The effects of country of origin and corporate reputation on initial trust

Abstract

Purpose -The purpose of this paper is to investigate the simultaneous effects of country of origin (COO) and corporate reputation on initial trust in a transition economy, and to compare these effects across two service industries. The model broadens COO research by incorporating initial trust as a key driver of success in the context of services internationalization. Design/methodology/approach -Poland is the transition economy studied. A total of 184 respondents evaluated different service combinations (high vs low reputation/home country vs foreign country) in two different service categories (high risk vs low risk). Relationships between constructs are tested, employing a between-subject experimental design. Findings -Both reputation and the risk level of service have a significant main effect on initial trust. Furthermore, results indicate a highly significant interaction effect: a positive COO effect leads to a higher level of initial trust only in the case of a risky service. Research limitations/implications -As with all laboratory studies, external validity is limited. Further research should focus on other instruments for gaining initial trust (e.g. warranties), especially in the case of a negative COO image. Practical implications -International marketers of services must carefully consider COO information as a means of building initial trust. Positive effects only apply in the case of high-risk services. Originality/value -A major contribution is the introduction of initial trust as an important mediator in COO-related international service marketing literature. As a second contribution, COO effects were compared across different service categories with respect to perceived risk. Furthermore, investigating COO effects in transition economies is of particular interest, as such markets are gaining attraction for international service providers.

Emerging Markets Commerce: The Role of Country-of-Origin and Animosity in Purchase Intention

“…Moreover, reputation of firms from an emerging market has an indirect effect on purchase decision through trust. This empirical observation coincides with the findings of Michaelis et al (2008), who hold that consumers facing an uncertain purchase situation (the case of value products from emerging countries) primarily draw on indicators that signal foreign product quality (such as the reputation of the COO firms) until when they start to trust a foreign firm. In line with the above argument, a foreign firm's reputation is the key deciding factor in consumer purchase decision in our study.…”

“…In terms of the theory of signals, reputation is more useful as a generator of trust when firms and their products are not well known, as happens with foreign firms and products (Nijssen, Singh, Sirdeshmukh & Holzmuelle, 2003). Under such circumstances, reputation of firms from a particular country becomes an evaluation criterion for available offer and a cornerstone in the construction of a trust-based relationship (Michaelis, Woisetschläger, Backhaus & Ahlert, 2008;Nijssen & Herk, 2009). Thus, the first hypothesis proposes that:…”

A Conceptual Study on the Country of Origin Effect on Consumer Purchase Intention

“…Globalization gives the chance to companies to distribute their products all over the world, and presents the opportunity for people to choose between different types of product; consequently, country of origin is a significant subject when examining consumer purchase behaviour according to foreign products. In addition, it is also a label for brands, which guides the consumers to know the firm and the country of origin (Chen, Wu, & Chen, 2011;Michaelis, Woisetschläger, Backhaus, & Ahlert, 2008).…”

Country-of-origin effect in professional services – literature review

“…This also implicates medical tourism because the recent trend is for people to travel from developed countries to third--world countries for medical treatments because of cost consideration. However, the study conducted by Michaelis et al (2008) showed that a positive COO effect leads to a higher level of initial trust only in the case of a risky service.…”

“…Most of the study in this area lies in the fields of cross-country marketing and culture studies. To sum up, considering services, the COO is an essential carrier of information for consumers (Ahmed, Johnson, Ling, Fang, Nui, 2002) which affects their assessment of purchase risk (Michaelis Woisetschläger, Backhaus, Ahlert, 2008) and purchase intentions (Harrison-Walker, 1995;Morrish, Lee, 2011). Moreover, it serves as a cue from which consumers make inferences about a product and product attributes, such as evaluation of quality or performance.…”