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Country of Origin Effectson PurchasingManagers Product

PerceptionsSadrudin A. AhmedAlain dAstousMostafa El Adraoui

INTRODUCTIONAs the manufacture of products and the search for sup-

pliers become increasingly global activities, the understand-ing of buyers attitudes and behavior with respect to globalproducts takes on greater importance. One very activestream of research in the area of consumer/buyer purchas-ing behavior, the study of country-of-origin effects, seeksto understand how individuals perceptions of products areaffected by knowledge of the country where the productswere made. The interest in the study of country-of-origin

This research was funded by the Social Sciences and Humanities ResearchCouncil of Canada. The authors acknowledge the support f the CanadianAssociation of Purchasing Managers during the data collection phase of the study.

Address correspondence to Alain dXstous, Faculty of Administmtion, Universityof Sherbrooke, Sherbrooke (QuCbec), Canada JlK 2Rl.

effects eflects the increasing complexity of the marketplace.Current country-of-origin research attempts to examine suchimportant question as, What do organizational buyers thinkof a product designed in a country, manufactured in an-other, and carrying a brand name associated with a thirdcountry (e.g., a Honda car designed in the United Statesand assembled in Mexico)?

Past research indicates that both household and indus-trial buyers evaluations are based on their assessment ofproduct cues, which may be intrinsic (taste, design, per-formance) or extrinsic (brand name, country of origin).Buyers often make judgments about product quality andpurchase value on the basis of extrinsic cues, particularlywhen it is not easy to assess the intrinsic value of a product[19]. This is why country of origin, an extrinsic cue, isoften used to judge foreign products.

Industr ial M arketi ng M anagement 23, 323-332 1994)o Elsevier Science Inc., 1994655 Avenue of the Americas, New York, NY 10010

3230019-8501/94/$i.O



Give prospects a reason to buyIn the marketing literature, attention has been given toexamining the extent to which country-of-origin knowledge

influences product purchase decisions. Several issues havebeen considered, including buyers involvement and/orfamiliarity with a product category, knowledge of a partic-ular country, experience and expertise in purchase deci-sion making, and the presence of other extrinsic productinformation cues. By relating industrial buyers perceptionsof product quality and purchase value to country imagesin a context where information on other cues such as brandname, price, and warranty is also available, decision makerscan better understand how preferences for their productsare formed. Research like this provides insight into whatunderlines industrial buyers attitudes towards productsmanufactured in different countries. Industrial marketingmanagers can benefit by knowing when promoting a prod-ucts country of origin is helpful and when it is not.

Research has shown that a products country of originaffects the perceptions of industrial buyers [6,23,3 I]. How-ever, the number of country-of-origin studies that have beenconducted with industrial buyers is very limited in com-parison with those that have focused on household buyers[5, 261. Since the buying behavior of these two types ofbuyers is somewhat different 1321, the empirical findingsfrom consumer research may not be readily applicable toindustrial buyers. There is therefore a need for more re-search on the role of country-of-origin cues in the purchasebehavior of industrial buyers.

In order to meet global competition, many corporationsare manufacturing and assembling and sometimes even con-ceiving, designing, and engineering products abroad, innewly industrialized countries. However, past and recentstudies have shown that products made in newly industri-

SADRUDIN A. AHMED is Professor of Marketing at theUniversity of Ottawa.ALAIN dASTOUS is Professor of Marketing at the University ofSherbrooke.MOSTAFA EL ADRAOUI is a Ph.D. student at the icole desHautes Etudes Commerciales, Montreal.

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alized countries are evaluated negatively [II]. Workers insuch countries are perceived to be technologically un-sophisticated [25]. In the context of the North AmericanFree Trade Agreement (NAFTA) and the inclusion of Mex-ico, a newly industrializing country, it seems important forinternational industrial marketers to examine the reactionsof Canadian and United States industrial buyers towardmade-in-Mexico products. This may also prove interest-ing for those firms in other developed countries that manu-facture products in newly industrialized countries for ex-port to North American markets. For example, Japanesecompanies planning to manufacture products in Mexicoto take advantage of the gradual elimination of U.S. andCanadian trade barriers coming out of NAFTA should takeinto consideration buyers reactions to the made-in-Mexicolabel. Although because of lower labor costs, lax environ-mental regulations, and tax concessions, it may appear ad-vantageous for developed country firms to implementmanufacturing facilities in newly industrializing countries,negative attitudes toward a country of origin can adverselyaffect the perceived quality and purchase value of products.

In planning the present study, special attention was givento some important considerations emanating from past re-search. Firstly, country-of-origin studies have often assessedthe impact of country image along a single attribute, thatis product quality. Recent research indicates, however, thatcountry image is really a multi-attribute construct 1271. Thisstudy therefore incorporates two attributes of country im-age perceptions, namely perceived quality and purchasevalue. Secondly, as Bilkey and Nes [5] and others havepointed out, in order to avoid an overestimation of the effectsof country of origin, it is necessary to present other ex-trinsic information cues such as brand name, price, andwarranty along with the country-of-origin cue. A few re-cent country-of-origin studies have followed this advice [28].Thirdly, country of origin is not a unidimensional concept.Many products are designed in one country and manufac-tured in another [8]. This hybrid nature of products mayor may not be inferred directly from knowledge of brandname, which is often associated with a companys countryheadquarters [26]. It is therefore important to distinguishbetween two dimensions of country or origin, namely de-sign (conception, engineering) and assembly. Fourthly,



studies have shown that country-of-origin effects vary acrossdifferent product categories [16]. The importance of thecountry-of-origin cue seems to depend on such product char-acteristics as technological complexity, financial risk, andcountry specialization (e.g., French perfumes, Turkish car-pets). For this reason and also because of the need to gener-alize findings, country-of-origin effects must be studiedacross different types of products. Finally, among research-ers who have used a multi-cue approach to examining made-in effects, very few have used Mexico as a country of ori-gin (but see [15]). As mentioned previously, Mexico is ofspecial interest for industrial marketers in the context ofNAFTA.In this article, we present results from a study conductedwith members of the Canadian Association of PurchasingManagers. The first objective of the research was to geta better understanding of the impact of country of originon purchasing managers product perceptions by distinguish-ing between country of design and country of assembly.The second objective was to examine how purchasingmanagers perceptions of products made in Mexico areaffected by a change from a single cue setting to a multiplecue setting.DEVELOPMENT OF RESEARCH PROPOSITIONS

Research indicates that knowledge of country of origindoes indeed influence buyers perceptions of products [ I.A major criticism of early studies is that country of originwas the only information respondents received about theproducts they had to evaluate. Recent studies [2,28] haveaddressed this problem and confirmed the significant im-pact of country of origin on the subjective evaluation ofconsumer products when other information concerning var-ious product characteristics is available.The few studies that have examined country-of-origineffects on industrial buyers evaluations have reached simi-lar conclusions [l, 6,9,30]. Three studies have also exam-ined the impact of additional information cues besides coun-try of origin on the evaluations of industrial buyers [17,22,3 11. The findings of these studies have enhanced our un-derstanding of the role of information cues in industrialbuying and have also provided insights about the mediat-ing role of individual characteristics such as education, in-come, and age.In most studies, country of origin has so far been treatedas a unidimensional concept, i.e., the country where theproduct is made.As Oszomer and Cavusgil[26] have notedhowever, the concept of country of origin has not been

clearly defined by the great majority of researchers. Dueto the globalization of markets, for many firms the designand assembly operations associated with the making of aproduct may not take place in the same country. Accord-ing to Chao (81, hybrid products will be more and morepresent in the global marketplace because of the changingstrategies of global corporations. Research must thereforeadopt a multidimensional perspective on country of originby distinguishing between the country of design and thecountry of assembly.According to Johansson [19], country of origin is extrinsicinformation allowing buyers to make inferences about theintrinsic value of a product. Hastak and Hong [18] arguethat the relative importance of country of origin diminisheswhen additional information regarding the product suchas brand name, price, warranty, etc. is provided. Brandname is commonly used by buyers when making judgmentsabout quality and purchase value and has been shown tomoderate the effects of country of origin [20]. In addition,brand names carry some of the information usually as-sociated with countries of origin with their implicit refer-ence to corporate headquarters. In general though, for in-dustrial buyers who have a greater expertise in purchasedecision making and who have a greater willingness to de-vote cognitive efforts to this task, brand name would beless informative, since it would not serve as a good proxyfor country of origin. Quality assurance programs such aswarranty reduce purchase risk and may also have a posi-tive impact on perceived quality. Price information shouldaffect the perceived purchase value of products. In lightof these considerations, our research design includes rele-vant extrinsic cues (brand name, price, quality assurance)to moderate the impact of country of origin on buyers per-ceptions.

In general, the importance of a summary cue such ascountry of origin is directly related to its ability to reducethe uncertainty surrounding a decision. When there arc per-ceived differences between countries regarding their com-petency in the design and production of products, the effectof made-in should be stronger. On the other hand, whendesign and production technologies are standardized andmarkets are relatively homogenous, buyers are less likelyto use country of origin as a proxy for quality and pur-chase value. Inversely, when markets are heterogeneousand there is a noticeable variability in manufactured prod-ucts, one should expect significant country-of-origin effects.When a product is at the beginning of its life cycle, withunstandardized design and production technologies, vari-ability in the quality of design and production between coun-

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Looking for ver ge needs inevitably leadsto false estimations

tries is more likely, and buyers perceptions should beaffected by knowledge of country of origin [19].

To summarize, this study seeks to understand how buyersproduct perceptions are affected by knowledge of countryof design and country of assembly when other informa-tion concerning such attributes as brand name, price, andwarranty is also available. It seeks also to find out if country-of-origin effects vary across categories of products differ-ing in terms of technological complexity. With the precedingdiscussion in background, the following three propositionsare put forward:

PI:

P2:

PA

Organizational buyers perceptions of the quality andpurchase value of products are more favorable whenthese products are designed and/or assembled in de-veloped countries than when they are designed and/orassembled in a newly industrializing country.Information concerning brand name, price, and war-ranty has a significant impact on buyers perceptionsof the quality and purchase value of products.The effects of country of design and country of as-sembly on buyers perceptions will be attenuatedwhen other information concerning brand name,price, and warranty is available.

METHODResearch Design and Questionnaire

The methodology used to estimate the impact of coun-try of origin and the other informational cues is conjointanalysis. This methodology uses product profiles con-structed by combining in a factorial manner the attributeschosen for the analysis. Subjects provide evaluations of allproduct profiles on rating scales. Figure 1 shows an exam-ple of one of the profiles employed in the study. Percep-tions on perceived quality and purchase value in this studywere measured with two nine-point bipolar scales.

Table 1 presents the conjoint research design. Three cat-egories of products were selected for study: computer sys-tem, fax machine, and ballpoint pens. The choice of these

products was guided by our desire to include productsrepresenting different levels of financial risk, technologi-cal complexity, purchase difficulty, and organizational in-volvement [29], so as to increase the generalizability ofthe findings. Each product profile comprises five cues: coun-try of design, country of assembly, brand name, price, andguarantee (or delivery for pens). The cues themselves areoperationalized using three levels chosen to correspond tothe market conditions prevailing at the time the data werecollected. Canada (developed country) and Mexico (newlyindustrializing country) were included as countries of de-sign and assembly along with a third prestigious country(Japan for the computer system and the fax machine, Ger-many for the ballpoint pens). Brand names were chosenso as to create differences in prestige and reputation. Pricesand levels of warranty (or delivery) also show significantvariations.

Combining all attribute levels results in 243 (37profiles for each product category. In order to make theprofile evaluation task possible for respondents, a one-ninthconfounded block fractional factorial was constructed [lo],so that only nine profiles had to be evaluated for eachproduct.

Computer designed in CanadaAssembled in Mexico

Brand name is SeikochaPrice is 12,000

Warranty is 3 yearsYour Evaluation:

Very bad Very goodquality 1 3 4 5 6 7 8 9 qualityVery bad Very goodbuy 1 2 3 4 5 6 7 8 9 buy

FIGURE I Example of conjoint profile.

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In addition to the conjoint task, the questionnaire com-prised a first part where 13 countries had to be evaluatedas locations for the conception, design, and engineering(country of design); and manufacturing and assembly (coun-try of assembly) of industrial products using a nine-pointscale (mediocre/excellent). In order to make sure that theconcepts of country of design and country of assembly wereclear for all respondents, these were explained in detail.This was followed by a series of questions concerning prod-uct familiarity, product involvement, purchase expertise,purchase experience, and company and personal charac-teristics.Data Collection

The data were collected with the collaboration of theCanadian Association of Purchasing Managers (CAPM)in the province of Qukbec. The questionnaire was writtenin French language. At the time the study was conducted(between June 23 and July 23 1992), the Qu6bec divisionof the CAPM comprised 1,193 members. A total of 943telephone calls were made to contact these individuals and332 were reached. In order to be eligible for the survey,the individual had to be personally involved in the pur-chasing function. A total of 306 persons directly involvedin purchasing accepted to answer the questionnaire. Com-pleted questionnaires were received by mail from 175 pur-chasing managers. Only two questionnaires were discardedbecause they were not filled out properly. The final samplethus comprises 173 purchasing managers representing 14%of the Qukbec division of the CAPM.TABLE 1Study Design

Country of design

Country of assembly

Brand name

Price

Warranty or delivery

Computer FaxSystem Machine

Canada CanadaJapan JapanMexico MexicoCanada CanadaJapan JapanMexico MexicoIBM XeroxFujitsu ToshibaSeikocha Samsung$16,ooO $1,300$12,ooo $1,000

$8,000 $7003 years 24 months2 years 18 months1 year 12 months

BallpointPens

CanadaJapanMexicoCanadaJapanMexicoPaper-MateStaedlerBit$1.20$0.80$0.40FastMediumS OW

RESULTSSample Description

Table 2 presents some descriptive statistics about the sam-ple. The mean age of the organizations to which membersof the CAPM belonged is 42 years, with average annualsales and purchasing budgets of $63 and $30 million (Cana-dian dollars), respectively. These firms employ on average500 employees, and 50 % of them are involved in manufac-turing operations.The mean age of the respondents is 43 years, and theirpurchasing experience is 14 years on average. About three-fourths of the respondents are male, and 56% occupied amanagerial position at the time the study was conducted.The respondents who occupied a managerial position tendedto be from smaller-size firms. Comparisons between thesample and the membership population on characteristicswhere information was available indicated that there wereno systematic sampling biases. By and large, the sampleappears to be representative of the population.Direct Evaluations of Countries

Table 3 presents the mean evaluations of the 13 coun-tries as locations for the design and assembly of industrialproducts. As mentioned before, these evaluations concernindustrial products in general. As can be shown, developedcountries are better evaluated in general than newly indus-trializing countries as locations for the design and assem-

TABLE 2Sample Characteristics

CharacteristicsOrganizational

Mean ageMean yearly salesSector of activity

ManufacturingGovernmentOther

Mean number of employeesMean purchasing budget

PersonalMean ageMean purchasing experienceSex

MaleFemale

FunctionManagerialBuyerOther

42 years$63 million50%14%36%500$30 million43 years14 years76%24%56%35%9%

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Customer analysis must precedecompetitor analysis

bly of industrial products. This result supports our first re-search proposition. It is interesting to note also that newlyindustrializing countries are consistently better evaluatedas locations for the assembly of industrial products thanas countries of design. The average evaluation of newlyindustrializing countries increased from a mean of 3.6 forcountry of design to 4.2 for country of assembly, the lowestdifference being associated with India (0.3) and the highestwith Mexico (0.9). Interestingly, South Korea, which isa newly industrialized country, rated almost as well as

TABLE 3Evaluations of Countries of Origin

Countries

Country of Country ofDesign Assembly

Mean Rank Mean Rank DifferenceDeveloped countries

JapanGermanyUnited StatesCanadaFranceItalyBelgiumOverall mean

Newly industrializedcountry

South KoreaNewly industrializing

countriesBrazilMexicoMoroccoIndiaRussia

Overall meanComparisons

Japan/MexicoCanada/MexicoGermany/MexicoJapan/CanadaGermany/CanadaDeveloped/newly

industralizing

1.6 1 8.6 1 (1.0)7.6 1 7.6 2 -6.8 3 6.6 4 0.26.7 4 6.9 3 (0.2)6.1 5 6.1 5 _5.8 6 5.9 6 (0.1)5.2 7 5.4 7E E (0.2)(0.2)

5.1 8 5.8 7 (0.7)

4.2 9 4.9 9 (0.7)3.9 10 4.8 10 (0.9)3.5 11 4.0 11 (0.5)3.3 12 3.6 13 (0.313.2 13 3.7 123.6 c

(0.5)(0.61

3.1 3.82.8 2.13.7 2.80.9 1.70.9 0.72.9 2.5

* Mean values range from 1 to 9.

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France and Italy as a country of assembly. It rated slightlyhigher than Belgium as a country of assembly and almostas well as a country of design.Manipulation Checks

A series of repeated-measures analyses of variance [24]were conducted in order to verify that there were significantdifferences between the three product categories in termsof importance of purchase, search for information, anddifficulty in decision making, as well as significant differ-ences between the brands and countries of origin makingup the conjoint design. All differences were statisticallysignificant and in the predicted direction.Evaluation of Product Profiles

Table 4 presents the analysis of variance results for thethree product categories. The two dependent variables areperceived quality and purchase value. The mean squaresindicate that for both dependent variables, country of de-sign explains a larger proportion of common variance thancountry of assembly. This result holds across the three prod-uct categories. Also, country of design explains a relatively

TABLE 4Analysis of Variance Results: Mean Squares and StatisticalSignificance Levels

Computer Fax BallpointSource of Variation System Machine Pens

Perceived qualityCountry of design 437* 354* 316*Country of assembly 174* 157* 129*Brand name 50* 36* 1Price 1 5 3Warranty/delivery 14* 2 13*Total of the five cues 676 554 462

Purchase valueCountry of design 301* 229* 170*Country of assembly 189* 206* 137*Brand name 45* 48* 2Price 165* 73* 271*Warranty/delivery 47* 8 130*Total of the five cues 747 564 710* Significant at p < 0.01.



larger proportion of variance for perceived quality than forpurchase value. Moreover, the greater the technologicalcomplexity of the product, the larger the statistical effectof country of design.

Although brand name has a statistically significant im-pact on the perceived quality and purchase value of the com-puter system and the fax machine, its explanatory poweris much smaller than that of the country-of-origin cues. Onaverage, the mean squares associated with brand name is13 times smaller than that of the country-of-origin cues takentogether. Brand name has no significant effect when it comesto the evaluation of ballpoint pens. The largest proportionof common variance explained by brand name is for thepurchase value of a computer.

Price and warranty/delivery have almost no impact onperceived quality, On the other hand, they have a substan-tial and statistically significant impact on the purchase valueof the computer and the ballpoint pens. When consideringthe purchase value of ballpoint pens, purchase managersare more influenced by price than by country of design orcountry of assembly.

Taken together, these results partially support our sec-ond research proposition. The impact of brand name, price,and warranty (delivery) on purchasing managers evalua-tions of products is contingent upon the product categoryand the type of judgment considered (quality versus pur-chase value).Additional Analyses

Additional analyses were conducted to assess the impactof the firmk sector of activity on purchasing managers evalu-ations of product profiles. Sector of activity was operation-alized as a two-level variable, manufacturing versus other,and included as a supplementary factor in the analyses ofvariance. Results indicated that sector of activity was notsignificantly related to the evaluations. Some statisticallysignificant interactions with the other cues were found, butin none of the analyses did the interactions explain morethan 2 % of the common variance. It was thus concludedthat the firms sector of activity had a minimum impact onthe results.Comparison of Single Cue and Multiple CueEvaluations

Table 5 presents the marginal means associated with coun-try of design and country of assembly as well as the corre-sponding single-cue means obtained from direct ratings (seeTable 3). The marginal means come out of the conjointdesign. They reflect the evaluation of each country (Canada,

Mexico, and Japan or Germany), taking into account theother informational cues, i.e., brand name, price, and war-ranty/delivery. As can be seen, for both perceived qualityand purchase value, intercountry differences between mar-ginal/multiple-cue means are much narrower than thosebetween direct/single-cue means. These differences aresomewhat greater for country of design than for countryof assembly.

For purpose of comparison, Table 5 shows the differ-ences in single-cue and multiple-cue ratings between Ja-pan (or Germany) and Mexico, Canada and Mexico, andJapan (or Germany) and Canada. Looking at the Ja-pan/Germany-Mexico and Canada-Mexico differences, itcan be seen that purchasing managers negative perceptionsof Mexico are attenuated when other informational cuesare present. For instance, the single-cue difference betweenJapan/Germany and Mexico for the design of industrialproducts in general is 3.7. The corresponding differencesin marginal means for the purchase value of a computersystem are 1.5, 1.3 for a fax machine, and 1.5 for ball-pointpens. As for the Japan/Germany versus Canada ratings,Table 5 shows a similar attenuation of differences from

TABLE 5Single Cue Versus Multi Cue Evaluationsof Countries of Origin

Japan or (1) (4 (1)Germany Canada Mexico minus minus minus(1) (2) (3) (3) (3) (2)

Country of designComputer qualityComputer valueFax qualityFax valuePen qualityPen valueAverage qualityAverage valueSingle-cue mean*

Country of assemblyComputer qualityComputer valueFax qualityFax valuePen qualityPen valueAverage qualityAverage valueSingle-cue mean

JapanGermany

6.8 6.5 5.16.1 5.8 4.66.9 6.6 5.36.3 6.1 5.07.0 6.6 5.56.0 5.8 4.96.9 6.6 5.36.1 5.9 4.87.6 6.7 3.96.6 6.4 5.55.9 5.8 4.86.7 6.4 5.66.3 6.0 5.16.7 6.6 5.85.8 6.0 5.06.7 6.5 5.66.0 5.9 5.08.6 6.9 4.87.6 6.9 4.8

1.7 1.4 0.31.5 1.2 0.31.6 1.3 0.31.3 1.1 0.21.5 1.1 0.41.1 0.9 0.21.6 1.3 0.31.3 1.1 0.23.7 2.8 0.91.1 0.9 0.21.1 1.0 0.11.1 0.8 0.31.2 0.9 0.30.9 0.8 0.10.8 1.0 0.21.1 0.9 0.21.0 0.9 0.23.8 2.1 0.12.8 2.1 0.9

*The single-cue evaluations of Germany and Japan as countries of designwere the same.

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There is no single best wayof segmenting markets

single-cue to multiple-cue situations. For instance, thedifference in single-cue evaluations between Japan andCanada for the assembly of industrial products in generalis 1.7. In multi-cue situations, this difference practicallydisappears.

These results support our third research proposition. Itappears that in multi-cue situations, prejudice against anewly industrializing country is reduced considerably andthat differences between developed countries are practicallynonexistent.DISCUSSION

The results presented in this article must be examinedin light of a number of limitations. The data were collectedthrough a questionnaire rather than through monitoring ofa real life purchase situation. Only a limited number ofproducts, brands, and countries were included in the re-search design. Finally, the survey participants come froma single Canadian province. Therefore, interpretation ofour findings must be done with great care.

If, however, some credence can be given to this research,the results should be of interest to industrial marketers.They show that country of design is a more important cuein organizational purchase decisions than country of as-sembly and brand name. In this study, newly industrializ-ing countries were rated quite poorly as countries of as-sembly and even worse as countries of design. It seemsthat purchasing managers feel that there is a significant dis-crepancy between newly industrializing and developedcountry skills in sheer assembly or manufacturing of prod-ucts and an even greater discrepancy in the conceptualiza-tion, design, and engineering of industrial products.Country of design is a more important indicator of prod-uct quality and purchase value than country of assembly,and its importance is positively related to product com-plexity. For purchase managers, the more complex the prod-uct technology, the greater the perceived importance of de-sign skills.

The fairly good ratings obtained by South Korea as a

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country of assembly in this study are quite interesting. Itis possible that Canadian purchase managers have little buy-ing experience of products assembled in Belgium, France,and Italy, which would lead to less well-informed opin-ions about these countries. It may also be the case that thequality of products assembled in South Korea is just as highas in some developed countries like Belgium and that Cana-dian purchasing managers judgments are just reflecting thisfact.

Unlike several studies conducted among household buyerswhere brand name was found to be an important predictorof quality and/or purchase value [2, 7, 131, in the presentstudy brand name played a very limited role. In thesestudies, country of origin was defined as simply the loca-tion where the products were made. Perhaps by incorporat-ing the notion of country of design in the research design,we were able to isolate that part of the brand image thatis related to the companys headquarters and the implicitassociation to product design. Thus, in this study brandname would reflect only the prestige of different manufac-turers. But it may also be possible that purchasing managers,being more rational and informed than household buyers,are less likely to be swayed by brand names. In recent studiescarried out with Canadian [14] and Belgian [3] householdbuyers that have distinguished between country of designand country of assembly, brand name was found to havemuch greater importance. In both studies in fact, brandname was a stronger predictor of the quality and purchasevalue of automobiles than either country of design or coun-try of assembly. Further evidence in favor of the rational-ity explanation comes from the fact that in comparison withhousehold buyers, purchasing managers in this study gavemore weight to price and warranty/delivery when evaluat-ing profiles.

The greater importance attached to country of designby purchasing managers as compared to household buyersis another interesting difference. In previous householdstudies [2, 131, country of design received just as muchweight as country of assembly. It appears that purchasingmanagers are more willing to buy a product that is assem-



Team members are responsible forthe entire process

bled in an newly industrializing country, provided it is de-signed in a developed country.

The differences between the perceptions of different coun-tries of origin are substantially reduced when other infor-mation is provided along with made-in. Although the per-ceptual differences between newly industrializing countriesand developed countries remain statistically significant,those between developed countries virtually disappear.Thus, when purchasing managers are presented with othercues such as brand, price, and warranty (or delivery), de-veloped countries are treated homogenously, and the prej-udice toward newly industrializing countries diminishes.It seems that in the case of a newly industrializing country,appropriate pricing, warranty, and delivery policies maycounter the negative perception of a country of origin.IMPLICATIONS

The results presented in this article have strategic impli-cations for industrial marketers. The implications concerninternational sourcing, branding, pricing, quality assurance,and promotion policies. Our results show that country oforigin is a very important extrinsic cue used by purchas-ing managers, especially when judging the quality of a tech-nologically complex product. Moreover, country of designhas more impact than country of assembly on purchasingmanagers perceptions. Thus, an industrial marketer sell-ing a technologically complex product designed in a pres-tigious country will be well advised to promote this infor-mation to his/her customers in order to influence theirdecision-making process.

Countries of origin such as Germany and Japan hold greatprestige among North American household and organiza-tional buyers. However, if a North American corporationis able to reassure its customers by improving the qualityof its products and communicating this information throughbrand name promotion, quality assurance programs, andattractive pricing policies, it should be able to counter theprestigious image of some foreign countries of origin. Dur-ing the 1980s the quality of North American products im-

proved considerably. Corporations having undertaken pro-grams of quality improvement should be heartened by ourresults, which indicate that purchasing managers appearto treat developed countries equally when presented withmultiple cues.

North American firms are facing enormous price com-petition from foreign firms in domestic markets. Shiftingmanufacturing facilities to a newly industrializing countrysuch as Mexico in order to reduce production costs is aninteresting competitive strategy. Our results show, however,that country of assembly is a significant cue used by pur-chasing managers. Therefore, North American firms withproduction facilities in less prestigious countries of originshould be ready to implement appropriate pricing and war-ranty/delivery strategies to counter negative biases. Ourresults indicate that there is less bias against a newly in-dustrializing country when it is an assembly location thanwhen it is a design location. Therefore, to enhance the qual-ity image of their products and counteract the negative im-age of a country of assembly such as Mexico, domesticindustrial marketers should emphasize country-of-designinformation through advertising and sales promotion. Thisadvice also applies to firms from other developed coun-tries marketing in North America products assembled inindustrializing countries.

The negative perceptions that purchasing managers holdtoward products (especially technologically complex prod-ucts) conceived, designed, or engineered in newly indus-trializing countries is rather disheartening for those cor-porations located in such countries. However, perceptionsof countries as producers of consumer and industrial goodscan change over time, as the example of Japan has shown[12]. One strategy for dealing with the problem is to as-semble products designed in newly industrializing coun-try in developed countries, just like Hyundai, a South Kor-ean automobile manufacturer, does by assembling someof its cars in Canada. Perhaps, this may in part explain therelatively positive attitudes that Canadian purchasingmanagers have toward products made in South Korea.

As this study has shown, organizational and household

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buyers appear to have somewhat different reactions tocountry-of-origin cues. Given the small number of studiesconducted with organizational buyers and the apparentdifficulty in generalizing results from studies conducted withhousehold buyers, it is recommended that further researchbe conducted with industrial buyers. Such studies wouldbe of great interest to industrial marketing researchers andpractitioners alike.REFERENCES

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