Ethnocentricism and Country of Origin Effects: Literature Review by Doreen Soutar
The literature review is divided into three main sections: the first section looks at the background into models of purchasing behaviour developed out of psychological research, such as the Theory of Reasoned Action (TRA) proposed by Fishbein and Azjen (1975) and the Theory of Planned Behaviour (Azjen, 1991).
These psychological models began to adapted for use in business research in the late nineties and early 2000s with models developed by Kotler (2000) and Hawkins et al (2001). From simple early models, theories of purchasing behaviour have become more complex over the years, and have attempted to account for both rational and non-rational aspects of behaviour, as well as social and cognitive aspects of purchasing trends.
Indeed, non-rational aspects of purchasing such as brand loyalty have become more important in building models of purchasing behaviour (e.g. Cardy et al, 2007). In addition to the value placed on the products themselves, researchers have also been paying attention to the recent involvement of customers in the actions of companies and the ethics of business (e.g. Bray et al, 2011; Bondy & Talwar, 2012). However, several researchers have suggested that although customers may hold strong views about the types of purchase they prefer to make, this does not always translate into sales.
Section two looks at the country of origin effect, which, like research into ethical purchasing, studies the relationship between the consumer and their attitudes towards the countries producing goods and services. The COO effect is a large literature, and the results produced paint a complex picture. While some researchers suggest that domestic products are viewed as more valuable than foreign products, other researchers suggest the opposite is the case (e.g.Tan & Farley, 1987). Research is further complicated by the dynamic nature of attitudes towards countries, and the value and frequency of the products being bought. Others note that company brands can often be more important to consumers than COO, particularly given the current globalisation of production.
The third section looks at the concept of ethnocentrism and the preference for domestic products over foreign products. Although similar in concept to the COO effect, ethnocentrism tends to be defined as an internally-grounded concept of high value towards the products of the in-group. Here again, the literature is large, and looks at aspects of purchasing such as socio-psychology, economy, politics and socio-demographics. This section also looks at the concept of localism. Localism is the term which is used when consumers prefer to give their custom to locally produced goods and services, most notably in local farm produce, for example.
This section is included because it is argued that the concept of localism is very similar to COO or consumer ethnocentrism in that they describe a preference for the domestic over imported products. The main difference appears to be in the description of the underlying causes of preference for domestic products: in the case of ethnocentrism, the cause tends to be described as a lack of awareness of the benefits of global trade, whereas localism tends to be grounded in an awareness of the disadvantages of global trade.
The literature review ends with a case study on Sri Lanka and the Elephant House soft drink company John Keells, plc, which are used in this study.