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Country-of-Origin Effects on Purchasing Managers Product Perceptions

Sadrudin A. Ahmed Alain dAstous Mostafa El Adraoui


INTRODUCTION As the manufacture of products and the search for suppliers become increasingly global activities, the understanding of buyers attitudes and behavior with respect to global products takes on greater importance. One very active stream of research in the area of consumer/buyer purchasing behavior, the study of country-of-origin effects, seeks to understand how individuals perceptions of products are affected by knowledge of the country where the products were made. The interest in the study of country-of-origin effectsreflects the increasing complexity of the marketplace. Current country-of-origin research attempts to examine such important question as, What do organizational buyers think of a product designed in a country, manufactured in another, and carrying a brand name associated with a third country (e.g., a Honda car designed in the United States and assembled in Mexico)? Past research indicates that both household and industrial buyers evaluations are based on their assessment of product cues, which may be intrinsic (taste, design, performance) or extrinsic (brand name, country of origin). Buyers often make judgments about product quality and purchase value on the basis of extrinsic cues, particularly when it is not easy to assess the intrinsic value of a product [19]. This is why country of origin, an extrinsic cue, is often used to judge foreign products.

This research was funded by the Social Sciences and Humanities Research Council of Canada. The authors acknowledge the support of the Canadian Association of Purchasing Managers during the data collection phase of the study. Address correspondence to Alain dXstous, Faculty of Administmtion, University of Sherbrooke, Sherbrooke (QuCbec), Canada JlK 2Rl.

Industrial Marketing Management 23, 323-332 (1994) o Elsevier Science Inc., 1994 655 Avenue of the Americas, New York, NY 10010

323 0019-8501/94/$i.O0

Give prospects a reason to buy.


In the marketing literature, attention has been given to examining the extent to which country-of-origin knowledge influences product purchase decisions. Several issues have been considered, including buyers involvement and/or familiarity with a product category, knowledge of a particular country, experience and expertise in purchase decision making, and the presence of other extrinsic product information cues. By relating industrial buyers perceptions of product quality and purchase value to country images in a context where information on other cues such as brand name, price, and warranty is also available, decision makers can better understand how preferences for their products are formed. Research like this provides insight into what underlines industrial buyers attitudes towards products manufactured in different countries. Industrial marketing managers can benefit by knowing when promoting a products country of origin is helpful and when it is not. Research has shown that a products country of origin affects the perceptions of industrial buyers [6,23,3 I]. However, the number of country-of-origin studies that have been conducted with industrial buyers is very limited in comparison with those that have focused on household buyers [5, 261. Since the buying behavior of these two types of buyers is somewhat different 1321, the empirical findings from consumer research may not be readily applicable to industrial buyers. There is therefore a need for more research on the role of country-of-origin cues in the purchase behavior of industrial buyers. In order to meet global competition, many corporations are manufacturing and assembling and sometimes even conceiving, designing, and engineering products abroad, in newly industrialized countries. However, past and recent studies have shown that products made in newly industrialized countries are evaluated negatively [II]. Workers in such countries are perceived to be technologically unsophisticated [25]. In the context of the North American Free Trade Agreement (NAFTA) and the inclusion of Mexico, a newly industrializing country, it seems important for international industrial marketers to examine the reactions of Canadian and United States industrial buyers toward made-in-Mexico products. This may also prove interesting for those firms in other developed countries that manufacture products in newly industrialized countries for export to North American markets. For example, Japanese companies planning to manufacture products in Mexico to take advantage of the gradual elimination of U.S. and Canadian trade barriers coming out of NAFTA should take into consideration buyers reactions to the made-in-Mexico label. Although because of lower labor costs, lax environmental regulations, and tax concessions, it may appear advantageous for developed country firms to implement manufacturing facilities in newly industrializing countries, negative attitudes toward a country of origin can adversely affect the perceived quality and purchase value of products. In planning the present study, special attention was given to some important considerations emanating from past research. Firstly, country-of-origin studies have often assessed the impact of country image along a single attribute, that is product quality. Recent research indicates, however, that country image is really a multi-attribute construct 1271. This study therefore incorporates two attributes of country image perceptions, namely perceived quality and purchase value. Secondly, as Bilkey and Nes [5] and others have pointed out, in order to avoid an overestimation of the effects of country of origin, it is necessary to present other extrinsic information cues such as brand name, price, and warranty along with the country-of-origin cue. A few recent 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 manufactured in another [8]. This hybrid nature of products may or may not be inferred directly from knowledge of brand name, which is often associated with a companys country headquarters [26]. It is therefore important to distinguish between two dimensions of country or origin, namely design (conception, engineering) and assembly. Fourthly,

SADRUDIN A. AHMED is Professor of Marketing University of Ottawa. ALAIN dASTOUS is Professor of Marketing Sherbrooke.

at the

at the University of

MOSTAFA EL ADRAOUI is a Ph.D. student at the icole Hautes Etudes Commerciales, Montreal.

des

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studies have shown that country-of-origin effects vary across different product categories [16]. The importance of the country-of-origin cue seems to depend on such product characteristics as technological complexity, financial risk, and country specialization (e.g., French perfumes, Turkish carpets). For this reason and also because of the need to generalize findings, country-of-origin effects must be studied across different types of products. Finally, among researchers who have used a multi-cue approach to examining madein effects, very few have used Mexico as a country of origin (but see [15]). As mentioned previously, Mexico is of special interest for industrial marketers in the context of NAFTA. In this article, we present results from a study conducted with members of the Canadian Association of Purchasing Managers. The first objective of the research was to get a better understanding of the impact of country of origin on purchasing managers product perceptions by distinguishing between country of design and country of assembly. The second objective was to examine how purchasing managers perceptions of products made in Mexico are affected by a change from a single cue setting to a multiple cue setting.
DEVELOPMENT OF RESEARCH PROPOSITIONS

Research indicates that knowledge of country of origin does indeed influence buyers perceptions of products [!!I. A major criticism of early studies is that country of origin was the only information respondents received about the products they had to evaluate. Recent studies [2,28] have addressed this problem and confirmed the significant impact of country of origin on the subjective evaluation of consumer products when other information concerning various product characteristics is available. The few studies that have examined country-of-origin effects on industrial buyers evaluations have reached similar conclusions [l, 6,9,30]. Three studies have also examined the impact of additional information cues besides country of origin on the evaluations of industrial buyers [17,22, 3 11. The findings of these studies have enhanced our understanding of the role of information cues in industrial buying and have also provided insights about the mediating role of individual characteristics such as education, income, and age. In most studies, country of origin has so far been treated as a unidimensional concept, i.e., the country where the product is made.As Oszomer and Cavusgil[26] have noted however, the concept of country of origin has not been

clearly defined by the great majority of researchers. Due to the globalization of markets, for many firms the design and assembly operations associated with the making of a product may not take place in the same country. According to Chao (81, hybrid products will be more and more present in the global marketplace because of the changing strategies of global corporations. Research must therefore adopt a multidimensional perspective on country of origin by distinguishing between the country of design and the country of assembly. According to Johansson [19], country of origin is extrinsic information allowing buyers to make inferences about the intrinsic value of a product. Hastak and Hong [18] argue that the relative importance of country of origin diminishes when additional information regarding the product such as brand name, price, warranty, etc. is provided. Brand name is commonly used by buyers when making judgments about quality and purchase value and has been shown to moderate the effects of country of origin [20]. In addition, brand names carry some of the information usually associated with countries of origin with their implicit reference to corporate headquarters. In general though, for industrial buyers who have a greater expertise in purchase decision making and who have a greater willingness to devote cognitive efforts to this task, brand name would be less informative, since it would not serve as a good proxy for country of origin. Quality assurance programs such as warranty reduce purchase risk and may also have a positive impact on perceived quality. Price information should affect the perceived purchase value of products. In light of these considerations, our research design includes relevant extrinsic cues (brand name, price, quality assurance) to moderate the impact of country of origin on buyers perceptions. In general, the importance of a summary cue such as country of origin is directly related to its ability to reduce the uncertainty surrounding a decision. When there arc perceived differences between countries regarding their competency in the design and production of products, the effect of made-in should be stronger. On the other hand, when design and production technologies are standardized and markets are relatively homogenous, buyers are less likely to use country of origin as a proxy for quality and purchase value. Inversely, when markets are heterogeneous and there is a noticeable variability in manufactured products, one should expect significant country-of-origin effects. When a product is at the beginning of its life cycle, with unstandardized design and production technologies, variability in the quality of design and production between coun325

Looking for average needs inevitably leads to false estimations.


tries is more likely, and buyers perceptions should be affected by knowledge of country of origin [19]. To summarize, this study seeks to understand how buyers product perceptions are affected by knowledge of country of design and country of assembly when other information concerning such attributes as brand name, price, and warranty is also available. It seeks also to find out if countryof-origin effects vary across categories of products differing in terms of technological complexity. With the preceding discussion in background, the following three propositions are put forward: Organizational buyers perceptions of the quality and purchase value of products are more favorable when these products are designed and/or assembled in developed countries than when they are designed and/or assembled in a newly industrializing country. P2: Information concerning brand name, price, and warranty has a significant impact on buyers perceptions of the quality and purchase value of products. PA The effects of country of design and country of assembly on buyers perceptions will be attenuated when other information concerning brand name, price, and warranty is available.
PI:

products was guided by our desire to include products representing different levels of financial risk, technological complexity, purchase difficulty, and organizational involvement [29], so as to increase the generalizability of the findings. Each product profile comprises five cues: country of design, country of assembly, brand name, price, and guarantee (or delivery for pens). The cues themselves are operationalized using three levels chosen to correspond to the market conditions prevailing at the time the data were collected. Canada (developed country) and Mexico (newly industrializing country) were included as countries of design and assembly along with a third prestigious country (Japan for the computer system and the fax machine, Germany for the ballpoint pens). Brand names were chosen so as to create differences in prestige and reputation. Prices and levels of warranty (or delivery) also show significant variations. Combining all attribute levels results in 243 (37 profiles for each product category. In order to make the profile evaluation task possible for respondents, a one-ninth confounded block fractional factorial was constructed [lo], so that only nine profiles had to be evaluated for each product.

METHOD Research Design and Questionnaire

Computer

designed

in Canada

Assembled

in Mexico

The methodology used to estimate the impact of country of origin and the other informational cues is conjoint analysis. This methodology uses product profiles constructed by combining in a factorial manner the attributes chosen for the analysis. Subjects provide evaluations of all product profiles on rating scales. Figure 1 shows an example of one of the profiles employed in the study. Perceptions on perceived quality and purchase value in this study were measured with two nine-point bipolar scales. Table 1 presents the conjoint research design. Three categories of products were selected for study: computer system, fax machine, and ballpoint pens. The choice of these

Brand name is Seikocha Price is $12,000 Warranty is 3 years

Your Evaluation:
Very bad quality Very bad buy 1 2 3 4 5 6 7 8 9 1

Very good quality Very good buy

FIGURE I.

Example

of conjoint

profile.

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In addition to the conjoint task, the questionnaire comprised a first part where 13 countries had to be evaluated as locations for the conception, design, and engineering (country of design); and manufacturing and assembly (country of assembly) of industrial products using a nine-point scale (mediocre/excellent). In order to make sure that the concepts of country of design and country of assembly were clear for all respondents, these were explained in detail. This was followed by a series of questions concerning product familiarity, product involvement, purchase expertise, purchase experience, and company and personal characteristics. Data Collection The data were collected with the collaboration of the Canadian Association of Purchasing Managers (CAPM) in the province of Qukbec. The questionnaire was written in French language. At the time the study was conducted (between June 23 and July 23 1992), the Qu6bec division of the CAPM comprised 1,193 members. A total of 943 telephone calls were made to contact these individuals and 332 were reached. In order to be eligible for the survey, the individual had to be personally involved in the purchasing function. A total of 306 persons directly involved in purchasing accepted to answer the questionnaire. Completed questionnaires were received by mail from 175 purchasing managers. Only two questionnaires were discarded because they were not filled out properly. The final sample thus comprises 173 purchasing managers representing 14% of the Qukbec division of the CAPM.
TABLE 1 Study Design Computer System Country of design Canada Japan Mexico Canada Japan Mexico IBM Fujitsu Seikocha $16,ooO $12,ooo $8,000 or delivery 3 years 2 years 1 year Fax Machine Canada Japan Mexico Canada Japan Mexico Xerox Toshiba Samsung $1,300 $1,000 $700 24 months 18 months 12 months Ballpoint Pens Canada Japan Mexico Canada Japan Mexico Paper-Mate Staedler Bit $1.20 $0.80 $0.40 Fast Medium
SIOW

RESULTS Sample Description Table 2 presents some descriptive statistics about the sample. The mean age of the organizations to which members of the CAPM belonged is 42 years, with average annual sales and purchasing budgets of $63 and $30 million (Canadian dollars), respectively. These firms employ on average 500 employees, and 50 % of them are involved in manufacturing operations. The mean age of the respondents is 43 years, and their purchasing experience is 14 years on average. About threefourths of the respondents are male, and 56% occupied a managerial position at the time the study was conducted. The respondents who occupied a managerial position tended to be from smaller-size firms. Comparisons between the sample and the membership population on characteristics where information was available indicated that there were no systematic sampling biases. By and large, the sample appears to be representative of the population. Direct Evaluations of Countries Table 3 presents the mean evaluations of the 13 countries as locations for the design and assembly of industrial products. As mentioned before, these evaluations concern industrial products in general. As can be shown, developed countries are better evaluated in general than newly industrializing countries as locations for the design and assem-

TABLE 2 Sample Characteristics Characteristics Organizational Mean age Mean yearly sales Sector of activity Manufacturing Government Other Mean number of employees Mean purchasing budget Personal Mean age Mean purchasing experience Sex Male Female Function Managerial Buyer Other

42 years $63 million 50% 14% 36% 500 $30 million 43 years 14 years 76% 24% 56% 35% 9%

Country

of assembly

Brand name

Price

Warranty

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Customer analysis must precede competitor analysis.


bly of industrial products. This result supports our first research proposition. It is interesting to note also that newly industrializing countries are consistently better evaluated as locations for the assembly of industrial products than as countries of design. The average evaluation of newly industrializing countries increased from a mean of 3.6 for country of design to 4.2 for country of assembly, the lowest difference being associated with India (0.3) and the highest with Mexico (0.9). Interestingly, South Korea, which is a newly industrialized country, rated almost as well as France and Italy as a country of assembly. It rated slightly higher than Belgium as a country of assembly and almost as well as a country of design. Manipulation Checks

TABLE 3 Evaluations

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

of Countries

of Origin Country of Design Country of Assembly Mean Rank Difference

Countries Developed countries Japan Germany United States Canada France Italy Belgium Overall mean Newly industrialized country South Korea Newly industrializing countries Brazil Mexico Morocco India Russia Overall mean Comparisons Japan/Mexico Canada/Mexico Germany/Mexico Japan/Canada Germany/Canada Developed/newly industralizing

Mean

Rank

1.6 7.6 6.8 6.7 6.1 5.8 5.2 E

1 1 3 4 5 6 7

8.6 7.6 6.6 6.9 6.1 5.9 5.4 E

(1.0)
0.2 (0.2) _ (0.1) (0.2) (0.2)

2 4 3 5 6 7

Table 4 presents the analysis of variance results for the three product categories. The two dependent variables are perceived quality and purchase value. The mean squares indicate that for both dependent variables, country of design explains a larger proportion of common variance than country of assembly. This result holds across the three product categories. Also, country of design explains a relatively

TABLE 4 Analysis of Variance Significance Levels

Results: Mean Squares

and Statistical

5.1

5.8

(0.7) Source of Variation

Computer System

Fax Machine

Ballpoint Pens

4.2 3.9 3.5 3.3 3.2 3.6 3.1 2.8 3.7 0.9 0.9 2.9

9 10 11 12 13

4.9 4.8 4.0 3.6 3.7 c 3.8 2.1 2.8 1.7 0.7 2.5

9 10 11 13 12

(0.7) (0.9) (0.5) (0.31 (0.5) (0.61

Perceived quality Country of design Country of assembly Brand name Price Warranty/delivery Total of the five cues Purchase value Country of design Country of assembly Brand name Price Warranty/delivery Total of the five cues * Significant at p < 0.01.

437* 174* 50* 1 14* 676 301* 189* 45* 165* 47* 747

354* 157* 36* 5 2 554 229* 206* 48* 73* 8 564

316* 129* 1 3 13* 462 170* 137* 2 271* 130* 710

* Mean values range from 1 to 9.

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larger proportion of variance for perceived quality than for purchase value. Moreover, the greater the technological complexity of the product, the larger the statistical effect of country of design. Although brand name has a statistically significant impact on the perceived quality and purchase value of the computer system and the fax machine, its explanatory power is much smaller than that of the country-of-origin cues. On average, the mean squares associated with brand name is 13 times smaller than that of the country-of-origin cues taken together. Brand name has no significant effect when it comes to the evaluation of ballpoint pens. The largest proportion of common variance explained by brand name is for the purchase value of a computer. Price and warranty/delivery have almost no impact on perceived quality, On the other hand, they have a substantial and statistically significant impact on the purchase value of the computer and the ballpoint pens. When considering the purchase value of ballpoint pens, purchase managers are more influenced by price than by country of design or country of assembly. Taken together, these results partially support our second research proposition. The impact of brand name, price, and warranty (delivery) on purchasing managers evaluations of products is contingent upon the product category and the type of judgment considered (quality versus purchase value).

Mexico, and Japan or Germany), taking into account the other informational cues, i.e., brand name, price, and warranty/delivery. As can be seen, for both perceived quality and purchase value, intercountry differences between marginal/multiple-cue means are much narrower than those between direct/single-cue means. These differences are somewhat greater for country of design than for country of assembly. For purpose of comparison, Table 5 shows the differences in single-cue and multiple-cue ratings between Japan (or Germany) and Mexico, Canada and Mexico, and Japan (or Germany) and Canada. Looking at the Japan/Germany-Mexico and Canada-Mexico differences, it can be seen that purchasing managers negative perceptions of Mexico are attenuated when other informational cues are present. For instance, the single-cue difference between Japan/Germany and Mexico for the design of industrial products in general is 3.7. The corresponding differences in marginal means for the purchase value of a computer system are 1.5, 1.3 for a fax machine, and 1.5 for ball-point pens. As for the Japan/Germany versus Canada ratings, Table 5 shows a similar attenuation of differences from

TABLE 5 Single-Cue Versus Multi-Cue of Countries of Origin

Evaluations

Additional Analyses
Additional analyses were conducted to assess the impact of the firmk sector of activity on purchasing managers evaluations of product profiles. Sector of activity was operationalized as a two-level variable, manufacturing versus other, and included as a supplementary factor in the analyses of variance. Results indicated that sector of activity was not significantly related to the evaluations. Some statistically significant interactions with the other cues were found, but in none of the analyses did the interactions explain more than 2 % of the common variance. It was thus concluded that the firms sector of activity had a minimum impact on the results.
Country of design Computer quality Computer value Fax quality Fax value Pen quality Pen value Average quality Average value Single-cue mean* Country of assembly Computer quality Computer value Fax quality Fax value Pen quality Pen value Average quality Average value Single-cue mean Japan Germany *The single-cue were the same.

Japan or Germany Canada (1) (2)

Mexico (3)

(1) minus (3)

(4 minus (3)

(1) minus (2)

6.8 6.1 6.9 6.3 7.0 6.0 6.9 6.1 7.6 6.6 5.9 6.7 6.3 6.7 5.8 6.7 6.0 8.6 7.6

6.5 5.8 6.6 6.1 6.6 5.8 6.6 5.9 6.7 6.4 5.8 6.4 6.0 6.6 6.0 6.5 5.9 6.9 6.9 of Germany

5.1 4.6 5.3 5.0 5.5 4.9 5.3 4.8 3.9 5.5 4.8 5.6 5.1 5.8 5.0 5.6 5.0 4.8 4.8

1.7 1.5 1.6 1.3 1.5 1.1 1.6 1.3 3.7 1.1 1.1 1.1 1.2 0.9 0.8 1.1 1.0 3.8 2.8

1.4 1.2 1.3 1.1 1.1 0.9 1.3 1.1 2.8 0.9 1.0 0.8 0.9 0.8 1.0 0.9 0.9 2.1 2.1

0.3 0.3 0.3 0.2 0.4 0.2 0.3 0.2 0.9 0.2 0.1 0.3 0.3 0.1 0.2 0.2 0.2 0.1 0.9 of design

Comparison of Single-Cue and Multiple-Cue Evaluations


Table 5 presents the marginal means associated with country of design and country of assembly as well as the corresponding single-cue means obtained from direct ratings (see Table 3). The marginal means come out of the conjoint design. They reflect the evaluation of each country (Canada,

evaluations

and Japan as countries

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There is no single best way of segmenting markets.


single-cue to multiple-cue situations. For instance, the difference in single-cue evaluations between Japan and Canada for the assembly of industrial products in general is 1.7. In multi-cue situations, this difference practically disappears. These results support our third research proposition. It appears that in multi-cue situations, prejudice against a newly industrializing country is reduced considerably and that differences between developed countries are practically nonexistent. DISCUSSION The results presented in this article must be examined in light of a number of limitations. The data were collected through a questionnaire rather than through monitoring of a real life purchase situation. Only a limited number of products, brands, and countries were included in the research design. Finally, the survey participants come from a single Canadian province. Therefore, interpretation of our 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 cue in organizational purchase decisions than country of assembly and brand name. In this study, newly industrializing countries were rated quite poorly as countries of assembly and even worse as countries of design. It seems that purchasing managers feel that there is a significant discrepancy between newly industrializing and developed country skills in sheer assembly or manufacturing of products and an even greater discrepancy in the conceptualization, design, and engineering of industrial products. Country of design is a more important indicator of product quality and purchase value than country of assembly, and its importance is positively related to product complexity. For purchase managers, the more complex the product technology, the greater the perceived importance of design skills. The fairly good ratings obtained by South Korea as a country of assembly in this study are quite interesting. It is possible that Canadian purchase managers have little buying experience of products assembled in Belgium, France, and Italy, which would lead to less well-informed opinions about these countries. It may also be the case that the quality of products assembled in South Korea is just as high as in some developed countries like Belgium and that Canadian purchasing managers judgments are just reflecting this fact. Unlike several studies conducted among household buyers where brand name was found to be an important predictor of quality and/or purchase value [2, 7, 131, in the present study brand name played a very limited role. In these studies, country of origin was defined as simply the location where the products were made. Perhaps by incorporating the notion of country of design in the research design, we were able to isolate that part of the brand image that is related to the companys headquarters and the implicit association to product design. Thus, in this study brand name would reflect only the prestige of different manufacturers. 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 studies carried out with Canadian [14] and Belgian [3] household buyers that have distinguished between country of design and country of assembly, brand name was found to have much greater importance. In both studies in fact, brand name was a stronger predictor of the quality and purchase value of automobiles than either country of design or country of assembly. Further evidence in favor of the rationality explanation comes from the fact that in comparison with household buyers, purchasing managers in this study gave more weight to price and warranty/delivery when evaluating profiles. The greater importance attached to country of design by purchasing managers as compared to household buyers is another interesting difference. In previous household studies [2, 131, country of design received just as much weight as country of assembly. It appears that purchasing managers are more willing to buy a product that is assem-

330

Team members are responsible for the entire process.


bled in an newly industrializing country, provided it is designed in a developed country. The differences between the perceptions of different countries of origin are substantially reduced when other information is provided along with made-in. Although the perceptual differences between newly industrializing countries and developed countries remain statistically significant, those between developed countries virtually disappear. Thus, when purchasing managers are presented with other cues such as brand, price, and warranty (or delivery), developed countries are treated homogenously, and the prejudice toward newly industrializing countries diminishes. It seems that in the case of a newly industrializing country, appropriate pricing, warranty, and delivery policies may counter the negative perception of a country of origin. IMPLICATIONS The results presented in this article have strategic implications for industrial marketers. The implications concern international sourcing, branding, pricing, quality assurance, and promotion policies. Our results show that country of origin is a very important extrinsic cue used by purchasing managers, especially when judging the quality of a technologically complex product. Moreover, country of design has more impact than country of assembly on purchasing managers perceptions. Thus, an industrial marketer selling a technologically complex product designed in a prestigious country will be well advised to promote this information to his/her customers in order to influence their decision-making process. Countries of origin such as Germany and Japan hold great prestige among North American household and organizational buyers. However, if a North American corporation is able to reassure its customers by improving the quality of its products and communicating this information through brand name promotion, quality assurance programs, and attractive pricing policies, it should be able to counter the prestigious image of some foreign countries of origin. During the 1980s the quality of North American products improved considerably. Corporations having undertaken programs of quality improvement should be heartened by our results, which indicate that purchasing managers appear to treat developed countries equally when presented with multiple cues. North American firms are facing enormous price competition from foreign firms in domestic markets. Shifting manufacturing facilities to a newly industrializing country such as Mexico in order to reduce production costs is an interesting competitive strategy. Our results show, however, that country of assembly is a significant cue used by purchasing managers. Therefore, North American firms with production facilities in less prestigious countries of origin should be ready to implement appropriate pricing and warranty/delivery strategies to counter negative biases. Our results indicate that there is less bias against a newly industrializing country when it is an assembly location than when it is a design location. Therefore, to enhance the quality image of their products and counteract the negative image of a country of assembly such as Mexico, domestic industrial marketers should emphasize country-of-design information through advertising and sales promotion. This advice also applies to firms from other developed countries marketing in North America products assembled in industrializing countries. The negative perceptions that purchasing managers hold toward products (especially technologically complex products) conceived, designed, or engineered in newly industrializing countries is rather disheartening for those corporations located in such countries. However, perceptions of countries as producers of consumer and industrial goods can change over time, as the example of Japan has shown [12]. One strategy for dealing with the problem is to assemble products designed in newly industrializing country in developed countries, just like Hyundai, a South Korean automobile manufacturer, does by assembling some of its cars in Canada. Perhaps, this may in part explain the relatively positive attitudes that Canadian purchasing managers have toward products made in South Korea. As this study has shown, organizational and household 331

buyers appear to have somewhat different reactions to country-of-origin cues. Given the small number of studies conducted with organizational buyers and the apparent difficulty in generalizing results from studies conducted with household buyers, it is recommended that further research be conducted with industrial buyers. Such studies would be of great interest to industrial marketing researchers and practitioners alike. REFERENCES
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