The Impact of Consumer Ethnocentrism on within country variation among consumers:
When local products are just not local enough!
By Shabnam Saremi
A Thesis Submitted in Partial Fulfillment of the Requirements for the Degree of
Master of Science In Business Administration
at
Rijksuniversity Groningen October 2011
Thesis Supervisor: Rene van der Eijk Co-Reader: Pedro de Faria
The last year has involved many ups and downs in my life both personally as well as academically. However, I am thankful that I did not choose to quit and go the easy way.
Instead I forced myself to work through the downs and finally I am able to say that I have achieved the high in my academic career that I worked so hard for.
At this point I would like to express my gratitude to those people who have helped and supported me through these many ups and downs of the last year. My supervisor Rene van der Eijk provided me with direct and straight feedback. He drew my attention back to the focal point of the paper and helped me to stay focused on the important aspect. I am very thankful for the emails, phone calls and meetings he arranged with me, regardless of the long distance between us.
I also would like to thank my co-reader Pedro de Faria who has shown interest in my progress and invested time to provide me with constructive feedback to improve my overall research.
Last but not least, I would like to use this opportunity to thank my family and friends who have been very supportive during the last couple of months in the completion of this thesis.
Special thanks go to my parents who tolerated the many stressed situations where I was completely unbearable and still supported me until the last day. And special thank goes to Evgeni Chankov who in moments of despair reminded me that challenges are what make life interesting; overcoming them is what makes life meaningful.
Shabnam Saremi
The author declares that the text and work presented in this Master thesis is original and that no sources other than those mentioned in the text and its references have been used in creating the
Master thesis.
The copyright of the Master thesis rests with the author. The author is responsible for its contents.
Rijksuniversity is only responsible for the educational coaching and beyond that cannot be held responsible for the content.
© Copyright by Shabnam Saremi, 2011 All rights reserved
List of Tables 7
List of Figures 8
List of Appendices 9
Abstract 10
1. Introduction 11
1.1 Theoretical Gap 11
1.2 Research Questions 12
1.3 Research Objectives 12
1.4 Relevance of the Study 12
1.4.1 Theoretical Relevance 12
1.4.2 Managerial Relevance 13
1.5 Thesis Structure 13
2. Literature Review 14
2.1 Country of Origin 14
2.1.1 Past Studies 15
2.1.2 Relationship between COO and CE 15
2.2 Consumer Ethnocentrism 16
2.2.1 Past Studies 16
2.2.2 Measuring CE 18
2.2.3 Antecdents of CE 18
2.2.4 Critique on CE 19
2.3 Regional Consumer Ethnocentrism 20
2.3.1 Past Studies 20
2.3.2 Measuring Regional Consumer Ethnocentrism 21
2.4 Theoretical Framework 21
2.4.1 Conceptual Model 21
2.4.2 Theoretical Propositions 22
(a) Regional CE on Purchase Intention 22
(b) Regional CE on Product Evaluation 23
(c) Product Evaluation on Purchase Intention 24
(d) Control Variables on regional CE 25
3. Methodology 27
3.1 Data Collection Method 27
3.1.1 Qualitative Data Collection 27
3.1.2 Quantitative Data Collection 27
3.2 Sampling Design 28
3.3 Measurements 32
3.3.1 Product Evaluation 32
3.3.2 Purchase Intention 33
3.3.3 Consumer Ethnocentrism 33
3.4 Reliability and Validity 34
3.5 Data Analysis 34
3.6 Pilot Testing 35
3.6.1 Pilot Test 1 35
3.6.2 Pilot Test 2 35
4. Results 37
4.1 Case Description 37
4.1.1 Country of Choice 37
4.1.2 Product of Choice 39
4.1.3 Market Overview 40
4.2 Statistical Results 41
4.2.1 Descriptive Statistics 41
4.2.1.1 Assumption of Normality 41
a) Normal Distribution 42
b) Skewness and Kurtosis 43
4.2.1.2 Assumption of Unidimensionality 44
a) Exploratory Factor Analysis 44
b) Internal Consistency 48
c) Construct Validity 48
4.2.1.3 Sub-Conclusion 49
4.2.2 Correlation 49
4.2.2.1 Sub-Conclusion 53
4.2.3 Mediation Analysis 53
4.2.3.1 Sub-Conclusion 57
4.2.4 Multiple Regression Analysis 60
4.2.4.1 Sub-Conclusion 63
5. Discussion 65
6. Conclusion 68
6.1 Managerial Implication 71
6.2 Future Research 71
7. References 73
8. Appendix 82
1. Overview of Variables 21
2. Calculation of Final Sample 31
Overview of all Types of Fire Brigades and amount of 40
Firefighters in Germany
4. Overview of Firefighters in Bavaria 41
5. Descriptive Statistics of all Variables 43
6. Findings Skewness and Kurtosis 44
7. Level of Reliability 48
8. Findings on Internal Consistency 48
9. Correlation Matrix 52
10. Results Hypothesis Testing Correlation Analysis 53 11. Mediation Analysis “Domestic Purchase Intention” 58 11.1 Mediation Analysis “Foreign Purchase Intention” 59
12. Regression Analysis 63
13. Results Hypotheses Testing Regression Analysis 64
1. A holistic model of the two literature streams 14
2. Consumer Ethnocentrism Antecedents 19
3. Conceptual Model focusing on Domestic and Foreign Products 22
4. Sample Overview 31
4.1 Proportionate Sampling 31
4.2 Disproportionate Sampling 31
5. Snapshot of Cetscale from Pilot Test 2 36
6. Germany Map 37
7. Bavaria Map 38
8. Overview Political Parties in Germany 39
9. Histogram Cetscale 42
9.1 Histogram Domestic Product Evaluation 42
9.2 Histogram Willingness to Buy Domestic Products 42
10. Scatter Plot Foreign Product Evaluation 50
10.1 Scatter Plot Domestic Product Evaluation, regional CE 50 10.2 Scatter Plot Domestic Product Evaluation, 50 Domestic Purchase Intention
11. Rule of Thumb Correlation Analysis 50
12. Conceptual Mediation Model 54
A. Questionnaire Product Evaluation (Roth & Romeo,1992) 71
B. Questionnaire Purchase Intention 71
C. Questionnaire Cetscale (Shimp & Sharma, 1987) 72
D. Final Questionnaire submitted 73
E. Kaiser Meyer Olkin Test 77
F. Factor Analysis 78
Purpose: Consumers are flooded with products from different countries and regions in the world. In light of globalization one would expect that this is commonly accepted by consumers. However, earlier studies show how consumer ethnocentrism favors domestic products over foreign products. This research therefore, contributes to the wider understanding of that phenomenon by exploring the characteristics of the Bavarian consumers’ regional ethnocentric attitudes towards products from other German regions.
Design/ Methodology: A sound literature review led to a set of hypothesis regarding the variable of interest, regional Consumer Ethnocentrism and a set of control variables (Age, Income, Education and Type of Firefighter). Empirical data was collected through 430 self- administered questionnaires sent to professional and volunteer firefighters located in Bavaria, South Germany. Before the final distribution of the questionnaire two Pilot Tests have been conducted. Regional Consumer Ethnocentrism is measured by the validated Cetscale.
Findings: It was found that Bavarian consumers exhibit higher levels of ethnocentric tendencies. Results indicate that consumers’ preference for domestic products can be best explained by this construct. Furthermore, it was suggested that regional Consumer Ethnocentrism generally relates positively to domestic product evaluation and the willingness to buy domestic products. At the same time it relates negatively to foreign product evaluation and the willingness to buy foreign products.
Practical Suggestions: Results indicate that Bavarian consumers are highly biased against foreign products, even if it is still a German made product. For marketers it is important to consider the level of ethnocentrism that consumer exhibit in order to launch the product successfully into the foreign market. In addition, it can be concluded that consumer ethnocentrism is a better way to segment the market compared to demographic segmentation.
Originality: Ethnocentrism has been widely discussed in the International context. However, academics as well as practitioners fail to recognize the need to investigate ethnocentrism among consumers of the same nation. This fact places particular importance to this paper as it not only support the existing literature but it also adds to the body of literature.
Key words: consumer behavior, regional consumer ethnocentrism, product evaluation, purchase intention
“It has been said that arguing against globalization is like arguing against the laws of gravity” (Kofi Anan). Globalization is increasing and becoming a central aspect for the industries and corporations. However, this does not imply that consumers are globalizing alike. Fatos Nano1 once said that “today in the era of globalization there is no such issue as borders between states of the same nation”. The concept of globalization views the world as a single space, or nearly as a single market (Taylor, 2002). Global transportation, communications, marketing, online shopping seem to be indicators that national borders are dissolving (Ger 1999) and that the global homogeneous consumption culture is emerging (Alden, Steenkamp and Batra, 1999; Hannerz, 1990; ter Hofstede, Steenkamp and Wedel, 1999). MNCs focus on a global marketing strategies and SMEs enter foreign markets faster than ever before (Knight, 2000; Etemad, 2004; Turcan, 2005).
However, the idea of a global consumption culture has drawn skepticism among theorists and consumers around the world (de Mooij, 2004) and the counterargument that local cultures remain more influential on consumer behavior than ever before results in people’s resistance to global forces (Cleveland, et al., 2009). Local resistance can be found in form of consumer ethnocentrism in the market. Ethnocentric consumers refuse to buy imported goods because they think it is destructive to the national economy and cause unemployment (Atlintas and Tokil, 2007). Ethnocentrism is one of the factors that influences consumer attitude towards foreign products (Shimp and Sharma, 1987).
For International Marketers it is therefore highly important to find the right balance between globally standardized versus locally customized marketing strategies (Cleveland et al., 2009). Global market segmentation focuses too much on clustering countries along market level indicators such as economic development and Hofstede’s index. Choi and Rajan (1997) propose to use consumer characteristics instead. Country level analysis has the following limitation. First, it neglects the fact that most countries are multicultural.
Researchers (Roth, 1995; ter Hofstede, Steenkamp and Wedel, 1999) have found out that within country variation among consumers is larger than between country variation.
Secondly it is suggested that globalization is enhancing consumer similarity across countries however, reducing the similarity within country (Craig and Douglas, 2006). Therefore, it is significant to understand the existence of sub-cultures within a nation and the influences of this local force in a global age (Marquis and Battilana, 2007).
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The construct of regional consumer ethnocentrism has just recently been added to the body of literature on consumer ethnocentrism. A few studies (Marchlewski and Fetchenhauer, 2006; Thelen et al., 2006; Siemieniako et al., 2011) have investigated consumer preference for products originating from different regions within a country. The outcomes of these studies show that consumers prefer local products over products from
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other regions. This is very much in line with the findings in the consumer ethnocentrism literature.
The aim of the research is to add to the body of literature by analyzing the relationship between regional consumer ethnocentrism and consumer behavior. As mentioned earlier, a vast numbers of studies have looked into consumer ethnocentrism on a (cross-) national context however, only a handful of papers investigate the construct on a regional level.
Therefore, there is need to do more research in this field Furthermore, scholars do not seem to agree whether consumer ethnocentrism is the better predictor for domestic products or rather foreign product preference and how it ultimately, affects consumers’ willingness to buy domestic/ foreign products.
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Deducing from the gathered information I wish to add to the extensive body of literature on consumer ethnocentrism by investigating the following research question:
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The paper aims to complete the following objectives:
• Accumulate relevant data that helps to understand consumer’s product evaluation with regard to regional and domestic products
• Provide a clear understanding of how regional consumer ethnocentrism can
critically cause a product bias towards domestic products among consumers within a country
• Provide managerial implications on how to overcome regional consumer ethnocentrism
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The present paper will be of interest for researchers as it intends to add to the academic literature. Furthermore, it will be also relevant to practitioners because it provides many valuable recommendations applied to the business world. Thus, the findings will contribute and benefit both parties.
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Consumer ethnocentrism by itself has been widely researched and discussed in the marketing literature. However, using the construct of consumer ethnocentrism to investigate consumer differences of one single country have not been explored enough.
The emphasis of this paper will be on the multicultural facets of one country. This is crucial for successful segmentation of the target market because within-country variation of
How does regional consumer ethnocentrism influence consumer product preference for regional versus domestic products?
consumers is often greater than between country variation (Roth, 1995; Ter Hofstede et al., 1999; Cleveland et al. 2009). Reported papers have indicated that regional consumer ethnocentrism is strongly present in the markets. By extending the current literature with regards to other local factors, such as political ties, the present study aims to validate the theoretical implications.
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Most of the time marketers invest a lot of resources investigating a new market, particularly a market that is in a different country. Much emphasis is placed upon cultural differences between consumers across countries. And it is forgotten that consumers also vary within the borders of a single country. Understanding the role and the effects of regional consumer ethnocentrism will help managers to successfully segment the market and target the right people. Although consumer ethnocentrism and the negative attitude towards foreign products arise from within the individual it is crucial to understand that it is enforced by local communities and local economies. Providing managers with the understanding how local forces can influence regional consumer ethnocentrism in times of globalization allows them to create the most appropriate marketing strategy to position their product.
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Followed by the introduction is the literature review presented in the second chapter which provides an in-depth assessment of regional consumer ethnocentrism. This analysis will be further extended by discussing the knowledge gap. At the end of chapter the conceptual model and the resulting hypothesis will be presented.
Chapter three provides an overview of the methodology employed for this study. The main sources for data collection are questionnaires and interviews. Prior to the distribution of the questionnaires two Pilot Tests have been conducted to ensure the comprehensibility of the questionnaire.
The fourth chapter provides information twofold. The first section provides a description of the company, the country of choice, the product of choice. The second part presents the data analysis with respect to the conceptual framework and the stated hypothesis. The statistical software program, SPSS will be used to generate the results.
In the fifth and final chapter a comprehensive evaluation of the analyzed data will be provided. The focal point of this section will be the connection of the results to the theory section presented in this paper. This will be followed by the conclusion and the recommendation section which will provide possible tactics to overcome regional consumer ethnocentrism. At the end of this chapter limitations and further research will be presented.
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Consumer attitude towards foreign products has been widely discussed in literature and it can be concluded that it streams from two separate constructs. The first stream is concerned with the country of origin which is used as key information by consumers to base their purchase decision upon. And the second stream is involved around consumer ethnocentrism which analyses the different variables that cause consumer product preference for local products. Figure 1 synthesizes the findings into a model.
Figure 1: A holistic model of the two literature streams
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Country-of-Origin (hereafter COO) is the most widely researched topic in the field of marketing, with up to 700 published studies up to date (Papadopoulos and Heslop cited in Ahmed and D’Astous, 2008). Since the mid 60’s researchers have been researching the field of Country-of-Origin effect. The first empirical study was carried out by Schooler (1965, 1971) and Reierson (1966, 1967) where it was found that customers were influenced by COO when assessing different foreign products. He concluded that customers use country of origin as information cue to assess the product quality. It was found out that consumers use a number of information cues to evaluate the quality of a product (Bednall et al., 1997). These information cues can be categorized into two major groups: intrinsic cues and extrinsic cues. Intrinsic cues are information cues that are directly linked to the physical characteristic of the product, e.g. product design, color, style, taste, etc. Extrinsic cues on the other hand, are information cues that are associated with the outward appearance of the product, e.g. brand name, price, warranty, reputation, etc. Since intrinsic cues are more difficult to judge prior to the purchase most consumers evaluate the product on the basis of extrinsic cues (Tam & Elliott, 2011). In the past years there were many studies published that had the same exact focus and it was found out that country of origin effect influences customers’ purchase decision (Pharr, 2005).
Ethnocentrism -Socio-Psychological Antecedent
-Economic Antecedent -Political Antecedent -Demographic Antecedent
Country-of-Origin
-Endogenous Antecedent -Exogenous Antecedent
For consumers who know little about a product, country of origin becomes the key information on which customers base their purchase decision upon (Han, 1989; Johansson, 1989; Maheswaran, 1994). The perception about the country influences the consumers’
evaluation of the product or the brand (Nebenzahl et al., 1997). The country of origin, as an information cue triggers beliefs, such as ethnocentric feelings, which in turn affect the evaluation of the product and its attributes. The more favorable the country image in the consumers mind the more favorable the evaluation of the product made in that country (Han, 1990; Schooler, 1965).
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The COO has been used as a research approach to investigate many different product categories (Dornoff et al., 1974; Festervand et al., 1985; Elliott and Cameron, 1994; Tse et al., 1996) and different services (Bruning, 1997; Pinkaeo and Speece, 2000) from different countries (Akaah and Yaprak, 1993; Hulland et al., 1996; Kwok et al., 2006; Papadopoulos et al., 1987) using both a quantitative and a qualitative approach (Amine et al., 2005). All these studies conclude that consumers use COO as a major information cue when evaluating a product. The study by Verlegh and Steenkamp (1999) proposes that COO has an impact on product evaluation with regard to quality. Research in mature consumer markets suggests that consumers rate domestic products with regard to quality better and/
or equal to other developed markets. While products from underdeveloped economies or even unknown countries are being rated the lowest (Balabanis et al., 2001; Yelkur et al., 2006; Wang and Chen, 2004).
As mentioned earlier COO comprises decades of research and it can be considered a fairly mature topic now. Many researchers (e.g. Pharr, 2005; Samiee, 1994; Verlegh and Steenkamp, 1999) have provided great in-depth analysis and literature review on this topic.
Therefore, what will follow on the topic of COO is strictly limited to the objective of this study.
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As presented in Fig.1 the antecedents of COO can be divided into endogenous and exogenous. Antecedents are determinants of a construct. The endogenous antecedents explain measurable traits within a consumer including ethnocentrism, country-specific animosity, stereotypes and Hofstede’s societal dimensions. Exogenous antecedents on the other hand, explain dimensions of the target country such as level of economic development.
Among these antecedents ethnocentrism has received the most attention (Zolfagharian and Sun, 2010). One should note here, that ethnocentrism is often confused with COO;
although these two topics seem to be connected they are independent of each other.
The following example will help to clarify the distinctness of these two constructs:
A French consumer can have a positive COO effect for German cars because of product attributes, such as quality, but decide not to buy because of nationalistic reason, which is explained by consumer ethnocentrism.
Consumer ethnocentrism directs consumers away from buying foreign products, whereas COO is used by consumers as information cue to evaluate a foreign product. In the following a more distinctive review of ethnocentrism will be presented.
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The concept of consumer ethnocentrism (CE) was derived from ethnocentrism that was firstly discussed in literature by Sumner (1906). He defines ethnocentrism as the distinction between in-group and out-group. The in-group is the center of everything and views the rest as inferior; thereby evaluating the rest with reference to the in-group. In the later years a researcher (Murdock, 1931) indicated that the concept of ethnocentrism can be further transferred to all kinds of social groups, “developing into family pride, nationalism, religious prejudice and patriotism” (Sharma et al, 1995, p.27). Levine and Campbell (1971) point out in their findings that the main factor of ethnocentrism is not the focus on the in-group but rather the disapproval of the out-group. The concept of ethnocentrism is important to Marketing and therefore widely researched because it portrays a potential barrier for firms to enter a new market.
Shamp and Sharma (1987) followed their analysis from the consumer’s point of view and identified that CE is only set in motion during the purchasing process. They found out that consumers with high levels of ethnocentrism refuse to buy foreign products since it is harmful to their own economy and causes unemployment. CE is defined as “the beliefs held by consumers about the appropriateness and indeed morality of purchasing foreign- made products” (Shimp and Sharma, 1987, p. 280). In the field of consumer ethnocentrism Shimp and Sharma are the most influential researchers. It is worth noting that there had been other researchers before them that investigated consumers’ product opinion towards foreign products (Anderson and Cunningham, 1972; Dornhoff et al., 1974). However, Shimp and Sharma took the research to the next level by introducing the CETSCALE (a multi-item scale) that explains why consumers prefer domestic products over imported one, even when the latter is cheaper and its quality is much better than the domestic one. In many studies (Balabanis and Diamantopoulos, 2004; Herche, 1992; Lantz and Loeb, 1996;
Netemeyer et al., 1991; Nielsen and Spence, 1997; Sharma et al., 1995; Watson and Wright, 2000; Witkowski, 1998) the scale has proven valid.
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The construct of consumer ethnocentrism (CE) was first defined by Shimp and Sharma (1987) as a “unique economic form of ethnocentrism that captures the beliefs held by consumers about the appropriateness and indeed morality of purchasing foreign-made products” (p.280). Shimp and Sharma are the most influential researchers in the field of consumer ethnocentrism. With the development of the CETSCALE they were able to empirically explain why some consumers prefer local products over foreign products, even when the latter is cheaper and highly qualitative compared to the domestic one. In many studies (Balabanis and Diamantopoulos, 2004; Herche, 1992; Lantz and Loeb, 1996;
Netemeyer et al., 1991; Nielsen and Spence, 1997; Sharma et al., 1995; Watson and Wright, 2000; Witkowski, 1998) the scale has proven valid.
Several important characteristics of CE have been already recognized. A large body of literature naturally focused on CE in different countries (Netemeyer et al., 1991;
Papadopoulos et al., 1990; Shimp and Sharma, 1987). At this point it is important to emphasize that consumer ethnocentrism varies depending on the level of development of the consumer’s home country. Meaning, consumers from developed countries tend to favor domestic products over foreign products (Wang & Chen, 2004). On the other hand, consumers from developing countries favor foreign products (especially, from prestigious countries) over domestic products.
Other studies focused on different product categories (Chryssochoidis et al., 2007, Sajdakowska, 2003), and the topic of the study by Smyczek (2006 cited by Siemieniako et al., 2011) has been financials. And other products of interest have been clothing (O’Cass and Lim, 2000). However, it has been suggested that the level of consumer ethnocentrism varies among different product categories. Consumers show higher ethnocentric tendencies when the product category is less important (Sharma et al., 1995). Another study conducted by Javalgi et al. (2005) concluded that the purchase intention of a product is higher when the product is perceived as absolute necessary.
Shankarmahesh (2006) reviewed recently the antecedents of consumer ethnocentrism. The common ground of most of these studies is based on the socio-psychological antecendents presented by Shankarmahesh (2006), such as patriotism (Han, 1988; Sharma et al., 1995; Klein and Ettenson, 1999), conservatism (Balabanis et al., 2002); animosity (Klein et al., 1998) and the Country-of-Origin effect (Johansson et al., 1985; Han, 1989;
Maheswaran, 1994).
What can be identified from past studies is that CE was used to explain consumer variation between countries as opposed to within country. Only a few researchers have considered investigating CE within a country (Balabanis et al., 2001; Sharma et al., 1995; Thelen et al., 2006, Siemieniako et al., 2011). According to social identity theory, the individual is much more influenced by the local community attachment than by nationality. This provides researcher with a new aspect of consumer ethnocentrism and highlights the importance of regional ethnocentrism. Yet, there seems to be a number of variables that influence regional CE which have been highly neglected and require further investigation.
Many researchers have already investigated the different variables that affect consumer ethnocentrism with regards to lifestyle (Kucukemiroglu, 1999), to shortage of domestic alternatives (Watson and Wright, 2000), to national identity (Keillor and Hult, 1999) and to nationalism (Balabanis et al., 2001).
In another study by Herche (1992, 1994) the author found out that CE can “predict”
consumer preference to buy a domestic product over a foreign product. On the basis of that study the author came to the conclusion that CE is a better way to explain import purchase behavior than demographics or even the marketing mix. However, the prediction ability of buying intension varies from country to country (Balabanis et al., 2001) and a number of authors claim that there is still too little replication studies in this field
(Easley et al., 2000; Evanschitzky et al., 2007, 2010) which limits the generalization ability for practitioners in the field of marketing.
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As already mentioned earlier Shimp and Sharma (1987) were the researchers who developed the scale that measures consumers bias towards foreign products. The so called CETSCALE stands for Consumer Ethnocentrism Scale. The scale was initially created for and validated in the US market. The authors first employed 225 items and 7 dimensions of consumer attitudes towards foreign products. However, after some additional screening and testing 6 of the 7 dimensions were erased and as a result a 17-item scale was developed. Four separate studies needed to be conducted in order to test the scale’s reliability and validity. All tests were again conducted in the US and the results showed strong support that the scale was reliable and valid (Cronbach alpha .94).
Since all the tests were initially conducted in the US market there was no evidence for cross-cultural applicability. Only after various other studies replicated the scale it was able to further validate it across other cultures and countries. It is with the help of studies conducted by researchers such as Netemeyer et al. (1991) that further evaluated the reliability and validity of this scale on a cross-national sample in the US, Germany, France and Japan. The findings strongly support the scale’s uni-dimensionality and support the scale’s reliability and validity.
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Shankarmahesh (2006) who investigated ethnocentrism from a socio-psychographic point of view identified in a recent study the antecedents of ethnocentrism. Figure 2 visualizes all the identified variables such as socio-psychographic, economic, political and demographic antecedents. This figure shows perfectly how much has been researched already in the field of consumer ethnocentrism.
Most of the socio-psychographic antecedents such as conservatism, ethnicity, patriotism, nationalism, collectivism, cultural openness, etc. have been widely discussed in literature (Han, 1988;; Klein and Ettenson, 1999; Kucukemiroglu, 1999; Sharma et al., 1995; Javalgi et al., 2005; Yoo and Donthu, 2005; Quellet, 2007; Yelkur et al., 2006). In the study by Balabanis et al. (2001) the authors investigate the constructs of nationalism, patriotism and internationalism as antecedents of CE in Turkey and Czech Republic. Their findings show that nationalism and patriotism do not have the same influence on consumer ethnocentrism.
What can be found in the literature is that the consumer ethnocentrism generally positively correlates with attitude towards domestic products, yet negatively correlates with attitude towards foreign products (Verlegh, 2007). Nevertheless, it is important to mention that not all studies come to the same conclusion. The attitude towards domestic products was much stronger than for foreign products (Shimp and Sharma, 1987; Balabanis &
Diamantopolous, 2004). Said differently, consumer ethnocentrism is a better predictor for domestic products rather than foreign products.
With regard to purchase intention it was found out that consumers ethnocentric tendencies are positively related to purchase intention of domestic products and negatively related to purchase intention of foreign products (Shimp and Sharma, 1987).
Furthermore, it is said that the attitude towards imported products is moderated by product necessity and the perceived degree of personal and economic threat imposed by the foreign product (see fig.2).
Fig.2 Consumer Ethnocentrism Antecedents
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A number of researchers have claimed that the exploratory power of the construct has been weakened because it fails to consider the impact of product type and category.
Many studies (Herche, 1994; Kaynak & Cavusgil, 1983; Balabanis & Diamantopoulos, 2004, Thelen et al., 2006) have shown that product category differences are also observed within the same ethnic or sub-group. Therefore, it was indicated that product attributes can weaken the moral obligation of the consumer to purchase domestic products (Thelen et al., 2006). The study by Leonidou et al. (1999) has shown that Bulgarian consumers rate Japanese electronics as high however, Japanese personal care items are rated low.
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Furthermore, product involvement (Lantz & Loeb, 1996) and perceived product necessity (Sharma et al., 1995; Huddleston et al., 2001) were proven to have significant impact on consumer ethnocentrism and the attitude towards foreign products. It has been confirmed that the more necessary the product, the less impact consumer ethnocentrism has on the attitude towards foreign products (Huddleston et al., 2001; Javalgi et al., 2005).
Therefore, it is imperative for the success of the study to consider product type and product category when analyzing the level of regional ethnocentrism.
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So far, the concept of Consumer Ethnocentrism on a national level has been discussed.
However, the scope of this paper is to analyze consumer ethnocentrism on a regional/
local level and thus, goes beyond the national level.
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Since regional CE has just recently become the focal point of interest for many researchers and managers alike; there are only a handful of papers that investigate this construct in depth. Lambert et al. (2008) investigated the Sea-food market of the coastal area in Wisconsin and Mississippi. It was found out that the consumers have a strong, positive bias towards products from their own region. It was shown that consumers deliberately try to protect their local market and the local producers. This behavior is mostly prompted by morals, rather than rationale thinking or emotional reasons (Smyczek in Siemieniako et al., 2006). Consumers might even choose a product from their own country/ region even though the quality is much lower than the imported counterpart. Thus, it can be stated that regional CE is expressed by consciously favoring and choosing local products over the imported product one or from another region.
A recent study (Apoliniaris Case Study, 2011) conducted an analysis in the food and beverage industry in Germany and found an increasing trend that consumers prefer local products over imported ones. 83% of the respondents indicate that they prefer red wine from their local region. This indicates that German consumers exhibit ethnocentric attitude and thus, whenever possible choose local products.
Similarly, the study by Vida and Dmitrovic (2007) conducted in Bosnia and Herzegovina shows that consumers are highly ethnocentric and favor local products. The authors emphasize the importance of multi-ethnicity within a state. It has been pointed out that most literature focuses on national culture and global culture, however, the existence of sub-cultures in many societies makes it increasingly difficult for marketers to target the right people. The results of the study show that ethnicity indeed affects the consumption behavior and predominantly reflects in the shoppers’ preference for local products.
Another study by Siemieniako et al. (2011) looks at Polish consumption behavior and analyzes regional consumer ethnocentrism based on a case study of beer consumers in Poland. The paper contributes to the wider understanding of the construct of regional CE by pointing out that nationalism (Siemieniako et al., 2011) and national identity (Vida and Dmitrovic, 2007) are significant predictors of regional consumer ethnocentrism.
Furthermore, it was concluded that countries like Poland which despite their long history (in this case over 1,000 years) have different regions within the country which still maintain their distinct local identity. In essence this is what influences the nature of regional ethnocentrism. This emphasizes again the importance of local community affiliation that influences and shapes consumers’ worldviews, rather than nationality or national identity (Marchlewski and Fetchenhauer, 2006).
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Until now it was highlighted that consumer ethnocentrism can be studied at a national level as well as at a regional/ local level. Although, the vast majority of studies to this point of time focus entirely on consumer ethnocentrism at a national level and only a small number of papers investigating regional consumer ethnocentrism, it can be concluded that consumers have the tendency to prefer national/ regional product over foreign products.
Although one might assume that both national and regional ethnocentrism might be rooted in the similar kind of antecedents, each of them might have different intensity in different situations and therefore need to be assessed independently. In all the past studies of regional ethnocentrism the validated CETSCALE has been used to analyze the data set.
Consequently, this paper will also use the CETSCALE in the further analysis to measure regional consumer ethnocentrism.
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This paper contributes to the literature of regional consumer ethnocentrism which is derived from the widely research construct of CE (Shimp and Sharma, 1987). In the next step hypotheses will be developed about how the construct might relate to and ultimately affects consumer behavior. An overview of all the variables included in this study are presented in table
Table 1 Overview of Variables
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The figure below provides an illustration of the conceptual model that has been developed for this research according to Willingness to Buy Domestic Products and Willingness to Buy Foreign Products, respectively. In addition, the relationship and their influence between the variable of interest are highlighted. In the next step the foundation
of the study will be elaborated upon in more detail by stating the necessary hypothesis that will reveal the relationship of the various constructs.
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In the following the hypothesized relationship will be presented.
a) REGIONAL CONSUMER ETHNOCENTRISM ON PURCHASE INTENTION
As already highlighted in the literature review that construct of Consumer Ethnocentrism has been discussed extensively in literature. Many researchers have investigated the impact of Consumer Ethnocentrism on Consumer Behavior. However, findings proof to be inconsistent.
The impact of consumer ethnocentrism on attitudes towards foreign products has been extensively researched and significant relationships were found (Sharma et al., 1995;
Ozsomer and Cavusgil, 1991; Meyers, 1995; Kaynak and Kara, 2002; Wang et al., 2004;
Watson and Wright, 2000; Lantz and Loeb, 1996; Huddleston et al., 2001). Consumer Ethnocentrism is closely linked to Nationalism, since both constructs exhibit a preference for the home country with the rejection for the foreign country. Shimp and Sharma (1987) found that highly ethnocentric consumers evaluated imported products according to their perceived effect on the economy. They feel a moral obligation to buy domestic products and evaluate foreign products negatively as they harm the local economy. Most of these studies have established that the higher the ethnocentric tendency, the more negative the attitudes towards foreign or imported products, the more positive they are towards domestic products.
Fig.3 Conceptual Model focusing on Domestic and Foreign Products
Many studies (Sharma et al., 1995; Fraser, 2002) have found out that Consumer Ethnocentrism negatively influences consumers’ Willingness to Buy Foreign Products. This can further be proven by the studies by Han (1988) and Herche (1992). They found out that there is a positive relationship between Consumer Ethnocentrism and the Willingness to Buy Foreign Products. However, not all studies suggest a negative connection between these two constructs. The study by Klein et al. (1998) found a negative connection between Consumer Ethnocentrism and Willingness to Buy Foreign Products. In line with these findings it is expected that the high level of regional CE will lead to Unwillingness to Buy Foreign Products.
Simultaneously, findings from studies by Shimp and Sharma (1987) and Balabanis &
Diamantopoulos (2004) have shown that there is a stronger attitude towards domestic products than towards foreign products. Therefore, it is expected that regional Consumer Ethnocentrism will positively influence Willingness to Buy Domestic Products. And it will negatively influence Foreign Product Evaluation and Willingness to Buy Foreign Products.
Following this line of thought the following proposition are presented (see fig.3).
Hypothesis 1: Regional Consumer Ethnocentrism has a positive relationship with Willingness to Buy Domestic Products.
Hypothesis 2: Regional Consumer Ethnocentrism has a negative relationship with Willingness to Buy Foreign Products.
b) REGIONAL CONSUMER ETHNOCENTRISM ON PRODUCT EVALUATION
As mentioned earlier in this chapter Country-of-Origin effect influences consumers’
perception and attitude towards imported products (Papadopoulos, 1993) and therefore is strongly related to consumer ethnocentrism. Consumers use the country of origin as an additional information cue to evaluate foreign products. This process activates ethnocentric beliefs in the consumer which determines consumers’ product preference.
It is believed that consumers who are experienced with the product at hand use product attribute to make a sound evaluation of the product. However, inexperienced consumers base their decision on the country of origin (Maheswaran, 1994). At the moment if both type of consumers lack information about the product then they rely solely on the country of origin effect to make inferences about the product quality.
Furthermore, it was found out that the level of consumer involvement in the purchasing process determines the extent to which the country of origin is utilized. Gurhan-Cali &
Maheswaran (2000) state that highly motivated consumers are more likely to focus on specific product attributes when evaluating the product. Less motivated consumers on the other hand, will have to engage more in the buying process and thus, it is more likely that they will use the country of origin to make inferences about the product quality.
In light of the focal paper it is important to consider that consumers that exhibit ethnocentric tendencies will evaluate regional products more positively because of the moral obligation and the love and loyalty they feel towards their own region. Even if they know that the foreign product is more qualitative they will still choose the local product
over the foreign. Rosenblatt (1964) hypothesized that highly ethnocentric consumers will exhibit higher in-group solidarity. This feeling will then translate into a positive evaluation of the domestic product. Furthermore, Olsen et al. (1993) found out that the ethnocentric consumers disregard the economic cost involved in obtaining the domestic product. This is in line with the price inelastic properties of consumer ethnocentrism.
At the same time highly ethnocentric consumers will use the country of origin to evaluate the foreign product. This is enhanced in situation when the consumer has little information or experience with the product and when the consumer is actively involved in the purchasing process. A study conducted by Wall et al. (1991) confirms that the evaluation of the product quality is connected to the country of origin effect. However, it has little impact on the final purchase intention. This was further verified by Rahman (2000) who argues that country of origin effect influences foreign product evaluation but it does not affect the purchase intention of the consumer.
Following this line of argumentation the following hypothesis can be deduced:
Hypothesis 3: Higher levels of Regional Consumer Ethnocentrism have a positive relationship with the Evaluation of the Domestic Product.
Hypothesis 4: Higher Levels of Regional Consumer Ethnocentrism have a negative relationship with the Evaluation of the Foreign Product.
c) PRODUCT EVALUATION ON PURCHASE INTENTION
The primary goal of this study is to find out whether consumers’ ethnocentric tendencies will lead to the purchase of domestic or rather foreign products. This paper has used different constructs such as “Purchase Intention” (Han, 1988), or “attitude towards buying domestic/
foreign products” (Sharma et al., 1995)) or “Willingness to Buy Domestic Products” (Olsen et al., 1993) and “Willingness to Buy Foreign Products” (Klein et al., 1998).
In this section it is important to point out that the definition of consumer ethnocentrism implies (1) affective elements (the sense of belonging, love towards the country, region), (2) cognitive elements (development of stereotypes) and (3) normative elements (societal forces to act towards the common good). Herche (1994) stated that consumer ethnocentrism is therefore, the strongest predictor of buying behavior.
It is believed that these elements are mediated by Product Evaluation in the process of deciding to buy the product. Highly ethnocentric consumers who have a strong sense of belonging will use their cognitive skills to use the country of origin as information cue by referring to the stereotypical attributes to make inferences about the product’s quality.
Studies by O’Cass & Lin (2002) have found out that consumers from Singapore rated Western products higher than Eastern product however, in the final purchase decision they chose Eastern products. This is in line with the normative elements of consumer ethnocentrism in which consumers follow the societal forces to act towards the common good. Another study by Vida & Reardon (2008) confirms this further and indicates that quality perception has a weaker predicting ability than consumer ethnocentrism.
One must keep in mind that the focus of consumer ethnocentrism is not the focus on the in- group but rather the disapproval of the out-group. Translating this into consumer behavior and the ultimate purchase decision it can be stated that consumer ethnocentrism might result in an overestimation of the overall quality of the domestic product and an underestimation of the quality of the foreign product (Sharma et al., 1995).
Following this line of thought the following hypothesized are formulated:
Hypothesis 5a: The effect of regional Consumer Ethnocentrism on Willingness to Buy Domestic Products is positively, partially mediated by consumers’ Domestic Product Evaluation.
Hypothesis 5b: The effect of regional Consumer Ethnocentrism on consumers’ Willingness to Buy Foreign Products is negatively, partially mediated by consumers’ Foreign Product Evaluation.
d) CONTROL VARIABLES ON REGIONAL CONSUMER ETHNOCENTRISM
The focal paper makes use of control variable which are identified as the demographics of respondents. Studies of consumer behavior and consumer ethnocentrism have both used the demographics as a separate stream of antecedents to consumer ethnocentrism (Shankarmahesh, 2006). Additionally, it helps to segment customers in accordance to their favoritism for or against foreign products. The following variables have been considered:
age, education and income. Gender was excluded from further analysis because the number of female firefighters is very little and thus, it is not considered to have a significant impact on the results.
It is argued that age has a positive influence on consumer ethnocentrism. Although studies by Sharma et al. (1995) found no significant relationship between age and consumer ethnocentrism or in more specific favorable attitude towards foreign products, it is still believed that younger consumers are less ethnocentric than older consumers. This can be further confirmed with a study by Klein & Ettenson (1999) and Cleveland et al. (2009). The authors emphasize that younger consumers nowadays have grown up in a world where globalization is felt at every step of the way and they are part of global consumption (e.g.
internet) and therefore, are more open towards foreign products.
Furthermore, it is believed that more educated people are less ethnocentric. The reason for this is found in the argumentation that educated consumers are likely to have less ethnic prejudice and are considered less conservative. Cleveland et al. (2009) state that educated people are more open to broader perspectives. In addition, they argue that school environment also exposes people to other cultures and thereby, enhances their knowledge about foreign cultures and broadens their perspective towards foreign products. Most studies seem to be consistently directing towards a negative relationship between level of education and consumer ethnocentrism.
A study by Watson & Wright (2000) states that wealth and consumer ethnocentrism are negatively related. This means the level of income has a significant impact on consumer ethnocentrism. As a matter of fact, the majority of studies (Sharma et al., 1995) point to a negative correlation between income and consumer ethnocentrism. It is argued that more disposable income allows consumers to travel and purchase foreign products (Kaynak &
Kara, 2002). However, there are also studies (Han, 1988) that have found no significant relationship between income and consumer ethnocentrism and other studies (Tan &Farley, 1987) have even found a positive relationship between the constructs.
Summarizing the findings from above it can be hypothesized:
Hypothesis 6: Regional Consumer Ethnocentrism is (a) positive relationship with age, (b) a negative relationship with education, (c) a negative relationship with income and (d) a positive relationship with type of firefighter.
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This section is used to provide an outline about how the data for this study was collected.
The following research strategy presented below is chosen on the basis of the previously discussed literature review. For the analysis of the literature review, the conceptual model and the defined constructs were built employing quantitative data. Two sets of sources were used for the data collection, primary and secondary sources. Primary sources which were collected from my own observation, experiments, etc. were inevitable for the success of this study. The findings provided firsthand information on the variables important to the research question. With equal importance the use of secondary sources were employed in the investigation. The available information found in various online journals, published papers and books were used as supporting material. Since the construct of consumer ethnocentrism has been researched for many decades already and the measurement was tested and verified by many researchers (Shimp and Sharma, 1987; Balabanis et al., 1995) in the past, this research is built upon the same measurement and has used questionnaires to establish empirical findings that can contribute to the body of literature.
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There are vast amounts of ways to collect data in a research. However, every research is unique and requires a customized approach in the data collection. The present study uses an interrogation/ communication approach to collect the necessary data. In this approach the researcher is in direct contact with the subject and collects their responses by personal or impersonal means (Blumberg, Schindler and Cooper, 2005, p.128). In order to reduce the chance of bias many researchers combine effectively different research techniques which will provide an improved understanding of the topic under study.
Therefore, this study combines quantitative and qualitative data collection in its approach.
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For the scope of this study it was inevitable to conduct personal interviews to get a better insight into the topic and gain first hand information. The personal interview was held with one sales person of Lion Apparel who is responsible for the South of Germany. As a direct salesman he is the one that communicates directly to the customers and therefore has the best understanding of what the customers want and need. Furthermore, there were two more personal interviews with saleswomen in a Lion Shop in Nuremberg located in Southern Germany. All interviews followed a flexible/ unstructured method of asking questions in order to get a better grasp of the situation and resulting issues. This method is also called qualitative research technique.
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As a second step in the research it was imperative to conduct a survey. A self-administered questionnaire was developed for the purpose of this study. This has both advantages as well as disadvantages. One of the major advantages is that is less expensive and easy to use. Yet, respondents do not have the benefit of a personal interviewer who can assist with misunderstanding. The questionnaire needs to accurately communicate the goal of the
study and each single question should provide an easy and understanding response way (Wilson, 2003).
All scales relevant to this study which were discussed extensively in chapter 2 already will be components of the questionnaire. Due to conceptual and methodological differences all scales need to be evaluated carefully. Furthermore, it is important to keep a certain sequence of the presented scales in the questionnaire. Items that incorporate the same theme will be grouped together in order to provide a logical and interesting structure for the respondent. “Sensitive” questions, such as level of income, etc. will be placed at the end of the questionnaire since respondents might feel compelled to answer the last questions considering they have spent so much time and effort in answering the previous items (Fritsch, 2008).
Considering the format and number of categories it was decided to use a non-forced scale with an odd number of response categories. In this way the respondents have the possibility to choose a neutral middle part, rather than “forcing” them to choose either a positive or negative option. Wilson (2003) states that most of the surveys employ between 5 and 9 categories and research has confirmed that data from Likert items become less accurate when the number of scales drops below 5 or higher than 7 (Johns, 2005).
Therefore, it was chosen to employ 5 point Likert scale where 1 = strongly disagree and 5 = strongly agree. With regard to the composition of the different items emphasis was placed in the use of positively worded questions. Simultaneously, negative items will be transformed into positive ones. Even though this method is considered to raise acquiescence bias because it positively worded items might generate “yes-saying”
(Fritsch, 2008), it is less confusing for the respondents (Netemeyer et al., 2003). In addition, it was found out that reverse coded items might lead to a falsification of the data because once the respondent has a pattern of answering the questions, (s)he might fail to recognize the change in the positive or negative wording of the items. Thus, the negative wording can be the cause of method bias (Podsakoff et al., 2003) and consequently excluded from this analysis. Since the survey was conducted with a German sample the questionnaire was first developed in English and then translated into German. Later a back translation was carried out by the author.
For the purpose of this study it has been decided to evaluate Product Evaluation and Purchase Intention on the basis of the following product category: Fire Fighter Gear/
Apparel. The country of choice is Germany and the regions of interest are Bavaria and North Rhine Westphalia (hereafter NRW). Bavaria will be considered the home region since respondents of the Bavarian region are of major interest for the present study and therefore, questionnaire will be distributed to Bavarian firefighters living in Bavaria. More details on the choice of country/ region and the product category will be provided in chapter 4 (Empirical Study).
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The general idea of sampling is that by selecting certain elements of a population it will help to draw conclusions about the whole population. The advantages of sampling are
that it leads to more accurate results in a faster manner involving lower costs (Blumberg, Schindler and Cooper 2005, p.202). One should keep in mind that there is a large array of sampling techniques. However, it is the researcher’s goal to create a sample design that matches to the requirements of the project, its objectives, and the funds available.
Before a proper sample can be defined it is viable to determine the population. For the purpose of this study the fire fighter apparel market in Germany is being investigated.
Therefore, the target population is firefighters in Germany. However, one should keep in mind that there are different types of firefighters and therefore it is of utmost significance to specify each element of the population in order to establish a proper sample. In Germany there are 5 types of fire fighters:
1. Professional Fire Brigade. German cities with a population of 80.000-120.000 (depending on the state) are required by law to have a professional fire brigade with firefighters 24/7 at duty.
2. Voluntary Fire Brigade. Men and women above the age of 18 can commit to the local voluntary fire brigade and be part of an organization that serves the community. It is a non-paid job and thereby keeping in mind that volunteers can be sent to a fire outbreak.
3. Factory/ Plant Fire Brigade (Compulsory). Some organizations are required by law to have an in-house fire brigade. For example companies that deal with explosives such as BASF. But also airports are required to have an in-house fire brigade to extinguish the fire right away.
4. Factory/ Plant Fire Brigade (Voluntary). Other organizations choose to have an in- house fire brigade because it is more convenient and secures the workplace for their employees. Companies such as BMW, Siemens, etc. have their own in-house firefighters.
5. Youth Fire Brigade. Young firefighters are recruited at the age of 10-12. In this young age children are taught how to deal with fire and fire outbreaks. Many of these kids will either become professional firefighters or enter the voluntary fire brigade once they have turned 18.
A list of all these fire brigades in Germany can be found in the company database of Lion Apparel. However for the scope of this research only the fire brigades of the Bavarian region will be of interest for this study.
In the next step the sample type must be chosen. There are two types of samples:
probability and non-probability sampling. The latter does not use chance selection procedures; rather it relies on personal judgment of the researcher (Malhotra, 2007, p.340).
In probability sampling on the other hand each element has a probable chance of being selected for the sample and thereby it increases the likelihood of obtaining samples that are representative of the population. Therefore, the sampling technique employed in this study is probability sampling and in more detail it utilizes the stratified sampling method.
A stratified sample is a mini-reproduction of the population. It requires the population to be divided into sub-populations or strata. Dividing the population into homogenous sub- groups allows the researcher to reach all the important elements of the population. In this case the sub-groups are divided with regard to the different types of fire brigades. Stratified sampling is a more precise technique compared to simple random sampling. This can be explained with the lower variability between the subgroups compared to the variance of the population.
A last element which needs to be reflected on in the sampling technique is the consideration of proportionate vs. disproportionate sampling. The disproportionate approach employs a sampling fraction that is not proportionate for all strata. This allows the researcher to select higher proportions from some groups and not others. This can be explained with different response rates that are expected. The advantage is that it helps to tackle the problem of overrepresentation of one group which can easily lead to skewness of the results2 if not considered in the sampling. Therefore, it was decided to use disproportionate sampling because it can also represent the smallest and inaccessible subgroup.
Furthermore, it is highly important for this study to investigate possible relationships between the subgroups. For the survey it is also important to question the person that has the most power in the procurement of firefighter clothing. In professional and factory fire brigades it is only one person in command namely the fire chief. The population size comprises then one chief from each of the 7 professional fire brigades and one chief from each of the 242 factory fire brigades summing up to 249. In voluntary fire brigades it is in general a little different with the procurement of firefighter apparel because every single person is responsible on his/ her own. Then it does not matter how much they spend or what brand they choose. Therefore, the population size will be all volunteer firefighters in Bavaria.
The sample of the entire population (N=308.569) is calculated to be 400. The calculation below illustrates the outcome.
n = N/ 1 + N (e)² e = 0.05 N = population size n = sample size n = 308.569/ 1 + 308.569 (0.05)²
n = 400
% * & :$ ":== 1" ( * & & =# " " ( " $ /9 ! #: 4
> ) &* % "
Firefighter population N=308.569 (professional=249)
(volunteer=308.320)
Proportionate Sampling (professional=1)
(volunteer=399)
Disproportionate Sampling (professional=200)
(volunteer=200)
Fig.4.2 Disproportionate Sampling
Out of these 400 the strata will be equally divided into two groups of 200 samples each.
Thereby, the overrepresentation of the volunteer firefighters is taken into account. The pie charts below illustrate the huge differences in population size between these two groups. In addition it is used to demonstrate the differences between the proportionate and disproportionate sampling. However, considering that some respondents might fail to fill out the questionnaire correct it is decided to send out additionally 40 questionnaires (20 to volunteer firefighters and 20 to professional Firefighters).
Fig.4 Sample Overview Fig.4.1 Proportionate Sampling
Stratum Professional and
Factory Fire Brigade
Voluntary Fire Brigade
Population Size 249 308.320
Sample Fraction of n (the sample for the entire population)
1/2 1/2
Final Sample 200 200
