 ... 65 Appendix 4 ... 66 Appendix 5 ... 69 LIST OF TABLES Table 3.1 Characteristics of the Research Constructs ………30

Table 4.1 Sample Characteristics ………..35

Table 4.2 Means and Standard Deviations of Consumer Ethnocentrism ………..………36

Table 4.3 Means and Standard Deviations of Country-of-Origin...………...36

Table 4.4 Means and Standard Deviations of Consumers’ Attitude ………37

Table 4.5 Reliability Coefficient ………..……37

Table 4.6 Model Summery ………38

Table 4.7 ANOVA ………38

Table 4.8 Correlations between Research Constructs...………38

Table 4.9 Coefficients Beta for Consumer Ethnocentrism and Country-of-Origin …………..39

Table 4.10 Coefficients Beta for Country-of-Origin Facets .………40

Table 4.11 Descriptive Differences of Demographic Characteristics of Consumer Ethnocentrism ….40 Table 4.12 Descriptive Differences of Demographic Characteristics of Country-of-Origin ….43 Table 4.13 Descriptive Differences of Demographic Characteristics of Consumers’ Attitude .45 Table 4.14 Statistical Significance for Research Constructs and Demographic Factors ….….48 Table 5.1 CET Score in Russia ……….…49

LIST OF FIGURES

Figure 2.1 Consumer ethnocentrism, its antecedents and outcomes ………12

Figure 2.2 Country-of-origin influence: antecedents, moderators and outcomes……….18

Figure 2.3 Theoretical framework of the study ………24

Figure 4.1 Mean values of consumer ethnocentrism in different age groups ………41

Figure 4.2 Mean values of consumer ethnocentrism in different educational groups …………42

Figure 4.3 Mean values of consumer ethnocentrism in groups with different occupation ……42

Figure 4.4 Mean values of country-of-origin in different age groups ………44

Figure 4.5 Mean values of country-of-origin in different educational groups ……….44

Figure 4.6 Mean values of country-of-origin in groups with different occupation ………45

Figure 4.7 Mean values of consumers’ attitude in different age groups ……….46

Figure 4.8 Mean values of consumers’ attitude in different educational groups ………47

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1. INTRODUCTION

This chapter presents the background of the study, features of services and their place in international trade. The concepts of consumer ethnocentrism and country-of-origin are described as well as their roll in international trade. Further the gaps in existing literature pertaining these two concepts are discussed, which leads to the research purpose and research questions for the study. Finally, the delimitations and the outline of the study are presented.

1.1 Background

Expanding business activity internationally is a way for a company to obtain new markets (Hollensen, 2014). The necessity to internationalization is caused by different factors. The most significant of them are to grow further or just to survive in a highly competitive domestic market (Ruyter, Birgelen & Wetzels, 1998). Political liberalization and reduction or elimination of entry barriers have provided companies with an opportunity to operate in foreign markets (Barumwete & Rao, 2008). These processes have also contributed the economic development both of single countries and the whole world (World Bank, 2009). Today a huge number of companies are engaged in global activities selling, buying and distributing products and services. Export and import of goods, services and capital across national boundaries are known as international trade. (Heakal, 2015)

The service industry takes a great share of international trade. Exporting different kind of services has steadily increased over the past decade at an average rate of 5 percent a year and accounts nowadays for about 20 percent of overall world trade. In some countries the share of international service export is even higher, for example, in Austria it accounts for 36 percent and in Spain 39 percent of international trade. (Bizmove business guide, 2015)

As a rule, highly innovative and specialized services are exported. These include travel and tourism, transportation, banking, financial and insurance services, telecommunications and information systems, computer and data services, legal and accounting services, architectural, construction and engineering services, education and training, entertainment, E-business. The travel and tourism industry, for example, is at present one of the world’s largest industries (The World Bank). In 2014 it generated US $ 7.6 trillion (10% of global GDP) and accounted for 9.4% of world employment (World Travel & Tourism Council).

Services differ from goods significantly, specifically because they are:

- Intangible, which makes them unable to touch or evaluate unlike goods. This characteristic can cause difficulties in communicating services to consumers, pricing decisions, patent protection and storage of services for future use.

- Inseparable, which reflects interconnection between service providers and their customers. So consumers are directly involved in the service production process. - Heterogeneous, which reflects the variability inherent in the service delivery process.

This characteristic makes it difficult to standardize and provide a quality control on a regular basis.

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- Perishable, which makes it impossible to store services, so that they are more time dependent. (Hoffman, Bateson, Wood & Kenyon, 2014)

Besides financial, performance, physical, social and psychological risks, services are considered to have a higher level of perceived risks of purchase than goods. This results from the difficulty in producing a standardized service. Consequently, consumers may find it hard to anticipate the quality of service they are about to consume. Consumer involvement in the service production process is another source of perceived risk. Being a part of a process and not knowing exactly what is going on, increases the uncertainty of the consequences. Moreover, evaluation of the service occurs during or after its consumption. High level of perceived risk is also associated with the limited information before the purchase of a service. (ibid) The above mentioned types of risks together with services provided by relatively unfamiliar foreign companies can lead to an even higher level of perceived risk (Ruyter et al., 1998). Exporting services may increase these risks, because perception of the services takes place within a cultural context of the importing country, therefore marketing of services should be adjusted to suit different cultures (Hollensen, 2014).

1.2 Problem Discussion

International business depends mainly on consumers’ preferences, their evaluation and attitude towards domestic versus foreign products and services. The analysis of consumers’ preference model concerning domestic versus foreign products has received much attention in the international marketing literature (Cumberland, Solgaard & Nikodemska-Wolowik, 2010; Mokaitis, Salciuviene & Ghauri, 2013; Pecotich & Rosenthal, 2001; Watson & Write, 2000). The spread of products manufactured in other countries has increased the importance of the country of origin of these products. Previous studies have established that consumers as a rule prefer domestic products towards foreign ones (Cleveland, Laroche & Papadopoulos, 2009; Poon, Evangelista & Albaum, 2010). This domestic preference was theoretically explained by Shimp andSharma in 1987, when they proposed a construct of consumer ethnocentrism, which is defined as “the beliefs held by consumers about the appropriateness, indeed morality of purchasing foreign made products” (p. 280).

Consumer ethnocentrism (CE) represents a preference for domestic products based on nationalism. Ethnocentric consumers believe that buying foreign products is unpatriotic and can negatively impact their domestic economy, while non-ethnocentric consumers evaluate foreign products based on their attributes regardless the products country of origin (Watson & Write, 2000). Ethnocentric consumers decline from purchasing foreign products, because of their loyalty towards domestic products and their home country as well. In turn, such tendencies may cause negative attitudes towards foreign products. (Shimp & Sharma, 1987)

Ruyter et al. (1998) argue that the same explanation applies to the service industry. Ethnocentric consumers believe that the use of services provided by foreign companies can jeopardize their domestic economy, and in turn, negatively affect their own personal well-being, in terms of less prosperity or higher unemployment rates. Such tendencies cause systematic preference of domestic services and rejection of foreign services. However, the analysis of the role of

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consumer ethnocentrism within an international services marketing context has received little attention in the international marketing literature.

Country-of-origin (COO) effect is an obstacle, or intangible barriers that a product or service confronts when entering a new market (Wang & Lamb, 1983, as cited in Al-Sulaiti & Baker, 1998). Country-of-origin is a potential competitive differentiator for many products and services on the foreign markets (Dinnie, 2004). It serves as an extrinsic product informational cue (Maheswaran, 1994) which mitigates risk for consumers (Cordell, 1992; Han, 1989; Roth & Diamantopoulos, 2009). Together with other extrinsic cues such as price, brand name and guarantees, it serves as an intangible product attribute, while intrinsic cues such as taste and design, serve as tangible attributes of the product (Bilkey & Nes, 1982; Pharr, 2005; Schaefer, 1997). Some researchers claim that country-of-origin has a stronger impact on consumers’ attitude than price, brand name or quality (Lanz & Loeb, 1996; Okechuku, 1994).

Consumer ethnocentrism as well as country-of-origin effect are the challenges for companies that export or plan to export their services across national boundaries. However, studies about the effects of country image and ethnocentrism on consumers’ perception of services provided from abroad are limited. Pertinent scholarly articles seem to focus on products such as jeans, cars, shampoo, furniture, clothes, shoes, juice, food, beer, cereal, ice-cream, alcohol, home appliances, laptops, TV, tractors and so on (Al-Sulaiti & Baker, 1998; Dinnie, 2004). Al-Sulaiti and Baker (1998) in their content analysis identified only a few studies that investigate services, more specifically the link between national effects and consumers’ perception of services, among them: ophthalmology (Harrison-Walker, 1995), airline carriers (Bruning, 1997; Kaynak, Kucukemiroglu & Kara, 1994), tourism (Chan, Chan & Leung, 2010). We managed to find only one study that focuses on consumers’ concept of ethnocentrism with respect to ten different kinds of services, including travel service (Wetzels, Birgelen & Ruyter, 1996).

Dinnie (2004) names two major weaknesses which are common for the most studies in country-of-origin area: they have been usually carried out on student samples and focused on tangible products rather than intangible services. Researches investigate consumers’ attitude toward goods, and the most commonly used product in country-of-origin studies is a color television (Lim & Darley, 1997). It is also argued that some researches were conducted not in the realistic settings but artificially created situations (Dinnie, 2004). Authors emphasize that applicability of theories and models of country-of-origin effects should be examined separately in each country and culture (Hâubl, 1996, as cited in Dinnie, 2004). Despite extensive literature on country-of-origin effects, the question of how much influence it provides on consumers’ evaluations of product still remains unanswered (Al-Sulaiti & Baker, 1998). Besides, it still remains to be discovered whether consumers’ attitude towards services are similar to that of products (Cheng, Chen, Lai & Li, 2014).

Researchers point out that despite the importance of the issue, consumers’ behavior towards international services has not been comprehensively investigated (Bradley 1995; Javalgi, Cutler & Winans, 2001). The same situation is with the country-of-origin concept. Chen et al. (2014) claim that very limited attention has been emphasized on the country image effect in service industry. The authors underline that research within these areas should be continued.

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The vast majority of existing country-of-origin literature is overwhelmingly focused on Western nations/US and European consumers (Al-Sulaiti & Baker, 1998; Badri, Davis & Davis, 1995; Dinnde, 2003). Contextual influences of emerging economies seem to have been overlooked by researchers (Moskaitis et al., 2013; Pentz, Terblanche & Boshoff, 2013). The Russian market is not an exception in this respect. Authors highlight the relatively few studies referring to Russian consumers’ attitudes, and their behavior towards domestic and foreign products linked to consumer ethnocentrism and country-of-origin effect (Durvasula, Andrews & Netemeyer, 1997; Good & Huddleston, 1995).

A review of studies on interrelations between consumer ethnocentrism, country-of-origin and attitudes towards foreign goods shows that the level of consumer ethnocentrism in Russia is heavily dependent on dramatic political and cultural changes that took place over the last ten years. Going back to 1997, Russian consumers preferred American foods, however a 2005 study revealed a reduction of CE level, specifically showing that purchasing decisions were being affected by nostalgia, which resulted in a preference to old Soviet brands rather than foreign ones. (Saffu & Walker, 2005) Nostalgia as a specific antecedent to ethnocentrism for Russian consumers is also mentioned by Thelen, Ford, and Honeycutt (2006). The authors concluded that further studies are needed to determine tendencies in consumer ethnocentrism level in Russia.

Taking into account that consumers’ attitude towards foreign products can differ significantly from one country to another (Morello, 1984, as cited in Mockaitis, A. I., Salciuviene, L. & Ghauri, P. N., 2013) as well as the limited knowledge pertaining to consumers’ attitudes towards foreign services on the Russian market, investigation of impact of country-of-origin effect and consumer ethnocentricity have significant theoretical and practical importance.

1.3 Purpose of the Research

Almost all countries have state-owned airline carriers. Countries follow the principle of national sovereignty over airspace, which prevents foreign ownership of national carriers. Thus, the promotion of airlines on the international markets is associated with national characteristics of the country-of-origin. That is why airlines usually are not global and considered as important national symbols. (Cheng et al., 2014)

Consumer decision to buy air travel tickets is usually highly involving and nonspontaneous. If a consumer has never used a service of the specific airline carrier before, or has no intrinsic cues, he evaluates the service by observing an extrinsic cue, such as image of the country-of-origin. Thus, research of its impact together with consumer ethnocentrism on consumers’ attitude would be actual. On the basis of all stated above we have formulated the following purpose for this research: to describe the constructs of consumer ethnocentrism and country-of-origin on the Russian market and to investigate their impact on attitude towards services provided by Swedish companies in the public transport area, specifically airline service.

1.4 Research Questions

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1. What is the current level of consumer ethnocentrism in Russia?

2. How do demographic factors impact the consumer ethnocentrism, country-of-origin and consumers’ attitudes in Russia?

3. How does ethnocentrism impact Russian consumers’ attitudes towards Swedish airline services?

4. How does country-of-origin impact Russian consumers’ attitudes towards Swedish airline services?

1.5 Delimitations

Being Russians by origin the authors take an advantage of the language and contacts in Russia, thus the choice of Russian market for this thesis is obvious. It focuses on the concepts consumer ethnocentrism and country-of-origin as they, on the one hand, are not investigated properly on the non-student sample of in Russia, and, on the other hand, may become significant challenges for service companies when entering Russian market. Furthermore, airline services are chosen since tourism and travel industry is one of the largest in the world and Russians are considered to be one of the most traveling nations, despite some decline during the last few years due to economic and political environments both in Russia and in the world (ITB World Travel Trends Report, 2014). Finally, the research is limited by the geographic area (Moscow) and age (18-61+) due to this urban group is considered to be the most frequent travelers on both business and private trips.

Research Outline

The research contains five chapters, namely:

Introduction, Literature review, Methodology, Results and Discussion.

Chapter 1 Introduction presents the background of the study, the problem as well as purpose and research questions. The chapter is concluded by descriptions of delimitation of the study. Chapter 2 Literature review introduces the earlier studies relevant to the research purpose and questions.

Chapter 3 Methodology describes methods of collecting and analyzing the empirical data and discusses reliability and validity of the study.

Chapter 4 Results presents statistical analysis of the information obtained from the survey for the current research.

Finally, in chapter 5 Discussion findings and answers to the research questions as well as suggestions for future research are discussed, along with practical implications for managers and theoretical significance of the research.

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2. LITERATURE REVIEW

This chapter presents a literature review of previous studies and theories pertaining consumer ethnocentrism and country-of-origin, their antecedents, moderators, mediators and outcomes. The relationship between CE and COO and differences between the concepts are discussed. Besides a review of studies pertaining investigations of CE and COO in Russia, as well as air transport services are presented. The chapter concludes with the theoretical framework for the research.

2.1 Consumer Ethnocentrism

Ethnocentrism is a concept rooted in sociology, anthropology, and social psychology (Durvasula et al., 1997). Sumner (1906) introduced the concept and defined ethnocentrism as the technical name for view of things in which one’s own group is the center of everything, and all others are scaled and rated with reference to it. Attitude towards out-groups are negative and willingness to associate with them is low (Sumner, 1906; Summer, 1940). Triandis (1994) has identified the following characteristics of ethnocentrism:

- everything that happens in one’s own culture is natural and correct and what happens in other cultures is unnatural and incorrect,

- one’s own in-group customs and traditions are perceived as universally valid, - one’s own in-group norms, roles and values are perceived as correct,

- it is natural to help and cooperate with one’s own in-group members, feel proud of being an in-group member and mistrust members outside one’s own group.

The main functions of ethnocentrism are to help to secure the survival of groups and their culture as well as to increase a group’s cooperation, loyalty, solidarity, conformity and effectiveness (Catton, 1960; Lynn, 1976; Mihalyi, 1984, as cited in Sharma et al., 1995). More specifically, ethnocentrism is the tendency:

- to separate different groups,

- to perceive happenings in terms of the group’s own interest, such as economic, political and social,

- to see one’s own group as the center of the universe and regard their way of life as superior to others,

- to be suspicious towards other groups, - to neglect and disdain other groups,

- to see one’s own group as superior, strong and honest, while other groups as inferior, weak and dishonest. (LeVine & Campell, 1972, as cited in Sharma, Shimp & Shin,

1995)

According to Lewis (1976), ethnocentrism is a universal phenomenon which is rooted in most areas of intergroup relationships. It can be observed in various situations, such as in politics, social life and even in business, for example between corporate headquarters and foreign subsidiaries, where control, organizational structure and implemented technology are normally the same as in the home country. Similar situations occur when a company uses the same

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marketing methods in foreign markets as in the home country; when a company sends its top managers or sales representatives abroad to lead the foreign affiliate, or to perform sales functions. (Hollensen, 2014)

Sometimes consumers go so far as to refrain from purchasing products or services produced by foreign companies. According to Shimp and Sharma (1987), this phenomenon is identified as consumer ethnocentrism, which is considered to be an economic form of ethnocentrism. It is defined as “consumer preference for domestic products, or prejudice against imports” (Sharma et al., 1995, p. 26). Consumer ethnocentrism focuses on willingness to decline from purchasing products made in foreign countries and the consumers’ loyalty and responsibility to products made in their own country. This concept results from the love for one’s own country and the anxiety of losing control of one’s economic interests caused by the harmful economic effects that imports can bring about. Buying foreign made products becomes not only an economic issue but also a moral one for highly ethnocentric consumers. It is considered to be good, correct, appropriate and patriotic to refrain from consuming imported products, and vice versa, bad, incorrect, inappropriate to buy them. This leads to domestic products’ consumption, even if these are inferior in quality and superior in price when compared to foreign products. Moreover, consumer ethnocentricity results from a personal level of prejudice against foreign products. (ibid)

Consumers’ ethnocentrism does not develop in isolation. Sharma et al. (1995) have developed a model, which helps explain why and under which conditions customer ethnocentrism arises. Furthermore, they identified socio-psychological concepts as well as demographic factors, which can impact the level of consumer ethnocentrism and, therefore consumers’ attitudes towards foreign products. This model was empirically tested, validated and completed by other researchers. Later Shankarmahesh (2006) made a comprehensive overview on previous research, summarizing the antecedents and consequences of consumer ethnocentrism.

“Antecedents are precursors to or determinants of a construct” (Pharr, 2005, p. 35). There are four categories of antecedents, which may influence the level of consumer ethnocentrism: socio-psychological, economic, political and demographic.

Socio-psychological antecedents

- Cultural openness. This concept is determined by the individuals’ willingness to interact with people from other cultures, experience their values and artifacts, which, in its turn, may reduce cultural prejudice (Sharma et al., 1995). Studies found a negative relationship between cultural openness and consumer ethnocentrism (Howard, 1990; Shimp & Sharma, 1987). However, Skinner (1959) observed that some individuals, such as travelers, diplomats and border dwellers, who typically have more contact with other cultures, tend to be extremely ethnocentric or nationalistic (as cited in Shankarmahesh, 2006). However, Vida, Dmitrovic, and Obadia (2008) did not confirm cultural openness, among the antecedents of consumer ethnocentrism.

- Worldmindedness. This concept points to a “world-view of the problems of humanity” (Sampson & Smith, 1957; Skinner, 1988, as cited in Shankarmahesh, 2006). Some of

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the characteristics of world minded individuals are their interest in international business and development of consensus between different cultures and countries (Gomberg, 1994). Studies found a negative relation between worldmindedness and consumer ethnocentrism (Rawwas, Rajendran & Wuehrer, 1996).

- Patriotism. This concept is defined as love for or devotion to one’s country (Sharma et al., 1995). Studies found a positive relationship between patriotism and customer ethnocentrism (Klein & Ettenson, 1999; Netemeyer, Durvasula & Lichtenstein, 1991; Sharma et al., 1995).

- Conservatism. Conservative individuals “show a tendency to cherish traditions and social institutions that have survived the test of time and to introduce changes only occasionally, reluctantly and gradually” (Sharma et al., 1995, p. 28). Studies seem to indicate a positive relationship between conservatism and consumer ethnocentrism (Balabanis, Mueller & Melewar, 2002; Sharma et al., 1995).

- Collectivism/individualism. According to Hui and Triandis (1986) individuals in collectivist cultures tend to subordinate their personal goals to the goals of a group and the group functions as a source of one’s identity. Individuals in individualistic cultures have the tendency to behave as if a society is the only means to their ends. Thus collectivistic persons reveal more ethnocentric tendencies than individualistic persons. (Shankarmahesh, 2006). There is empirical support of a positive relationship between collectivism and consumer ethnocentrism (Sharma et al., 1995).

- Animosity. This concept is defined as the remains of antipathy to previous or ongoing military, political or economic events that may impact consumers’ buying decision. As a rule, animosity is directed towards specific countries, not all (Klein, Ettenson & Morris, 1998). It is claimed that animosity and consumer ethnocentrism interrelate with each other, but future studies should investigate the merit of animosity as an antecedent of consumer ethnocentrism (Shankarmahesh, 2006).

- Materialism. This concept refers to material possession as substitutes for the absence of satisfying interpersonal relations (Rindfleisch, Burroughs & Denton, 1997). Empirical studies showed a positive relationship between materialism and consumer ethnocentrism (Clarke, Shankarmahesh & Ford, 2000).

- List of values. The term is defined as “a specific end state of existence or specific mode of conduct that is preferred to an opposite end state or mode of conduct for living one’s life”. There are two kinds of values: internal, which are measured by such notions as “self-respect” or “self-fulfillment” and external, which are measured by “fun and enjoyment in life” or “being well respected.” (Kahle, 1983) Studies found a positive relationship between external values and consumer ethnocentrism (Clarke et al., 2000). - Salience. This concept concerns a perceived moral dimension and is considered to be one of the main facets of consumer ethnocentrism. It holds buyers of foreign made

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products to be morally responsible for the predicament of domestic workers who lose their jobs due to international competition. Cooperation in purchasing domestic products is viewed as a form of “helping behavior.” Salience means the perceived threat to domestic workers and industries. Empirical studies showed a positive relationship between salience and consumer ethnocentrism. (Olsen, Biswas & Granzin, 1993) - Dogmatism. This concept is defined as an individual characteristic to see the world in

black and white (Caruana, 1996). Studies reported a significant positive relationship between dogmatism and consumer ethnocentrism (Caruana, 1996; Shimp & Sharma, 1987).

Economic antecedents

Economic environment is considered to be an influencing factor of consumer ethnocentrism. Some authors suggest that there is a negative relationship between capitalism and ethnocentrism (Rosenblatt, 1964, as cited in Shankarmahesh, 2006). Schuh (1994) claims that different stages of economic development may impact consumers’ preferences for imports. During the transition period from a state controlled economy to the market economy, consumers have a more favorable attitude towards foreign products (especially western products), because of their good quality and novelty, as well as status symbolism and curiosity. At the same time, when an economy goes to the intermediate stage of transition, nationalistic motivations become dominant. When an economy is in a developed state, ethnocentric buying behavior tends to decrease. (ibid) Empirical studies found a negative link between beliefs of improving national economy and consumer ethnocentrism. Another conclusion is the belief that improved personal financial conditions may reduce the level of consumer ethnocentrism. (Klein & Ettenson, 1999)

Political antecedents

Some authors argue that political propaganda is one of the antecedents of consumer ethnocentrism (Rosenblatt, 1964). Leaders or government propaganda, and political histories of different countries may determine the level of ethnocentrism. Consumers who belong to countries with a long history of oppression tend to be more ethnocentric than consumers who belong to conquering countries (Good & Huddleston, 1995). These hypotheses should be empirically tested in multi-country situations (Shankarmahesh, 2006).

Demographic antecedents

Studies concerning purchase behavior towards foreign products and consumer ethnocentrism take demographic parameters as a separate set of antecedents.

- Age. Some studies showed a positive relationship between age and consumer ethnocentrism: younger people have lower consumer ethnocentrism than older people (Caruana, 1996; Good & Huddleston, 1995; Klein & Ettenson, 1999). Other studies did not find any statistically significant relationship between these two variables (Sharma et al., 1995). Some older studies even found a consistent significant positive relationship

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between age and positive evaluation of foreign products (Bannister & Saunders, 1978; Schooler, 1971; Wall & Heslop, 1986, as cited in Shankarmahesh, 2006).

- Gender. Some empirical studies support the proposition that women are more ethnocentric than men (Good & Huddleston, 1995; Sharma et al., 1995). However, there are several studies that did not find any significant gender differences (Caruana, 1996; Saffu & Walker, 2005) while some other studies found men to have higher ethnocentric scores than women (Bannister & Saunders, 1978; Schooler, 1971; Dornoff, Tankersley & White, 1974, as cited in Shankarmahesh, 2006).

- Education. With a few exceptions, most studies found a negative relationship between education and level of consumer ethnocentrism (Caruana, 1996; Good & Huddleston, 1995; Klein & Ettenson, 1999; Shimp, 1984; Wall & Heslop, 1986). More educated persons have no ethnic prejudices (Watson & Johnson, 1972) and have tendencies to be less conservative (Ray, 1990). However, Saffu and Walker (2005) did not find a negative correlation between education and level of consumer ethnocentrism with Canadian and Russian consumers. Han (1988) did not find significant relationship between education and consumer ethnocentrism.

- Income. Major studies found a negative relationship between income level and consumer ethnocentrism. Increased income provides more opportunity to travel abroad and buy foreign products (Sharma et al., 1995; Shimp, 1984; Wall & Heslop, 1986). Some studies showed no income impacts (Han, 1988) and others found a positive link between income and level of consumer ethnocentrism (Tan & Farley, 1987).

- Race/ethnic group. The empirical evidence is contradictory. Some studies found no significant relationship between race and level of ethnocentrism (Klein & Ettenson, 1999; Piron, 2002). A study conducted by Zarkada-Fraser and Fraser (2002) revealed minorities to be more favorable to foreign products than the majority ethnic group. Vida et al. (2008) observed that ethnic affiliation (national identity and nationalism) has a significant effect on consumer ethnocentrism.

- Social class. A number of scholars support the theory that ethnocentrism tends to fall when consumers move up the social ladder (Klein & Ettenson, 1999; Shimp, 1984). However, other studies did not find any correlation between class differences and the level of consumer ethnocentrism (Caruana, 1996).

The primary motive for studying consumer ethnocentrism is to investigate how this concept impacts consumers’ buying decisions towards domestic, as opposed foreign products. It can be expressed in such constructs as “willingness to buy domestic products” (Olsen et al., 1993), “attitudes towards foreign products” (Ruyter et al., 1998), “attitudes towards buying foreign products” (Sharma et al., 1995), “purchase intention” (Han, 1988). Different researchers have identified direct and indirect consequences of the relationship between consumer ethnocentrism and various outcomes, as well as how moderators and mediators may affect these outcomes.

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Direct outcomes

Some researches argued that consumer ethnocentrism causes negative attitude towards foreign products (Sharma et al., 1995), willingness to buy foreign products (Klein et al., 1998), or support foreign retail outlets (Zarkada-Fraser & Fraser, 2002). Others found a positive correlation between ethnocentrism and purchase intention towards domestic products (Han, 1988). Besides, one study did not demonstrate any direct effect of ethnocentrism on consumers’ evaluation of product quality, or on their buying intention (Cumberland et al., 2010).

Outcomes through mediators

Researchers consider perceived equity, costs, responsibility, empathy and country-of-origin as possible mediators between consumer ethnocentrism and willingness to purchase foreign products (Olsen et al., 1993). It is argued that consumer ethno-nationalism influences negatively perceived equity, because ethnocentric consumers perceive international competition as unfair to domestic economy. As a result, decreased perceived equity may influence consumers’ intention to purchase domestic, as opposed to foreign products. It is argued that consumer ethno-nationalism positively influences empathic feelings for individuals who are perceived to be similar to the customer. This empathy towards the in-group may then increase consumers’ intention to purchase domestic products (Rosenblatt, 1964). Researches claim that greater ethno-nationalism would decrease the perceived costs of helping the in-group, which inevitably results in ethnocentric consumers having tendencies to take no notice of personal economic cost when purchasing domestic products. They propose that as perceived equity decreases, customers’ responsibility increases. As a result, they exhibit an intention to purchase domestic products (Olsen et al., 1993). Country-of-origin is considered to be another important mediator between consumer ethnocentrism and purchase intention (ibid.; Han, 1988). Han (1988) posits that consumer patriotism affects country image but the relationship is moderated by the significance of products. Some researchers include consumer ethnocentrism as one of the antecedents of country-of-origin (Brodowsky, 1998).

Outcomes through moderators

There are two moderating factors between consumer ethnocentrism and consumers’ attitude towards foreign products: perceived product necessity and perceived economic threat. Perceived product necessity is defined as the extent to which a foreign product is necessary to consumers personally, or to the domestic economy. It is indicated that the effect of consumer ethnocentrism on attitudes towards foreign products, is stronger for products which are perceived to be unnecessary. Perceived economic threat is defined as the threat that foreign competitors pose to consumers personally, and/or to the domestic economy. Consumer ethnocentrism influences attitudes mainly for products that are perceived to threaten individual or the domestic economy. (Sharma et al., 1995) Cultural similarity is understood to be another moderating factor, which may impact the relationship between consumer ethnocentrism and product evaluation (Watson & Wright, 2000).

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Shankarmahesh (2006) has summarized the previous studies on the antecedents and consequences of the consumer ethnocentrism concept and built an integrated graphic framework (Figure 2.1).

Figure 2.1 Consumer ethnocentrism, its antecedents and outcomes Source: Shankarmahesh, 2006, p. 161

Additionally, to above-mentioned antecedents, some authors point out that the level of CE varies among product categories. Sharma et al. (1995) indicated that consumers exhibit greater ethnocentric tendencies toward less important product categories. Conversely, Javalgi, Khare, Gross and Scherer (2005) concluded that the impact of CE on the purchasing intention of a particular product, decreases when this product is perceived as being absolutely necessary. Hamelin, Ellouzi, and Canterbury (2011) argue that CE is affected by product categories and level of involvement.

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CETSCALE

To measure consumers’ ethnocentric tendencies to act consistently towards domestic versus foreign products and services, Shimp and Sharma (1987) developed a Consumer Ethnocentric Tendencies scale (CETSCALE). They describe the scale as a measure of tendency, as “tendency captures the more general notion of a disposition to act in some consistent fashion toward foreign products in toto” (p. 281). It was initially constructed to examine the effects of American consumers’ ethnocentrism on beliefs, attitudes, purchase intention and behaviors towards foreign-made products.

The CETSCALE was developed from the initial pool of 225 items acquired from more than 800 consumers. After extensive purification and refinement, a total 17 items scale remained, which was later tested in different geographical areas across the United States. The results of their investigation reveal strong negative correlation between ethnocentric tendencies and general attitudes toward foreign-made products, the stronger the consumers’ level of ethnocentrism, the more likely they are to own a domestically manufactured automobile and/or the stronger their intention to purchase a domestically manufactured automobile (ibid.). The 17-item CETSCALE (see Appendix 1) has been translated in other languages and widely used in different studies analyzing ethnocentric tendencies in different countries and geographical areas and for many different product categories and services (Cumberland et al., 2010; Mockaitis et al., 2013; Ruyter et al., 1998; Watson & Write, 2000). In several studies the CETSCALE exhibited a high degree of reliability, validity and unidimensionality (Durvasula et al., 1997; Hult, Keillor & Lafferty, 1999; Jiménez-Guerrero, Gázquez-Abad & Linares-Agüera, 2014; Klein, J. G., Ettenson, R. & Krishnan, B. C., 2006).

Later a shorter version of the CETSCALE, which was based on the original 17-item scale, was developed. Shimp and Sharma (1987) proposed a 10-item CETSCALE, which was used in a number of studies (Supphellen & Rittenburg, 2001; Douglas & Nijssen, 2003; Balabanis & Diamantopoulos, 2004). Lindquist, Vida, Plank, and Fairhurst (2001) proposed revised individual country models with “better fit”: a 7-item scale for the Czech Republic, a 6-item scale for Poland, a 5-item scale for Hungary (as cited in Pentz et al., 2013). A valid and reliable version of CETSCALE containing 6 items was developed and tested in Russia and China (Klein et al., 2006), 3-item scale – in China (Qing, Lobo & Chongguang, 2012), 4-items scale – in Slovenia, Kazakhstan and the US (Reardon, Miller, Vida & Kim, 2005) and in Bosnia and Herzegovina (Vida et al., 2008). Respondents rated the items on a seven-point or a five-point, Likert-type scale. Jiménez-Guerrero et al. (2014) cautioned about the use of a scale developed in one country or cultural context, on specific product categories in other environments. The CETSCALE should be adapted to every geographical and cultural context in each empirical application, in order to exhibit both effective and reliable results.

2.2 Country-of-Origin

As early as in 1987 Tan and Farley (1987) described the impact of country-of-origin as being the “most researched international aspect of consumer behavior” (p. 540). More than 1000 studies on country-of-origin effect have been conducted during the recent 30 years (Usunier,

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2006). These include five comprehensive meta-analyses (Bilkey & Nes, 1982; Cavusgil, 1991; Oszomer & Liefeld, 1993; Peterson & Jolibert, 1995; Verlegh & Steenkamp, 1999) and a number of content analysis papers: for the period 1965-1997 (Al-Sulaiti & Baker, 1998); for the period 1965-2004 (Dinnie, 2004); and for the period 1995-2005 (Pharr, 2005).

Nowadays there are many definitions of the concept of country of origin. It can be regarded as the home country for a company where its corporate headquarters are located (Johansson, Douglas & Nonaka, 1985; Ozsomer & Cavusgil, 1991) or as “the country of manufacture or assembly” (Bilkey & Nes, 1982; Cattin, Jolibert & Lohnes, 1982; Han & Terpstra, 1988; Papadopoulos, 1993 and others). Country-of-origin or the “made-in” concept is described as a positive or negative influence on consumers’ attitudes, decision process or subsequent behavior (Elliott & Cameron, 1994). It is defined as the picture, image or stereotype that consumers attach to products made in a specific country (Nagashima, 1970). Country-of-origin effect is “the phenomenon of evaluating products based on judging the country of origin” (Chryssochoidis, Krystallis & Perreas, 2007, p. 1520).

Empirical studies before 1985 examined the impact of country-of-origin as a single product cue in isolation from other attributes such as product price and quality (Reierson, 1966; Reierson, 1967; Schooler & Wildt, 1968). Their results identified the strong influence of COO on consumers’ attitude towards specific products and their subsequent evaluations (Peterson & Jolibert, 1995). However, further studies from a multi-cue perspective, taking into consideration extrinsic product cues such as price and brand name, did not reveal any significant and direct country-of-origin effect on product evaluations, and/or purchasing intensions (Ahmed, Johnson, Yang, Kheng Fatt, Sack Teng & Chee Boon, 2004; Ettenson, Wagner & Gaeth, 1988; Hui & Zhou, 2002; Johansson, Douglas & Nonaka, 1985; Lin & Kao, 2004; Parameswaran & Pisharodi, 2002; Pecotich & Rosenthal, 2001; Teas & Argawal, 2000). Other authors argued that COO’s influence on consumers’ attitude towards foreign made products and their evaluation, is significant (Han, 1989). Further development went toward multifaceted investigations, considering different combinations of product, countries/economies and product attributes (Dinnie, 2004).

Country-of-origin image is developed by using different criteria: representative products, national characteristics, economic and political background, history and tradition (Roth & Romeo, 1992; Ruyter et al., 1998; Zhang, 1996), technical advancing (Agarwal & Sikri, 1996; Badri, Davis & Davis, 1995; Han, 1990), prestige (Agarwal & Sikri, 1996; Han, 1990; Roth & Romeo, 1992;), geopolitical dimension (van Ham, 2001) and culture (Roth & Romeo, 1992). According to Pharr (2005) there are two categories of antecedents to COO evaluations: endogenous (within consumers) – values and psychographic dimensions, and exogenous (outside consumers) – dimensions of the importing country.

Endogenous antecedents (Culturally derived factors)

- Ethnocentrism. There is no unity among authors regarding impact of CE on consumers’ preferences. Some authors argue that highly ethnocentric consumers prefer products from countries with the closest culture and politics. (Watson & Wright, 2000). However,

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Supphellen and Rittenburg (2001) found that ethnocentric consumers prefer imported products, if their quality is significantly higher than that of domestic ones.

- Hofstede’s societal dimensions – individualism/collectivism (Gürhan-Canli & Maheswaran, 2000).

- Consumers’ subcultural differences based on geographic region and language (Laroche, Papadopoulos, Heslop & Mourali, 2005).

- Consumers’ animosity (Klein et al., 1998).

- Stereotypes (Liu & Johnson, 2005; Parameswaran & Pisharodi, 2002).

Exogenous antecedents

- Level of economic development of country of origin (Verlegh & Steenkamp, 1999). - Type of information encountered by a consumer (Pharr, 2005).

- Similarity in culture and politics between countries. When imported products do not have domestic substitutes, similarity in culture and politics become more important. When there is a domestic substitute product, consumers prefer them, regardless of quality and price (Watson & Wright, 2000).

- Economic development. Consumers tend to prefer products made in developed countries because they are associated with high quality and low-cost. Less developed countries are associated with poor quality products (Darling & Kraft, 1997; Han, 1989; Lotz & Hu, 2001; Schooler, 1965).

Moderators of COO effect on product evaluations and purchase intentions

Like in the case of consumer ethnocentrism, demographic characteristics influence the relationships between COO and consumers’ evaluations and attitude. The following factors are indicated in the literature:

- age influences the preferences of countries (Guina & Giraldi, 2015; Schooler, 1971), - gender. Females evaluate foreign products more favorably than males (Guina & Giraldi,

2015; Heslop & Wall, 1985; Schooler, 1971),

- education. The higher the level of education, the more positive the attitude towards foreign products (Anderson & Cunnigham, 1972; Schooler, 1971),

- race/ethnic group. Groups composed of non-white and white people made different evaluations of products based on country-of-origin (Schooler, 1971).

Brand components:

- brand name (Ahmed & d-Astous, 1995; Miyazaki, Grewal & Goodstein, 2005),

- brand image. Brands with strong images can diminish the effects of negative COO evaluations (Jo, Nakamoto & Nelson, 2003),

- brand familiarity (Schaefer, 1997), - brand equity (Lin & Kao, 2004). Product attributes, both extrinsic and intrinsic:

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- Price. Some authors suggest that information about price is more important than COO information (Ahmed et al., 2004). Others suggest that price and COO interact to influence consumers’ evaluations of product quality (Miyazaki, Grewal & Goodstein, 2005). Still others suggest that price affects purchase intentions directly, however COO does not (Ahmed & d-Astous, 1995; Brunning, 1997; Hui & Zhou, 2002).

- Life cycle (Lampert & Jaffe, 1998; Niss, 1996).

- Type. COO has a significant impact on purchase intentions of luxury and publicly-consumed products, but not privately-publicly-consumed goods (Piron, 2000).

- Product importance, product complexity (Lin & Kao, 2004).

Individual consumer factors

- Consumers’ involvement (Ahmed et al., 2004; Schaefer, 1997; Guina & Giraldi, 2015; Gürhan-Canli & Maheswaran, 2000; Lee, Yun & Lee, 2005).

- Product familiarity has a more positive influence on evaluations for more complex products, not purchased frequently and a negative influence on simpler products purchased more frequently (Insch & McBride, 2004; Lin & Kao, 2004; Maheswaran, 1994).

- Lifestyle imagery that flows from the political system of a consumers’ country (Madden, 2003).

- Psychological factors: satisfaction assurance (Ahmed & d-Astous, 1995), need for cognition (Zhang, 1996), diverse consumers’ connotations and stereotypes (Lotz & Hu, 2001), level of experience (Maheswaran, 1994).

- Consumers’ cultural context (Askegaard & Ger, 1998; Harrison-Walker, 1995; Lotz & Hu, 2001).

- Subcultures within a country. National markets are not homogeneous and need to be segmented along cultural, rather than national lines. (Lenartowics & Roth, 2001) - International relations between nation states, geopolitical events and circumstances

(Quelch, 2003).

Investigated outcomes included attitudes, opinions, beliefs as well as purchase intentions of consumers. Generally, the outcomes of country-of-origin can be united into two main categories: 1) consumers’ perception/attitude/product evaluation and 2) consumers’ purchasing intension/purchasing behavior. (Dinnie, 2004) Sixty-three percent of studies, concerning the effects of COO, were focused on consumers’ perception of product quality rather than purchase intentions (Peterson & Jolibert, 1995).

Outcomes:

- Purchase intention. The results of empirical studies of the relationship between country-of-origin and purchase intention are inconsistent (Shankarmahesh, 2006). Some studies did not find any effect of country-of-origin on purchase intention (Han, 1988), while others found significant effects (Bannister & Saunder, 1978). COO does not affect purchase intention directly, but through product evaluations (Parameshwaran & Pisharodi, 2002) or through brand equity (Lin & Kao, 2004). A study conducted by

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Pecotich and Rosenthal (2001) failed to demonstrate any effect of county-of-origin on purchase intentions.

- Product evaluations. Types of product evaluations are: perceived quality, attitude and purchase intention (Verlegh & Steenkamp, 1999).

- Product quality perceptions/evaluations (Good & Huddleston, 1995; Hui & Zhou, 2002; Schooler, 1965). Verlegh and Steenkamp (1999) found that country-of-origin has a larger effect on perceived quality than on attitude toward the product, or even purchase intention.

- Attitudes towards foreign products (Reierson, 1966; Reierson, 1967). - Consumers’ purchase preference (Schooler & Wildt, 1968).

- Product perception (Lin & Kao, 2004; Schooler & Wildt, 1968).

Many researchers argue that there may be little, if any at all, direct impact of county-of-origin on purchase intentions and product perceptions. Product evaluations, perceived product value, brand equity and brand image, seem to have a stronger impact (Cumberland et al., 2010;Pharr, 2005).

Global production seems to redefine the perception of country of origin of products and services (Pharr, 2005). Most products are rarely manufactured in a single country Papadopoulos (1993). The term country-of-origin has become rather misleading in modern reality and should be replaced by the term product-country image (PCI), which takes into account economic globalization. Some authors use terms such as country-of-design (COD), country of parts (COP), country of assembly (COA) (Insch & McBride, 2004) issued by the U.S. Customs Service in 1996 (Pharr, 2005). The nation branding construct has a wider frame of reference in comparison to the narrow country-of-origin construct. However, the term country-of-origin is still widely used (Dinnie, 2004).

COO sometimes is incorporated into brand beliefs (Hong & Wyer, 1990). However, it should be distinguished from the concept of brand origin. Brand origin is a more inclusive concept, which can refer not just to the country, but to regions, such as Nordic, Rhine or Mediterranean (Thakor & Kohli, 1996, as cited in Dinnie, 2004) alternative continent of origin (Smith, 1993). Meanwhile, d’Astous and Ahmed (1999) observed that consumers may use a brand name as a proxy for country-of-origin. Quelch (2003) notes the tendency that famous national brands will try to increase the distance between themselves and country-of-origin and emphasize themselves as supranational brands when operating in markets synonymous with negative perceptions of country-of-origin.

Pharr (2005) has summarized the previous studies on the antecedents, moderators and outcomes of the country-of-origin concept in a holistic model of country-of-origin influences (Figure 2.2).

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Figure 2.2 Country-of-origin influence: antecedents, moderators and outcomes Source: Pharr, 2005, p. 40

Despite extensive literature on the subject there is no widely adopted theoretical structure of the country-of-origin concept. Researches reveal a lack of robust identification and measurement (Agarwal & Sikri, 1996), sometimes contradictory results and conclusions (Dinnie, 2004; Kaynak & Kara, 2002) and discrepancies in relation to the country of origin effect and its moderators (Guina & Giraldi, 2015). Most of studies are of ad hoc nature because country-of-origin effect heavily depends on context (Dinnie, 2004). Thus, a better conceptualization of the country-of-origin construct is needed (Laroche et al., 2005; Roth & Diamantopoulos, 2009).

Scale to measure the construct of country image

The scale to measure the construct of country-of-origin or country image had been developed by Martin and Eroglu (1993). They defined country image as “the total of all descriptive, inferential and informational beliefs one has about a particular country” (ibid, p. 193). Authors reviewed previous analytic and multi-dimensional scaling studies and literature on international business, political sciences, economics and sociology. Based on this analysis they identified the following underlying dimensions of this construct: political, economic, technological and social desirability. The study showed that the fourth dimension – social desirability – was not a separate dimension but fell within the other three factors (ibid).

The proposed scale is of semantic differential format as most commonly used for measuring images of brands, products, stores, countries, institutions and so on (ibid). It allows the researches measuring, assessing and comparing the image of a concept or objects with similar

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topics (Alreck & Settle, 1985, as cited in Marting & Eroglu, 1993). Semantic differential is supposed to be the most accepted and relevance in marketing researches (Malhotra, 1981, as cited in Marting & Eroglu, 1993).

The initial scale consisting of 29 item was tested on sample of 200 undergraduate and graduate students. Due to the principal component analysis and the criterion of meaningfulness, the number of items was decreased to 14 items. Revised 14-items scale was tested on a new group of 230 undergraduate students. It than had been checked for reliability and validity by use of various indicators and statistical techniques (Cronbach’s alpha, factor analysis, squared multiple correlations). As the result, the 14-item semantic differential scale was developed.

2.3 Review of the Literature Pertaining Consumer Ethnocentrism and Country-of-Origin

Consumer ethnocentrism and country-of-origin are recognized to be the factors, which impact consumers’ evaluation of products produced in domestic, versus foreign countries, and purchase intention towards domestic and foreign products. Researchers investigating the relationship between CE and COO came to the following conclusions:

- COO perception and purchase intention are impacted by CE (Balabanis & Diamantopoulos, 2004; Pecotich & Rosenthal, 2001), as consumers with ethnocentric tendencies reject purchasing foreign products, considering such purchases to be unpatriotic and destructive for the domestic economy (Shimp & Sharma, 1987), while non-ethnocentric consumers pay no attention to the products’ country-of-origin and evaluate them based on the products’ extrinsic and intrinsic characteristics (Watson & Wright, 2000).

- Ethnocentric consumers evaluate COO higher than non-ethnocentric consumers (Mockaitis et al., 2013). Consumers with a low level of ethnocentricity use country-of-origin cues for objective evaluation of product features (Shankarmahesh, 2006). - Ethnocentrism is a good predictor of preferences for products of different origin (ibid). - Both CE and COO impact customers’ evaluation of the product quality, price perception and purchase intention (Pecotich & Rosenthal, 2001): ethnocentric consumers have more favorable attitudes and purchase intention towards domestic products, than non-ethnocentric consumers.

- However, in some societies, ethnocentric consumers may still evaluate foreign products more favorable than domestic products (Mockaitis et al., 2013).

- Ethnocentric consumers from developed countries have more favorable attitudes and purchase intention towards domestic products (Samie, 1994), geographically close or culturally, politically and economically similar to the home country (Lantz & Loeb, 1996; Kaynak & Cavusgil, 1983, as cited in Watson & Wright, 2000).

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- If there is no domestic alternative to the foreign products, the ethnocentric consumers have no choice but to purchase foreign products (Watson & Wright, 2000).

- Consumers from emerging or developing countries evaluate foreign products more favorably than those produced in their home countries (Ettenson, 1993, as cited in Mockaitis et al., 2013).

- Developed countries such as Japan, the USA, and Germany are associated with high quality products, and contrary, developing countries such as China, Philippines are associated with poor quality products (Pecotich & Rosenthal, 2001). Thus, consumers have more favorable attitude towards products made in more-developed countries than towards the products made in less-developed countries (Mockaitis et al., 2013).

- The degree of consumer ethnocentrism may differ depending on the product category and products’ country-of-origin (Balabanis & Diamantopoulos, 2004; Cumberland et al., 2010; Jaffe, Nebenzahl & Lampert, 1994).

2.4 Differences between Consumer Ethnocentrism and Country-of-Origin

Consumer ethnocentrism and country-of-origin are closely related to each other, which is why both concepts are often confused. Nevertheless, they are dissimilar and independent of each other (Herche, 1992). According to Ruyter et al. (1998), the main difference is expressed in the specific nature of the attitudes which both concepts evoke towards foreign products and services. The main principle of consumer ethnocentrism is the contrast of the attitude towards two groups of products and services: domestic versus foreign. The construct was developed on the basis of domestic products and it gave a simplistic static gross indication about attitudes towards foreign products and services. The country-of-origin concept covers consumers’ differentiated attitudes towards different countries. This construct was developed from the consumers’ “made in” stereotype, picture and representation of products and services from specific countries. A country-of-origin image is usually created by representative products and services, economic and political background of the importing country, as well as its history and tradition. (Ruyter et al., 1998)

Country-of-origin represents the cognitive aspect of consumers’ decision making. Besides, it has a symbolic and emotional meaning to consumers, which they may have towards particular countries. Country-of-origin serves as a cue for product quality and functionality, which consumers rely on if there is no other information about a product. As for consumer ethnocentrism, it represents the normative aspect of consumers’ buying behavior. It is influenced not only by affective responses, which consumers may have towards their own country, but also normative pressure which consumers may feel towards purchasing domestic products. (Olsen et al., 1993; Shankarmahesh, 2006)

One more difference is that consumer ethnocentrism is an expression of a “general tendency” to avoid purchasing foreign products and services while country-of-origin concept affects an attitude toward specific country (Cumberland et al., 2010).

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2.5 Review of the Literature Pertaining Investigations of Consumer Ethnocentrism and Country-of-Origin in Russia

The former Soviet Union had a centrally-planned command economy where needs and wants of individual consumers were seldom taken into consideration. That explains why so little information about Russian consumers’ behavior had been available before the beginning of 1990s. (Ettenson, 1993). Having reviewed different marketing and business journals published afterthe 1990s, only few studies pertaining investigation of CE and COO in Russia were identified.

Good and Huddleston (1995) investigated ethnocentric tendencies pertaining to men shirts and women sweaters among Russian consumers and their dependence on country, demographic characteristics and store type, to determine whether the degree of ethnocentrism had any effect on product selection decisions related to country-of-origin. They didn’t find relationship between ethnocentrism scores and purchase intension in Russia. The study also revealed that ethnocentrism among Russian consumers depended on the level of education, but not age or gender. They reported that Russian consumers had a mean of 3.04 on the ethnocentrism scale. Ettenson (1993) examined the effect of brand name and country-of-origin information on the decision behavior in Russia, Poland and Hungary. He considered a single product category, specifically color televisions, produced in 6 countries. Using conjoint analysis to assess decision behavior, the author found that country-of-origin role was dominant for Russian consumers. They showed a strong preference toward televisions made in the USA, Japan or West Germany. Meanwhile specific brand names were not considered among the more important attributes in the evaluation of televisions.

Durvasula et al. (1997) examined ethnocentric tendencies, country-of-origin biases and other general indicators of receptiveness of American products among Russian consumers in comparison with the same characteristics among American consumers. The results showed that Russian consumers had a lower level of consumer ethnocentrism and more positive beliefs and attitudes toward foreign products than American consumers. Their results were based on a study of products-in-general and cars.

Huddleston, Good and Stoel (2000) investigated whether country-of-origin, product necessity and consumer ethnocentrism influence how Russian consumers perceive the quality of imported products. They concluded that product necessity and country-of-origin did influence the perceived product quality, however consumer ethnocentrism did not.

Saffu and Walker (2005) determined that Russians are more ethnocentric than Canadians. The situation seems to have changed since a previous study conducted by Durvasula et al. (1997). Back then, Russian consumers had shown to be less ethnocentric than their US counterparts. The authors attempted to explain this rapid change by attributing them to significant changes in the economic and political upheaval of Russia during this period. They pointed out that to confirm any further shift on the CETSCALE, a replication study would be needed in the future. The results did not show any negative correlations between CE and level of education or any positive correlation for females, neither for Canadians nor for Russians.