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Gains and Losses from the Misperception of Brand Origin: The Role of Brand Strength and Country-of-Origin Image

George Balabanis and Adamantios Diamantopoulos


ABSTRACT
Mounting empirical evidence shows that consumers often associate brands with the wrong country of origin (COO) or are unable to classify a brand to any COO. In this study, the authors investigate the consequences of brand origin misclassification and nonclassification on consumers brand image evaluations and associated purchase intentions. Drawing from categorization theory, the authors test hypotheses regarding the impact of brand strength and COO image on misclassification gains and losses on a sample of U.K. consumers. The results show that both misclassification and nonclassification have mostly adverse consequences on both brand evaluations and purchase intentions. The findings further show that strong brands are not immune to misclassification and stress the importance of ensuring that consumers are aware of a brands true COO. Keywords: country of origin, brand origin, recognition, branding

ecent country-of-origin (COO) research has shown that consumers often do not know the true origin of many (even well-known) brands and that they frequently categorize a brand to the wrong COO. For example, in the United States, Samiee, Shimp, and Sharma (2005) report average correct identification rates of only 49% for 40 domestic brands and 22% for 44 brands from seven other countries. Another study by Hennebichler (2007) in Australia reveals correct brand origin identification rates between 17% and 54% depending on the product category involved; notably, the brands examined were those actually owned by consumers in the various product categories examined.1 Similar findings indicating the limited ability of consumers to classify brands according to their true origins have been reported by Paswan and Sharma (2004) in

India, Anderson Analytics (2007) in the United States, and Balabanis and Diamantopoulos (2008) in the United Kingdom. Although some of these studies (notably, Balabanis and Diamantopoulos 2008; Samiee, Shimp, and Sharma 2005) attempted to identify antecedent variables (e.g., ethnocentrism, sociodemographic characteristics) that potentially affect consumers COO classification ability, little is known about the consequences of brand origin misclassification in terms of outcome variables such as brand image evaluations or buying intentions. However, this is an important issue because if consumers associate a brand with the wrong COO, their brand evaluations (and subsequent buying decisions) could differ from what they would have been if the correct COO had been identified (Balabanis and Diamantopoulos

George Balabanis is Professor of Marketing, Cass Business School, City University of London (e-mail: g.balabanis@ city.ac.uk). Adamantios Diamantopoulos is Professor and Chair of International Marketing, University of Vienna (e-mail: adamantios.diamantopoulos@univie.ac.at).

Journal of International Marketing 2011, American Marketing Association Vol. 19, No. 2, 2011, pp. 95116 ISSN 1069-0031X (print) 1547-7215 (electronic)

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2008, p. 40). Practically, it is important because many brand owners use foreign branding to deliberately associate their brand with a country that has a strong image (Leclerc, Schmitt, and Dub 1994) or disguise the brand origin if the country image is weak (Okechuku and Onyemah 1999). As Zhou, Yang, and Hui (2010, p. 204) observe, The origin information for most brands may not be readily accessible either because global marketers have the desire to mask the origins of their brands or the globalization of firms and the cross-border acquisition of brands complicate the nature of brand origin. The purpose of the current study is to investigate empirically the potential consequences of brand origin misclassification and consumers inability to classify a brand to a COO on (1) brand image evaluations and (2) purchase intentions. We examine these issues within a framework of combined dependent effect sizes (see Gleser and Olkin 1994) and test them on empirical data from a survey of U.K. consumers. Consistent with prior research (e.g., Thakor 1996), we define a brands COO as the country in which the corporate headquarters of the company marketing the ... brand is located (Johansson, Douglas, and Nonaka 1985, p. 389), regardless of where the brand is manufactured (e.g., Nike is a U.S. brand, although all its production is outsourced outside the United States).

cesses, all of which are known to be limited (Smith 1995, p. 5); therefore, by categorizing brands into different origins, consumers can economize cognitive resources. In this context, categorization research shows that people do not deliberately and individually evaluate each new stimulus to which they are exposed, but often evaluate a stimulus in terms of whether or not it can be classified as a member of a previously defined category (Keller 2003, p. 609). The other function of categorization is the licensing of inferences, whereby the category label and/or values of some of the category dimensions are presented and the value of another category dimension must be predicted (Markman and Ross 2003, p. 597). Thus, categorization is the means of inferring properties of an object (i.e., brand) from the category to which it belongs (i.e., the COO). In marketing, several studies have examined consumer categorization of brands (Cohen and Basu 1987; Loken 2006; Loken and Ward 1990; see Sujan and Bettman 1989 for a review) and, more specifically, inferences that take place from the COO to the brand (Agarwal and Sikri 1996; Lee and Ganesh 1999; Maheswaran 1994). Specifically, consumers make inferences about a brands attributes (e.g., value for money durability, reliability) from their knowledge of the brands origin (i.e., the category label); an example is to infer the reliability of a refrigerator knowing that it comes from Poland. Thus, the category label (i.e., the COO) serves as a signal that all members of a category (i.e., different brands) are likely to share some similar attributes. Han (1989) explains the functions of categorization in the COO context, whereby the COO can serve either as a stereotype measure (coding function or COO as a summary construct) or as a proxy for other product attributes (inference function or halo effect). The specific mechanisms through which the category-based information processing of COO can influence brand evaluations and purchase intentions is classified into (1) cognitive, (2) affective, and (3) normative processes.

CONCEPTUAL BACKGROUND AND HYPOTHESES


We used categorization theory to conceptually underpin our study because categorization plays a central role in consumer behavior (see, e.g., Ratneshwar et al. 2001), and COO constitutes an important category for consumers (Gregan-Paxton and John 1997). To simplify, categorization is the mental act of coming to think of some object as an instance of the category (Smith 1995, p. 27). According to categorization theory, consumers tend to structure their knowledge of specific product alternatives in categories (Gutman 1982; Punj and Moon 2002); specifically, they use category structures to organize and differentiate brands (Johnson and Lehmann 1997). As a cognitive process, categorization expresses the characteristic manner in which individuals organize and structure perceptual inputs deriving from the external environment (Block et al. 1981, p. 770) and serves two functions: coding of experience and licensing of inferences (Smith 1995). Coding reduces the demands for perceptual processes, storage space, and reasoning pro-

Cognitive Processes
According to Obermiller and Spangenberg (1989), the COOs cognitive influence on brand evaluations or attitudes is indirect. From the COO, consumers infer attributes of the brand (e.g., durability and reliability) that are then used to form attitudes or assessments of quality. Multiple cognitive processes could explain COO effects, which are contingent on the available information about

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the brand and the consumers familiarity with the brand (Li and Wyer 1994). According to Li and Wyer (1994), the COO (1) can be a signal to infer other attributes of the brand when available information is limited, (2) can serve as a comparison standard for the brand and result in a contrast effect on evaluations when sufficient information about the product category and the brand is available, or (3) can be one of several attributes of a brand used in the evaluation process. Similarly, Hong and Wyer (1990) show that prior categorization of brands to COOs leads to the formation of an initial evaluative concept of the brand on the basis of the COO. This evaluative concept is then used as a basis for overall brand evaluations and influences the assessment of information about the brands (other) attributes. In a comprehensive review of the literature, Bloemer, Brijs, and Kasper (2009) summarize and classify the identified COO cognitive process mechanisms into four types: 1. The halo effect, which occurs when consumers rely on COO cues to infer and form salient beliefs about the attributes of a product; in this case, additional product information is disregarded (p. 68) in the final product evaluations. 2. The summary construct effect, which occurs when additional product information is not explicitly taken into consideration anymore because it is already summarized by the COOcue (p. 68). 3. The default heuristic effect, which occurs when the processing of the COO-cue is done together with the processing of additional product information and there is a reciprocal interaction between the two (p. 68). 4. The product attribute effect, which occurs when both the COO-cue and additional product information are being processed (p. 68). Bloemer, Brijs, and Kasper (2009) apply the elaboration likelihood model to explain which of the four mechanisms underlies observed COO effects. Specifically, they indicate that the level of prior knowledge of the COO stored in the memory of a consumer (which ranges from low to extended) regulates the cognitive mechanisms that are activated each time and, as a result, the likely

size of the effect. Extended prior knowledge about the COO is likely to activate the summary construct effect processing mode, whereas moderate COO knowledge is likely to activate the default heuristic effect mode, and limited COO knowledge is likely to activate the halo effect processing mode. The use of different processing modes is expected to influence the strength of the COO effect on product evaluations. Specifically, in the summary construct effect processing mode, the COO is expected to have a direct and strong COO influence on product evaluations, whereas in the default heuristic effect processing mode, the COO effect is likely to be moderate. In the halo effect and product attribute effect processing modes, the resultant COO effects are expected to be weak. Similarly, Manrai, Lascu, and Manrai (1998) theorize and empirically establish that prior COO knowledge varies with the level of economic development of the COO, and consequently the COO cognitive processing mode and the strength of the COO effect also vary. Highly developed countries record higher levels of COO knowledge, and developing countries record the lowest levels. According to Manrai, Lascu, and Manrai (1998) the summary construct effect processing mode is more likely to be linked with products from developed countries, whereas the default heuristic mode is likely to be activated for products from newly industrialized countries or newly marketizing countries; the halo effect is most likely to be observed with products from developing countries.

Affective and Normative Processes


Country-of-origin membership can also activate emotional responses that might override cognitive inferential evaluations of the brand (Obermiller and Spangenberg 1989). Affect toward and attachment (or lack thereof) to a particular country usually form the basis of these responses, as captured by such constructs as consumer animosity (Klein, Ettenson, and Morris 1998) and consumer affinity (Oberecker, Riefler, and Diamantopoulos 2008). For example, several studies have shown that consumers animosity toward a COO due to historical events results in their unwillingness to buy products from that country despite the products perceived superiority (for a review, see Riefler and Diamantopoulos 2007). The well-known home country bias phenomenon reflects a similar result of affective processing, whereby domestic products are evaluated more positively than products from other COOs that are objectively superior (Balabanis and Diamantopoulos 2004b).

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Normative pressures that moderate the impact of brand attitudes on preferences form the basis of another process underlying COO effects (Obermiller and Spangenberg 1989). Social norms that prescribe acceptable rules of consumer conduct, such as buy local or do not buy from the enemy, might explain inconsistencies and irrationalities in purchasing behavior patterns (which involve disregarding positive evaluations of brands from certain COOs). For example, Wall and Heslop (1986) find that Canadians are willing to pay more for domestic (Canadian) products than for foreign imports. More recently, Drozdenko and Jensen (2009) report that U.S. consumers are willing to pay as much as 105% more for an American product. Their study of 11 consumer product categories shows that price premiums are significantly higher for domestic products than for products from developed countries. Affective and normative processes might be partly responsible for inconsistencies in COO influence on brand evaluations and purchase intentions, respectively. Peterson and Joliberts (1995) and Verlegh and Steenkamps (1999) meta-analytical evidence indicates that COO influence on brand evaluations is substantially stronger than that on purchase intentions. Peterson and Jolibert attribute this discrepancy to the higher degree of personal commitment involved in purchase intentions compared with perceptual evaluations, which causes consumers to respond less enthusiastically. Another explanation for the weaker effect of COO on purchase intentions is that the purchase intentions are mediated by product evaluations, which represent a more direct response to the COO; moreover, purchase intentions have more antecedents than brand evaluations, which might also explain the weaker effects observed. Although these studies provide theoretical explanations for the categorical information processing of the COO cue, they are all based on the implicit assumption that consumers are able to categorize the brands to COOs and, moreover, that they are able to categorize them correctly. To ensure that this occurs, the COO is disclosed or revealed to the respondents at some point in the research process. However, in their daily encounters, consumers incidentally categorize brands to COOs using processes that are not flawless (Hutchinson and Alba 1991; Markman and Ross 2003). The categories stored in consumers memory, not the true COOs, determine consumers attitudes and preferences in the marketplace. As Thakor (1996, p. 28) points out, the actual place that the brand originates from is almost

irrelevant.... Consumers perceptions might differ from reality because of ignorance, lack of salience of origin information for a particular brand, or deliberate obfuscation by companies concerned about consumer reactions to an unfavorable origin. Considering this, we developed hypotheses regarding the expected effects on brand evaluations and purchase intentions when consumers (1) categorize a brand to the wrong COO and (2) are unable to categorize a brand to any COO.

Categorizing Brands to the Wrong COO


What happens to behavioral outcomes such as brand evaluations or purchase intentions if (for whatever reason) a consumer mistakenly perceives a brand as coming from country Y instead of associating it with its correct COO, country X? Assuming that consumers are not indifferent to the COO cue, as most empirical research suggests (for literature reviews, see, e.g., Al Sulaiti and Baker 1998; Liefeld 1993; Papadopoulos and Heslop 2003; Peterson and Jolibert 1995; Pharr 2005; Verlegh and Steenkamp 1999), the reaction is likely to depend on (1) the extent to which country Y enjoys a more positive (negative) image than country X according to consumers (Papadopoulos and Heslop 2003; Peterson and Jolibert 1995; Pharr 2005; Verlegh and Steenkamp 1999) and (2) the extent to which the brand name is a stronger driver of consumer preference and choice than the COO cue (Cordell 1993; Han and Terpstra 1988; Tse and Gorn 1993; Tse and Lee 1993). There are two types of brand origin misclassifications (i.e., categorization to the wrong COO category): 1. Adverse misclassification, which occurs when the brand is mistakenly perceived as being from a country with a weaker image than its true origin, and 2. Favorable misclassification, which occurs when the brand is mistakenly perceived as being from a country with a stronger image than its true origin. Because different consumers might misclassify the same brand to different COOs and because consumers might associate different images with these (wrong) COOs, it is impossible to predict a priori what the net effect of misclassification will be for a brand.2 However, drawing from the extant COO research, it is possible to predict the effects of adverse and favorable misclassification separately. Meta-analytical evidence based on research

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in which the COO was explicitly identified to survey participants (Liefeld 1993; Papadopoulos and Heslop 2003; Peterson and Jolibert 1995; Pharr 2005; Verlegh and Steenkamp 1999) indicates that brands from weaker COOs experience negative effects on brand image evaluations and purchase intentions. For example, Manrai, Lascu, and Manrais (1998) empirical findings for 18 products from 21 countries show that consumer evaluations are higher for products from highly developed countries, followed by those for products from newly industrialized countries, newly marketizing countries, and finally developing countries (in that order). Without the explicit identification of the COO of a brand, consumers base their attitudes, evaluations, intentions, and behaviors on the COO from which they believe the brand comes (Josiassen and Harzing 2008). Erickson, Johansson, and Chaos (1984) early study shows that COO affects product evaluations through its effects on beliefs regarding such attributes as workmanship, durability, and reliability. A cognitive inferential process takes place in which consumers use information about the COO to assess the brand along several attributes, and the effects of this process are more pronounced when the consumers knowledge about the brand or the product category is limited (Hong and Wyer 1990; Obermiller and Spangenberg 1989). It is reasonable to assume that COO misclassification of a brands origin is an indicator of such limited knowledge (Samiee, Shimp, and Sharma 2005). Thus, when consumers associate a brand with a weaker COO than its true origin, brand origin misclassification is expected to lead to losses (i.e., more negative brand perceptions and weaker purchase intentions). The opposite also applies for the same reason, namely, that favorable misclassification (i.e., classification to a COO that is stronger than the true COO) is expected to lead to gains. Thus: H1: Adverse (favorable) COO misclassification of any brand leads to misclassification losses (gains) in terms of (a) brand image perceptions and (b) purchase intentions. Note that H1a and H1b focus on the effects of misclassifying the COO of a brand in relation to its true COO and do not state that favorable COOs lead to gains and unfavorable COOs to losses. More specifically, adverse misclassification does not necessarily mean that the brand will be associated with a COO that has an unfavorable image; rather, it might be associated with a country that has a less favorable image than the brands real

COO. For example, both the United States and Japan have positive images, although the latters is stronger than the formers (e.g., Papadopoulos, Heslop, and IKON Research Group 2000). Classifying a Japanese brand as originating in the United States would be an adverse misclassification, whereas classifying a U.S. brand as Japanese would indicate a favorable misclassification. Note also that misclassification (regardless of direction) might indicate limited knowledge of the brand and lead to different evaluations than those of brands correctly associated with the same country. These effects are not obvious and have not been examined in prior research. Hoeffler and Keller (2003) document the many benefits of brand strength, which are linked to stronger positive effects on consumer evaluations and behavior. Strong brands (i.e., brands with an established image and substantial brand equity) might intuitively be expected to be more resistant to COO misclassification because consumer choice is more likely to be driven by the brand name itself rather than the associated COO (Cordell 1992, 1993; Tse and Lee 1993). However, considerable empirical evidence shows that a brands COO influences brand equity (Pappu, Quester, and Cooksey 2006; Yasin, Noor, and Mohamad 2007). Therefore, part of the strength of a brand might be attributable to its COO (Shocker, Srivastava, and Ruckert 1994; Thakor and Katsanis 1997). Moreover, evidence indicates that although a favorable COO can compensate for a weak brand, the reverse is not true; that is, a strong brand does not necessarily counterbalance a negatively perceived COO (Ahmed et al. 2002; Nebenzahl and Jaffe 1996; Tse and Gorn 1993). Applied to a misclassification context, these findings indicate that weak brands have more to gain from favorable COO misclassification, whereas strong brands have more to lose from adverse COO misclassification. The reason is that weak brands are likely to draw more of their equity from the country with which they are associated than strong brands, and therefore a link to a stronger COO (i.e., a favorable misclassification) can compensate for a weak brand as far as consumers evaluations of product quality and attitude towards the product are concerned (Ahmed et al. 2002, p. 295). Conversely, this leverage effect is likely to be less pronounced for strong brands because most of them already come from countries with strong images. As a result, the scope for benefiting from favorable misclassification is more limited, and association with even stronger COOs is unlikely to result in major gains in

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equity. However, these diminishing returns do not apply in the case of adverse misclassification; linking a strong brand to a COO with an image that is considerably inferior to the brands true COO is both possible and bound to tarnish the brand name (Thakor and Katsanis 1997). In contrast, such tarnishing is likely to be less critical to weak brands because their names have less to lose from adverse misclassification. On this basis of the preceding discussion, we offer the following hypotheses: H2: Adverse COO misclassification of strong brands results in (a) greater brand image perception losses and (b) greater losses in terms of purchase intention compared with weak brands. H3: Favorable COO misclassification of weak brands results in (a) greater brand image gains and (b) greater gains in terms of purchase intention compared with strong brands. Note that H2 and H3 offer an opportunity to provide insights into the extent to which the strength of a brand is linked to its perceived COO. Although empirical evidence shows that brand equity is affected by the brands COO (see, e.g., Pappu, Quester, and Cooksey 2006), such evidence is based on survey designs in which the true COO was explicitly communicated to respondents. Whether this finding is consistent under ecologically valid conditions, where brand origin information has either to be acquired at the point of purchase through active search or accessed from memory via international, goal-driven efforts (Samiee, Shimp, and Sharma 2005, p. 391), remains to be seen. In this context, the COO is a secondary association and can only be partly responsible for a brands strength; the effects of misclassification not differing between strong and weak brands, as H2 and H3 predict, would indicate that COO and brand strength are independent cues affecting consumer behavior.

In a unique study, Hong and Wyer (1989, p. 184) examine what happens when consumers are not aware of the COO of a brand. Their results confirm the cognitive elaboration hypothesis of the COO, whereby awareness of a brands origin stimulates interest in other information about the brand and its evaluative implications. When consumers were not aware of the COO, they showed less interest in the brand. Hong and Wyer conclude that consumers try to confirm the validity of hypotheses they might have developed regarding the ability of different COOs to produce high- (low-) quality products. However, Hong and Wyer experimentally manipulate COO categorization in their study, and it is important to understand the effects of peoples inability to categorize brands to COOs in a natural setting. Some notable results from neuroscience research have potential implications for our study. This body of research reveals that peoples inability to categorize objects is linked to certain medical conditions such as temporal lobe damage and fronto-parietal lesions, as well as disorders such as dyslexia, semantic dementia, and Alzheimers disease (Warrington and Shallice 1984). Although an examination of these medical conditions is beyond the scope of the current study, a key message from neuroscience research is that a persons inability to categorize objects is associated with memory dysfunctions that inhibit categorical information processing. For the purposes of our study, the most important finding is that perceptual experiences or accrued knowledge by a person before memory dysfunction influences the persons ability to categorize objects (Moss et al. 1998). This indicates that the absence of knowledge or perceptual experiences with the focal brandsnot necessarily due to a disorder or memory dysfunctioncan inhibit consumers ability to categorize brands into COOs. In contrast, when some prior knowledge is available, consumers might use different categorization strategies (explained later) to classify brands according to their (perceived) origins. Categorization of an object is typically based on similarity or rule-based mechanisms (Smith 1995); indeed, an important Gestalt principle of perceptual organization is that similar things will tend to be grouped together (Medin, Goldstone, and Gentner 1993, p. 254). Thus, apart from a lack of explicit knowledge of a brands COO, lack of information about the brand itself might make it difficult to identify similarities or apply categorization rules to assign the focal brand to a COO. Specifically, consumers might not be able to identify the

Inability to Categorize a Brand to a COO


A heavily criticized practice of mainstream COO research is making consumers aware of the origin of a brand (Samiee, Shimp, and Sharma 2005; Usunier 2006). As Samiee (2009, p. 3) points out, with minor exceptions, COO research invariably discloses the manufacturing (design, assembly, etc.) location of products being evaluated for the project.

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necessary similarities (e.g., group similar-sounding brand names) to link brands to a COO category. In addition, they might not be able to apply learned rules to do so. An example of a rule that consumers might develop on the basis of experience is low-priced brands come from China; consumers might use such a categorization rule to compensate for the absence of similarities between the category (the COO) and the brand. In summary, consumers might not have the necessary information to discern the prototypical or other diagnostic features of the brands that would enable their categorization into different COOs. Another strategy used in categorization is reliance on semantic elements of the information related to the object (i.e., the brand) to compensate for the absence of diagnostic information. For example, the linguistic or phonologic properties of the brand, or brand name suggestiveness (Hennessey, Bell, and Kwortnik 2004; Lee and Soon Ang 2003), might not provide sufficient cues to link the brand to a COO. Under such circumstances, the absence of categorization makes inductive inference from the COO to the brand impossible, and therefore brands would be evaluated independently of their COO category membership. Thus, we expect that the inability to categorize brands into COOs will relieve brands of the positive (negative) associations transferred from a country with a strong (weak) image. This would have harmful effects on brands from countries with strong images but would be beneficial for brands from countries with a weak image. Thus: H4: Nonclassification of brands results in losses (gains) for brands from a strong (weak) COO in terms of (a) brand image perceptions and (b) purchase intentions.

brands in terms of outcome variables (e.g., brand image perceptions), misclassification (or nonclassification) gains/losses are not independent across brands because of the within-subject nature of the research design. Moreover, because different consumers might misclassify the same brand to different COOs, all possible (i.e., up to a maximum m 1)3 incorrect categorizations need to be considered and subsequently combined to arrive at an overall gain (loss). We approached this problem by adopting a procedure originally proposed by Gleser and Olkin (1994) that has been successfully applied for estimating and subsequently combining multiple effects identified within a study. We were specifically interested in the effects of misclassifying a brand to the wrong COO (i.e., the misclassification gain/loss). Such effects can be estimated for each brand separately by comparing the group of consumers that classifies the brand to its correct COO with the group that classifies the brand to the wrong COO. However, if measurements are taken for several brands, the calculation of a composite effect cannot be based on traditional methods and should take into account the interdependencies among brands (because all consumers are exposed to all brands, and thus the effects are not independent). Gleser and Olkins procedure allows the estimation of a composite effect from one study under these conditions. We defined the misclassification gain/loss resulting from incorrectly categorizing brand i (i = 1, 2, ..., n) to origin k (k = 1, 2, m 1) as follows: (1) where Xik = mean of the outcome variable under consideration (e.g., purchase intentions) based on those consumers who allocated brand i to wrong origin k, Xic = mean of the outcome variable under consideration based on those consumers who correctly allocated brand i to its true origin c, and Sic = standard deviation of the outcome variable under consideration based on those consumers who correctly allocated brand i to its true origin c. Similarly, we estimated the nonclassification gains/losses on the basis of the same formula, where Xin replaced Xik, the former being the mean of the outcome variable dik = X ik X ic , Sic

ANALYTICAL FRAMEWORK
In light of the foregoing hypotheses, how can the potential misclassification gains/losses (in terms of brand image perceptions and purchase intentions) be quantified and subsequently compared across brands? In other words, if N consumers are exposed to n brands (varying in brand strength) and are asked to assign them to m origins (varying in image), how would the overall misclassification (or nonclassification) gain/loss of brand i be computed and compared with the gain/loss of brand j (i j)? Because all N consumers are asked to rate all n

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under consideration based on those consumers who were unable to classify brand i to any COO. We apply Equation 1 separately to each incorrectly or nonassigned COO for all n brands and both outcome variables (brand image evaluations and purchase intentions). In essence, Equation 1 normalizes the misclassification gain/loss around the standard deviation of consumers who identified the brands true origin.4 Note that positive values in Equation 1 indicate misclassification gains, while negative values indicate misclassification losses; a value of (or close to) 0 indicates that COO misclassification does not materially affect the outcome variable under investigation. To compute composite effects (e.g., aggregated misclassification gains/losses for strong vs. weak brands), we apply Gleser and Olkins (1994) formula 2235. To test the homogeneity of the constituent effects, we use the Qstatistic (see Gleser and Olkin 1994, formula 2238).5 The latter is distributed as a chi-square statistic, and a nonsignificant result indicates that the individual effects are homogeneous and can therefore be legitimately combined.

(including brands with linguistically misleading brand names, such as Hinari and Matsui, both of which are U.K. brands). We focused on two key outcome variables to study the consequences of brand COO misclassification and nonclassification. We measured brand image evaluations on a four-item, ten-point bipolar scale (1 = low, and 10 = high), asking respondents to rate each brand in terms of value for money, reliability, performance, and quality; we established the unidimensionality of the scale through confirmatory factor analysis, and its reliability was highly satisfactory for all brands (alpha values between .82 and .91). We measured purchase intention on a single-item, ten-point bipolar scale (1 = not at all, and 10 = extremely likely); we conceptually justified the use of a single item on the basis that purchase intention is a concrete, singular construct, and as practitioners have long demonstrated,... for measuring concrete attributes such as AD LIKING or PURCHASE INTENT, single-item measures are definitely valid (Rossiter 2002, p. 314). To measure country image, we used Roth and Romeos (1992) well-established scale that captures innovation, design, prestige, and workmanship; we verified unidimensionality using confirmatory factor analysis for all origins, and scale reliabilities were very satisfactory (alpha values ranging from .79 to .95). For each brand, we allocated each wrong COO to one of two groups depending on whether its average image score was higher or lower than that of the correct COO. We then used the two groups thus generated to operationalize the favorable versus adverse misclassification conditions necessary for testing H1H3. We also created a third nonclassification group to test H4 based on respondents who were unable to categorize the brand in question to any COO. Finally, to classify brands according to brand strength, we consulted the Mintel (2007) report. This report provides comprehensive information on microwave brands sold in the United Kingdom. Using this information, we designated five brands as strong brands and the rest as weak. As a manipulation check on the brand strength classification, we also computed the average brand image scores across all respondents in our sample followed by a median split (supported by two-step cluster analysis). The resulting two groups were identical to those generated from the Mintel report, thus confirming the validity of the brand strength classification.

DATA AND MEASURES


For data collection purposes, we used the drop and collect method (Brown 1987) to administer a pretested questionnaire to a random sample of households in a major city in the United Kingdom. This approach has been used successfully in prior COO research (e.g., Ahmed and dAstous 2003; Balabanis and Diamantopoulos 2004b; Papadopoulos, Heslop, and IKON Research Group 2000). We collected a total of 193 fully completed questionnaires (approximately a 70% participation rate). We asked respondents to categorize 12 brands of microwave ovens to one of eight COOs; we also allowed respondents to specify a country of their own choice or respond with dont know. We focused on a single product category to minimize confounding effects in the consumer classification process emanating from differences in marketing practices, involvement, and other extraneous factors (Balabanis and Diamantopoulos 2008, p. 42). We chose microwave ovens because of their high penetration rate (82.7%) in the United Kingdom (Mintel 2007), which makes them a highly familiar product category.6 Another reason we chose microwave ovens is that brands from several countries are offered for sale in the United Kingdom

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To eliminate possible confounding effects arising from individual consumer differences on the misclassification and nonclassification gains/losses, we partialed out the effects of demographic variables (gender, age, and income) (Johansson, Douglas, and Nonaka 1985), levels of purchase involvement (Grhan-Canli and Maheswaran 2000), perceived importance of the COO (Tse and Gorn 1993), familiarity with the COO (Bloemer, Brijs, and Kasper 2009), and consumer ethnocentrism (Balabanis and Diamantopoulos 2004a) from the two outcome variables through a preliminary regression analysis. We then used the unstandardized residuals of the outcome variables in place of the observed scores in the calculations of misclassification (or nonclassification) gains/losses according to Equation 1.

ASSESSMENT OF COMMON METHOD VARIANCE


Because all construct measures came from the same survey and we used the responses to measure both the independent and dependent variables, it was important to investigate whether common method variance (CMV) had a substantial impact on the observed relationships between predictor and criterion variables (Podsakoff et al. 2003, p. 897). In addition to using several procedural techniques suggested by Podsakoff et al. (2003)such as using different response formats, assuring respondents anonymity, stressing that there are no right or wrong answers, and using pretests to avoid item ambiguitywe statistically investigated the potential impact of CMV by following the marker variable technique proposed by Lindell and Whitney (2001; see also Rindfleisch, Burroughs, and Wong 2009).7 We selected a country knowledge itemnamely, knowledge of the Netherlands (which related to a COO not associated with any of the brands investigated in our study)as the marker variable because it was conceptually unrelated to both the independent and dependent variables. Of the 105 significant bivariate correlations between our predictors (i.e., country image scores of the eight COOs) and outcomes (i.e., brand image evaluations and purchase intentions for the 12 brands), 98 remained statistically at p < .05 or better after partialing out the marker variable. The rest (7 correlations) remained significant at p < .1. These results indicate no major threat of CMV in our study.8

based on Gleser and Olkins (1994) procedures we outlined previously. To aid interpretation, we order the brands according to their strength (with strong brands placed first) and the COOs according to their average country image scores. The last column (labeled UNCL) is the unclassified category. Each cell in the tables contains three values: (1) the size of misclassification gain/loss as established in Equation 1 for the outcome variable under consideration (i.e., brand image evaluations in Table 1 and purchase intentions in Table 2), (2) the associated standard error, and (3) the percentage of consumers who incorrectly categorized the brand in question to a particular origin. For example, in the first cell of Table 1 (Panasonic and Germany), the value 1.020 indicates that misclassification resulted in a loss for brand image perceptions. The standard error associated with that loss is .417, and 5.7% of the respondents reported that Panasonic was a German brand. The shaded cells in each table indicate correct allocations and show the percentage of respondents that categorized the focal brands to their true COOs; for example, 58.5% of the respondents correctly classified Panasonic as a Japanese brand. The last row of each table shows the composite effects (i.e., the combined misclassification and nonclassification gains/losses across all brands) following tests for homogeneity. To illustrate the interpretation of Tables 1 and 2, consider the Panasonic brand in the first row of Table 1. Panasonic suffers losses in brand image regardless of the COO into which it is (incorrectly) categorized. This is indicated by the negative values, as established by applying Equation 1, in the cells in which Panasonic is associated with Germany, the United Kingdom, the United States, Korea, and China. Panasonic also suffers losses when it cannot be classified into any COO (see the UNCL cell in Table 1). In contrast, Daewoo (see the sixth row of Table 1) enjoys image gains if it is misclassified as a U.K. or Japanese brand, but it suffers losses if it is misclassified as a Taiwanese, Chinese, or (albeit it less so) German brand; it also suffers losses if it cannot be allocated to any COO. Notably, no single brand always gains from COO misclassification; in contrast, all five strong brands consistently suffer losses in image from COO misclassification regardless of which COO they might be (incorrectly) associated with. They also suffer losses if they cannot be associated with any COO. Across all brands, misclassification almost always results in losses in brand image (see the last row in Table 1). The entries in Table 2 related to purchase intentions can be interpreted similarly.

DESCRIPTIVE RESULTS
Tables 1 and 2 show the detailed results related to brand image evaluations and purchase intentions, respectively,

Brand Strength and Country-of-Origin Image 103

Table 1. Misclassification Gains/Losses: Brand Image Perceptions


Perceived COO Strong Brands Panasonic (JAP) GER 1.020 .417 5.7% .137 .432 5.2% JAP 58.5% UK .204 .379 10.4% .015 .221 28.5% USA .473 .314 11.4% .234 .378 14.0% FRA KOR 1.283 .260 2.6% .834 .239 2.1% .140 .327 6.2% 28% .205 .250 39.4% .653 .365 2.6% 1.113 .714 3.6% .322 .544 3.1% .520 .304 5.7% TAIW CHIN .847 .581 1.0% UNCL .583 .416 9.3% .227 .262 12.4% .150 .240 6.7% .632 .281 10.4% .810 .336 18.1%

Sharp (JAP)

31.6%

Sanyo (JAP) 76.2% Samsung (KOR) .436 1.219 2.1% .390 .299 11.9% .119 .191 43.5% .5% 19.7%

.117 .364 6.2% .085 .208 8.8%

Whirlpool (USA)

Weak Brands Daewoo (KOR) .266 .254 7.8% .460 .773 1.6% .660 .443 3.1% .075 .583 4.2% .029 .219 16.6% .176 .595 50.8% .266 .239 4.1% .048 .515 2.6% .221 .723 38.3% .151 .522 2.6% .909 .504 8.9% .149 .172 .411 .592 4.7% .037a .148 2.1% .159 .361 14.0% .573 .470 5.2% .071 .175 .066 .420 5.7% .078 .385 2.1% .375a .258 .349 .384 3.6% 3.1% .134 .189 14% .335 .413 5.7% .234 .286 20.8% .182 .392 4.2% .348 .737 24.4% .014 .543 2.6% 4.2% .903 .209 .633a .176 .463 .298 8.3% .282 .746 11.4% .360 .495 2.6% 45.1% .028 .600 16.1% .656 .195 7.8% .318 .657 8.3% .376 .424 4.1% .013 .723 7.3% .088 .619 2.1% .609 .521 4.7% .180 .734 6.2% 1.361 .559 2.6% .634 .538 2.6% .133 .174 .281 .362 10.9% .380 .677 11.9% .072 .168 19.2% .559 .268 33.3% .587 .786 17.1% .941 .276 52.8% .031 .393 64.9% .062 .124

Matsui (UK)

Belling (UK)

53.4%

Delonghi (ITA)

Hinari (UK)

Proline (UK)

13.5% .525 .541 5.8% .052a .190

LG (KOR)

Composite effect of all brands

aHomogeneous

composite effect. Notes: The bold number in the first row of a cell is the misclassification gain/loss effect. The number in the second row of a cell is the associated standard error. The number in the third row of a cell is the percentage of consumers who categorized the brand to that COO (the shaded cells indicate correct allocations).

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Table 2. Misclassification Gains/Losses: Purchase Intentions


Perceived COO Strong Brands Panasonic (JAP) GER .193 .260 5.7% .587 .380 5.2% JAP 58.5% UK .175 .295 10.4% .481 .214 28.5% USA .454 .324 11.4% .209 .272 14.0% FRA KOR 1.117 .406 2.6% .796 .522 2.1% .146 .269 6.2% 28.0% .195 .219 39.4% .263 .396 2.6% .596 .459 3.6% .712 .430 3.1% .011 .312 5.7% TAIW CHIN .702 .889 1.0% 1.0% .271 .308 6.2% .074 .236 8.8% UNCL .197 .248 9.3% .512 .236 12.4% .055 .164 6.7% .362 .224 10.4% .183 .248 18.1%

Sharp (JAP)

31.6%

Sanyo (JAP) 76.2% Samsung (KOR) .066 .383 2.1% .303 .253 11.9% .212 .189 43.5% 19.7%

Whirlpool (USA)

Weak Brands Daewoo (KOR) .060 .266 7.8% .735 .812 1.6% .365 .582 3.1% .008 .653 4.2% .038 .196 16.6% .358 .603 50.8% .444 .479 4.1% .013 .511 2.6% .563 .769 38.3% .430 .313 2.6% .053 .431 8.9% .153a .186 .264 .433 4.7% .069 .165 2.1% .396 .286 14% .540 .547 5.2% .276a .155 .375 .468 5.7% 1.160 .778 2.1% .914 .274 .031 .305 3.6% 3.1% .230 .170 14.0% .063 .447 5.7% .588 .334 20.8% .068 .374 4.2% .832 .828 24.4% .350 .575 2.6% 4.2% .357 .227 .294a .260 .087 .451 8.3% .910 .861 11.4% .365 .435 2.6% 45.1% .259 .607 16.1% .054 .324 7.8% .553 .640 8.3% .525 .254 4.1% .624 .659 7.3% .162 .853 2.1% .707 .715 4.7% .776 .822 6.2% .213 .569 2.6% .015 .542 2.6% .188a .179 .329 .259 10.9% .290 .617 11.9% .160 .173 19.2% .217 .286 33.3% .680 .796 17.1% .293 .230 52.8% .445 .405 64.9% .050 .106

Matsui (UK)

Belling (UK)

53.4%

Delonghi (ITA)

Hinari (UK)

Proline (UK)

13.5% .117 .480 5.8% .391 .178

LG (KOR)

Composite effect of all brands

aHomogeneous

composite effect. Notes: The bold number in the first row of a cell is the misclassification gain/loss effect. The number in the second row of a cell is the associated standard error. The number in the third row of a cell is the percentage of consumers who categorized the brand to that COO (the shaded cells indicate correct allocations).

Brand Strength and Country-of-Origin Image 105

HYPOTHESIS-TESTING RESULTS
Although the results in Tables 1 and 2 illustrate misclassification and nonclassification gains/losses for the focal outcome variables, they do not constitute a formal test of our research hypotheses. To test H1a and H1b, we compared favorable misclassifications (Group 1) with adverse misclassifications (Group 2)9 and with nonclassification (Group 3) using subgroup analysis via the analog to the analysis of variance (ANOVA). Table 3 summarizes the results for both outcome variables. Regarding brand image perceptions, any misclassification leads to losses of brand image (mean effect size for the three groups = .219, p < .001). However, as the subgroup analysis indicates (Q = 6.580, p < .05), the three groups differ significantly, with both adverse misclassifications and nonclassifications resulting in significantly greater losses compared with favorable misclassifications (mean effect size for the adverse misclassification group = .316, p < .001; for the nonclassification group, mean effect size = .288, p < .05). In general, these results support H1a, with the proviso that favorable misclassification does not actually lead to (significant) gains in brand image. Regarding purchase intentions, the results support H1b but only for adverse misclassifications (mean effect size = .161, p < .05). Although we also observe negative effects for the favorable misclassification and nonclassification groups, these effects are not statistically significant. We also tested H2a and H2b, relating to differences between weak (Group 1) and strong (Group 2) brands under conditions of adverse misclassification, using the analog to ANOVA. Table 4 summarizes the results. Focusing initially on the impact of adverse misclassification on brand image perceptions, both the overall mean effect size (.328, p < .001) and the effect sizes for the weak (.221, p < .01) and strong (.429, p < .01) brands are significant, indicating that adverse misclassification results in losses regardless of the type of brand involved. The group differences are also significant (Q = 3.017, p < .1), indicating that strong brands suffer greater losses from adverse COO misclassification than weak brands. These findings support H2a. Regarding purchase intentions, the results indicate that the strong brands suffer from adverse misclassification

(mean effect size = .299, p < .001) rather than the weak brands; however, the difference between the two groups is not significant (Q = 1.676, p = .195). Note that the mean effect size for weak brands is not significant (.14, p = .114), indicating that adverse COO misclassification does not affect purchase intentions of such brands. Regarding favorable misclassifications (see Table 5), the results provide no support for H3a, because we observe no actual gains for either weak or strong brands. Specifically, we observed a significant difference in brand image perceptions between weak and strong brands (Q = 4.603, p < .05); however, this indicates that the strong brands suffer significant losses in their image perception from favorable misclassification (mean effect size .268, p < .05). Furthermore, favorable misclassification for the weak brands results in no statistically significant gains in image perception (mean effect size = .654, p = .493). Regarding purchase intentions (H3b), favorable misclassification leads to similar results. Strong brands again suffer from favorable misclassifications (mean effect size = .228, p < .05), whereas weak brands do not sustain any gains from favorable misclassification (mean effect size = .115, p = .236). These findings do not support H3b. In general, the results in Tables 4 and 5 indicate negative effects even when brands are misclassified to COOs with a stronger image than their true origins; in other words, favorable misclassification does not seem to generate a positive leverage effect, and in some instances it even harms (strong) brands. Finally, focusing on instances in which consumers were unable to link a brand to any COO, Table 6 shows the results associated with testing H4a and H4b, relating to the consequences of nonclassification. Regarding brand image perceptions, nonclassification leads to losses (mean effect size = .328, p < .001) regardless of whether the brand originates from a strong or a weak COO. This provides only partial support for H4a because although nonclassification adversely affects brands associated with strong COOs (mean effect size = .283, p < .01), as we expected, the same applies to brands from weak COOs; instead of benefiting from nonclassification, brands from weak COOs are also harmed (mean effect size = .436, p < .01). The results for purchase intentions are identical: nonclassification results in lower purchase intentions both for brands from strong COOs (mean effect size = .181,

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Table 3. Effect Size Comparison: Favorable Versus Adverse Versus Nonclassification


A: Analog of ANOVA (Homogeneity Q) Q H1a: Brand Image Perceptions Between Within Total H1b: Purchase Intentions Between Within Total .2505 24.0681 24.3186 2 32 34 .8823 .8419 .8898 6.5806 52.8553 59.4359 2 32 34 .0372 .0116 .0045 d.f. p

B: Q by Group Group H1a: Brand Image Perceptions Group 1 Group 2 Group 3 H1b: Purchase Intentions 2 Group 1 Group 2 Group 3 8.3693 12.8803 2.8185 13 15 4 .8187 .6115 .5887 17.1268 30.0432 5.6853 13 15 4 .1936 .0118 .2239 Qw d.f. p

C: Effect Size Results Mean ES H1a: Brand Image Perceptions Total Group 1 Group 2 Group 3 H1b: Purchase Intentions Total Group 1 Group 2 Group 3 .1325 .1130 .1618 .1161 .0460 .0807 .0746 .0847 .2226 .2712 .3080 .2821 .0423 .0452 .0156 .0500 2.8797 1.3996 2.1696 1.3702 .0040 .1616 .0300 .1706 35 14 16 5 .2193 .0551 .3160 .2883 .0469 .0795 .0713 .0998 .3112 .2110 .4557 .4839 .1275 .1008 .1763 .0927 4.6803 .6928 4.4342 2.8884 .0000 .4884 .0000 .0039 35 14 16 5 SE 95% CI +95% CI Z P k

Notes: Group 1 = favorable misclassification. Group 2 = adverse misclassification. Group 3 = no classification. ES = effect size, and CI = confidence interval.

p < .05) and brands from weak COOs (mean effect size = .329, p < .05). Thus, again, the results provide only partial support for H4b.

In summary, consumers inability to classify a brand to a COO is detrimental in terms of both brand image perceptions and purchase intentions. This applies regard-

Brand Strength and Country-of-Origin Image 107

Table 4. Adverse Misclassification: Weak Versus Strong Brands


A: Analog of ANOVA (Homogeneity Q) Q H2a: Brand Image Perceptions Between Within Total H2b: Purchase Intentions Between Within Total 1.6765 28.6999 30.3764 1 32 33 .1954 .6344 .5984 3.0177 43.8776 46.8954 1 32 33 .0824 .0787 .0553 d.f. p

B: Q by Group Group H2a: Brand Image Perceptions Group 1 Group 2 H2b: Purchase Intentions Group 1 Group 2 16.4350 12.2650 19 13 .6281 .5060 19.3517 24.5260 19 13 .4345 .0266 Qw d.f. p

C: Effect Size Results Mean ES H2a: Brand Image Perceptions Total Group 1 Group 2 H2b: Purchase Intentions Total Group 1 Group 2 .2226 .1400 .2996 .0616 .0886 .0856 .3432 .3137 .4673 .1019 .0337 .1318 3.6150 1.5801 3.4997 .0003 .1141 .0005 34 20 14 .3280 .2213 .4292 .0598 .0857 .0835 .4452 .3893 .5928 .2108 .0533 .2656 5.4849 2.5822 5.1414 .0000 .0098 .0000 34 20 14 SE 95% CI +95% CI Z P k

Notes: Group 1 = weak brand. Group 2 = strong brand. ES = effect size, and CI = confidence interval.

less of whether the brands true origin is associated with a strong or weak image.

DISCUSSION AND CONCLUSIONS


The current study provides empirical insights into the consequences of brand COO misclassification and nonclassification by consumers and thus complements

extant research on the extent and antecedents of brand origin recognition (e.g., Hennebichler 2007; Paswan and Sharma 2004; Samiee, Shimp, and Sharma 2005). Focusing on two important outcomes (brand image perceptions and purchase intentions),10 our study introduces to the literature a measure for quantifying the effects of COO misclassification and nonclassification. It also proposes a novel methodological approach that allows the combining of evidence from multiple brands

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Table 5. Favorable Misclassification: Weak Versus Strong Brands


A: Analog of ANOVA (Homogeneity Q) Q H3a: Brand Image Perceptions Between Within Total H3b: Purchase Intentions Between Within Total .6285 8.8254 9.4540 1 21 22 .4279 .9905 .9906 4.6037 20.7681 25.3717 1 21 22 .0319 .4732 .2796 d.f. p

B: Q by Group Group H3a: Brand Image Perceptions Group 1 Group 2 H3b: Purchase Intentions Group 1 Group 2 7.2078 1.6176 16 5 .9690 .8991 16.5665 4.2016 16 5 .4142 .5208 Qw d.f. p

C: Effect Size Results Mean ES H3a: Brand Image Perceptions Total Group 1 Group 2 H3b: Purchase Intentions Total Group 1 Group 2 .1681 .1153 .2280 .0710 .0973 .1037 .3071 .3060 .4312 .0290 .0754 .0248 2.3684 1.1846 2.1988 .0179 .2362 .0279 23 17 6 .0602 .0654 .2681 .0753 .0954 .1227 .2078 .1216 .5087 .0874 .2524 .0276 .7991 .6858 2.1845 .4242 .4928 .0289 23 17 6 SE 95% CI +95% CI Z P k

Notes: Group 1 = weak brand. Group 2 = strong brand. ES = effect size, and CI = confidence interval.

and countries to study this underresearched phenomenon. The adopted research design enables researchers to unveil the link between a brands COO as it exists in the consumers mind and its likely effects on behavioral outcomes; it also traces the consequences of consumers inability to assign a brand to a COO. Controlling for the product category as well as for several potentially confounding factors (e.g., consumer

demographics, ethnocentrism, level of involvement), we find that both COO misclassification and nonclassification have mostly undesirable consequences. Specifically, association with a weaker country image than the brands true COO (i.e., adverse misclassification) is always detrimental. Both weak and strong brands suffer losses in brand image, with strong brands being more (adversely) affected; in addition, strong brands are associated with reduced purchase intentions.

Brand Strength and Country-of-Origin Image 109

Table 6. Nonclassification: Weak Versus Strong COOs


A: Analog of ANOVA (Homogeneity Q) Q H4a: Brand Image Perceptions Between Within Total H4b: Purchase Intentions Between Within Total .8537 4.9753 5.8290 1 10 11 .3555 .8928 .8845 .6688 15.9444 16.6133 1 10 11 .4135 .1012 .1198 d.f. p

B: Q by Group Group H4a: Brand Image Perceptions Group 1 Group 2 H4b: Purchase Intentions Group 1 Group 2 4.7182 .2571 7 3 .6943 .9679 13.6519 2.2925 7 3 .0577 .5140 Qw d.f. p

C: Effect Size Results Mean ES H4a: Brand Image Perceptions Total Group 1 Group 2 H4b: Purchase Intentions Total Group 1 Group 2 .2206 .1807 .3289 .0712 .0833 .1372 .3601 .3439 .5977 .0811 .0174 .0601 3.0988 2.1692 2.3982 .0019 .0301 .0165 12 8 4 .3278 .2834 .4357 .0846 .1005 .1568 .4937 .4805 .7430 .1619 .0863 .1285 3.8733 2.8188 2.7795 .0001 .0048 .0054 12 8 4 SE 95% CI +95% CI Z P k

Notes: Group 1 = unclassified brands from strong COOs. Group 2 = unclassified brands from weak COOs. ES = effect size, and CI = confidence interval.

From a theoretical perspective, our findings highlight that consumers categorization of brands to different COOs directly affects the inferences they make regarding the brands attributes (as captured by brand image perceptions) as well as the associated behavioral intentions. This emphasizes the relevance of categorization theory in COO research and demonstrates that licensing of inferences is based on consumers perceived COO categories rather than the actual origins of

brands. Moreover, the findings indicate that consumers inability to categorize brands results in inferences that are generally less positive than if (any) categorization had been possible. These patterns indicate that the perceived origin of a brand has diagnostic value for consumers, and they strongly support the view that for most research questions, COO research focusing on the COA [country of association] would be more appropriate than focusing on an increasingly

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irrelevant country of manufacture (Josiassen and Harzing 2008, p. 266). From a managerial perspective, the key implication of our findings is that COO misclassification is not only widespread but also clearly undesirable because its behavioral consequences are negative. Therefore, companies should make conscious efforts to educate and/or remind consumers of their brands true COO and avoid associations with a weaker COO (see Ahmed et al. 2002). As Tables 1 and 2 show and as other research has documented (e.g., Samiee, Shimp, and Sharma 2005), some brands are more prone to misclassification than others, and some countries are more likely to be targets of misclassification than others. On average, strong brands are less likely to be misclassified than weak brands (see the shaded cells in Tables 1 and 2). Although strong brands have a relatively low average correct identification rate (42.8%), the same rate is much lower for the weak brands (19.3%). Indeed, a nonparametric correlation test (Spearmans rho) between average brand image scores and correct identification rates revealed a positive and statistically significant relationship (rho = .715, p < .01). In light of the results showing that misclassification to weak COOs is particularly damaging for strong brands, the lower misclassification rates of strong brands might cushion the adverse effects on brand image evaluations and purchase intentions. However, this is no cause for complacency because, on average, it is more likely for a brands origin to be misclassified than to be correctly identified even in the case of strong brands. Therefore, ensuring that consumers can associate the brand with its correct COO (thus attaining a high correct identification rate) is still important even if a strong brand is involved. Surprisingly, favorable misclassification (i.e., to COOs with a better image than the true COO) does not result in actual gains in either brand image perceptions or purchase intentions. Indeed, strong brands suffer losses for both outcome variables. This indicates that the consequences of COO misclassification are asymmetrical that is, brands have (considerably) more to lose than to gain if their true origins are misclassified. Managerially, this finding reemphasizes that, in general, COO misclassification should be considered a threat to companies and their brands and should be dealt with as such. This finding also casts doubt on the effectiveness of foreign branding strategies (Leclerc, Schmitt, and Dub 1994), whereby a company intentionally chooses a brand name

that is incongruent with the brands true origin to associate the brand with another origin. A good example is the U.K. brand Hinari, which, as might be expected, is often erroneously perceived to be an Eastern brand (i.e., it is typically associated with Japan, South Korea, China, or Taiwan). However, in all instances, misclassification results in a less favorable brand image and lower purchase intentions for Hinari compared with its true (U.K.) origin (see Tables 1 and 2). Nonetheless, the brands examined in our study all belong to a functional product category, and it remains to be seen whether similar findings also apply to hedonic brands for which foreign branding strategies are more common. Tables 1 and 2 also show that misclassification of a weak brand to the United Kingdom leads to gains in brand image evaluations. Although the perceived COO image of the United Kingdom (the home country) is not the strongest in the marketplace, it still generates positive effects. A domestic country bias effect (Balabanis and Diamantopoulos 2004b) appears to be in place, and the key beneficiaries of erroneous brand domestication are the weak brands. In contrast, a domestic country bias effect for the strong brands is not evident in our study. Finally, consumers inability to classify a brand to a COO (i.e., nonclassification) also has adverse consequences for both brand image evaluations and purchase intentions; this occurs regardless of whether the focal brands true origin has a strong or weak country image. Thus, it appears that classification to any COO is preferable to nonclassification. From a managerial perspective, this important finding indicates that brand names that provide no clues as to their likely origin might negatively affect consumers brand image perceptions and purchase intentions. A good example in our study is the LG brand; almost two-thirds of respondents were unable to link LG to any COO, and only a small minority (less than 5%) was able to classify it correctly (see Tables 1 and 2). In summary, the consequences of nonclassification are similar to those of adverse COO misclassification; therefore, from a company point of view, nonclassification should be seen as a threat to branding.

LIMITATIONS AND FURTHER RESEARCH


In this study, we examined the consequences of the understudied phenomenon of COO misclassification and nonclassification on behavioral outcomes (brand image evaluations and purchase intentions). We conducted the study in a naturalistic context (i.e., using real

Brand Strength and Country-of-Origin Image 111

brands and their natural, unmanipulated occurrence/ distribution in the marketplace) and in one of the most globalized industries (consumer electronics). Our research provides a fresh approach to the study of COO in a more realistic setting in which people act on their perceptions of the origin of the brand as (correctly or erroneously) stored or classified in their memory and not in an impromptu manner or on the basis of artificially manipulated information that prespecifies the correct origin. This is consistent with advice in the recent literature that the important COO cue with regard to origin management is the COO that consumers associate with the product or the brand (Josiassen and Harzing 2008, p. 268, emphasis added). Our approach also avoids making the dubious assumption that consumers actually know or seek the origins of brands when forming judgments and making purchase decisions (Samiee, Shimp, and Sharma 2005, p. 392), which has been the subject of much criticism in COO research (see, e.g., Balabanis and Diamantopoulos 2008; Usunier 2006). Despite the strengths of our studys design, however, there are issues of generalizability because the results are from a single country (albeit one with a significant presence in the sector) and a single product category. Although a variety of other electronic products (e.g., DVD players, television sets) are also the brands investigated herein, thus offering some scope for generalization beyond the specific product category, future studies should examine the phenomena of COO misclassification and nonclassification in different contexts (e.g., less globalized industries) and other countries with a lower or higher presence of local brands in the focal product category. Furthermore, additional variables (e.g., brand equity dimensions, perceived risk, and product ownership) should be used as outcomes. A related issue is the extent to which the observed insensitivity of consumers to favorable COO misclassification (i.e., the lack of gains) is outcome specific or a more generalizable phenomenon. More refined research into additional factors that might affect the consequences of COO misclassification, such as differences between novice versus expert consumers and whether the (wrong) origin perceived by the consumer relates to an affinity or animosity country (see Oberecker, Riefler, and Diamantopoulos 2008; Riefler and Diamantopoulos 2007, respectively), should complement the insights provided in our study. Finally, an interesting question is what happens to brand image perceptions and purchase intentions if consumers

are alerted to the fact that they have misclassified the COO and are subsequently informed of the brands correct origin? Experimental research aimed at establishing the extent to which consumers are willing to update their brand evaluations and buying intentions and the magnitude of any adjustments undertaken would be most welcome to shed light on this important research question.11 In conclusion, our findings support the view that the COO that is relevant for consumer decision making is that country which consumers typically associate with a product or brand (Usunier 2006, p. 62). However, we do not share the view that the actual place that the brand originates from is almost irrelevant (Thakor 1996, p. 27), because discrepancies between the true origin and consumers perceived origin of a brand almost invariably have negative consequences in terms of brand image perceptions and purchase intentions. Similarly, when consumers are unable to associate a brand with any origin, both COO misclassification and nonclassification are likely to hurt the brand.

NOTES
1. Hennebichler (2007) examines brand ownership in eight product categories, namely, televisions, DVD players, computers, cell phones, hi-fi systems, refrigerators, microwave ovens, and digital cameras. 2. As Balabanis and Diamantopoulos (2008, p. 58) point out, consumers tend to assign many different incorrect origins (see also Samiee, Shimp, and Sharma 2005). 3. Given m origins, only one of which is correct, the maximum number of wrong COOs to which a brand can be classified is m 1. 4. The equation is also known as Glasss (Glass, McGaw, and Smith 1981) and is routinely used in meta-analytical research for similar purposes. 5. Space limitations prevent us from discussing these statistics in depth; for full details, see Gleser and Olkin (1994). 6. The choice of product category is consistent with advice offered in the literature that high-quality research designs in the study of COO knowledge should only ask consumers for information on products that they

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would actually consider using (Josiassen and Harzing 2008, p. 266). 7. We purposely did not use Harmans one-factor test to assess CMV in our study, because although widely used, it is an insensitive test (Podsakoff et al. 2003, p. 889). 8. The absence of a CMV biasing effect in our study must be interpreted from the perspective of the discipline to which the research is affiliated. In this context, research evidence indicates that method variance differs across disciplines, with marketing belonging to those areas affected least (see Cote and Buckley 1987). 9. Recall that adverse (favorable) misclassifications capture allocations to a COO with a weaker (stronger) image than the brands true COO. 10. Note that the average correlation coefficient (for all 12 brands) between brand image evaluations and purchase intentions comes to .28. This confirms the distinct nature (discriminant validity) of the focal outcome variables; the latter thus provide complementary insights into the consequences of COO misclassification. 11. The authors thank an anonymous reviewer for raising this important research question.

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ACKNOWLEDGMENTS
The authors thank two anonymous reviewers for constructive feedback on previous versions of this article.

THE AUTHORS
George Balabanis is Professor of Marketing in the Cass Business School at the City University of London and holds a doctoral degree from Strathclyde University. His research focuses on the areas of international marketing strategy, cross-cultural consumer behavior, and online relationships. His work has been published in outlets such as Journal of International Business Studies, Journal of the Academy of Marketing Science, Journal of International Marketing, Long Range Planning, Journal of Business Research, British Journal of Management, International Business Review, International Marketing Review, Journal of Global Marketing, and European Journal of Marketing, as well as many prestigious conference proceedings. Adamantios Diamantopoulos holds the Chair of International Marketing at the University of Vienna, Austria, as well as visiting professorships at Loughborough University and Ljubljana University. His main research interests include international marketing and research methodology, and his work has appeared in, among others, Journal of Marketing Research, Journal of International Business Studies, Journal of the Academy of Marketing Science, International Journal of Research in Marketing, Journal of Service Research, Journal of International Marketing, Journal of Retailing, and Journal of Business Research.

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