International Marketing Review

A flexible model of consumer countryoforigin perceptions: A crosscultural

investigation
Gary A. Knight Roger J. Calantone
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International Marketing Review, Vol. 17 Iss 2 pp. 127 - 145

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A flexible model of consumer Consumer

country-of-origin
country-of-origin perceptions perceptions

A cross-cultural investigation
Gary A. Knight 127
Department of Marketing, College of Business, Florida State Received October 1998
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University, Tallahassee, USA, and Revised April 1999

Accepted June 1999
Roger J. Calantone
Department of Marketing, Michigan State University,
East Lansing, USA
Keywords International marketing, Country of origin, National cultures, Consumer behaviour,
Japan
Abstract There is much research suggesting that the image consumers hold about a product's
country of origin can influence their purchase decision, but little empirical work has focused on
the underlying cognitive processing. A flexible model is devised and tested to represent country
image processing, using data from large samples of US and Japanese consumers. In addition to
strongly supporting the validity of the model, results suggest that country image cognitive
processing is significantly more complex than previously thought, and that culture appears to play
an important role in purchase decisions. The flexible model represents a substantive improvement
in the depiction of cognitive processing regarding country-of-origin image.

Introduction
Country-of-origin image (COI) reflects a consumer's general perceptions about
the quality of products made in a particular country and the nature of people
from that country (Erickson et al., 1984; Han, 1986, 1989; Haubl, 1996b;
Parameswaran and Yaprak, 1987). Generally, researchers have demonstrated
that, when known to consumers, COI influences the evaluation of products in
general, specific classes of products, and specific brands (Baughn and Yaprak,
1993; Bilkey and Nes, 1982; Liefeld, 1993; Ozsomer and Cavusgil, 1991; Samiee,
1994). For example, most people are likely to evoke differing impressions of
cars made in Germany and Russia; of men's suits made in Italy and Spain; or of
VCRs made in Japan and Malaysia. If the stereotype is negative, it can impose
formidable barriers for marketers attempting to enter a market or position
products in an existing market. Alternatively, numerous firms have used
positive COI to good advantage in the marketing of many types of goods (e.g.
Germany and beer; Sweden and cars; Japan and micro-electronics) (Haubl,
1996b; Johansson and Nebenzahl, 1986; Liefeld, 1993; Papadopoulos et al.,
1988).
The authors wish to thank S. Tamer Cavusgil, Cornelia Droge, and Richard Spreng for their
International Marketing Review,
helpful comments on an earlier draft of this manuscript, as well as two anonymous IMR Vol. 17 No. 2, 2000, pp. 127-145.
reviewers for their valuable suggestions. # MCB University Press, 0265-1335
 International Yet, despite hundreds of studies on the COI effect, little is known about the
Marketing cognitive processing that occurs during COI-based product evaluations.
Review Indeed, Baughn and Yaprak (1993) note the paucity of work that integrates the
COI literature with our knowledge of cognitive processing and attitude
17,2 formation. Given the effect that COI can have on the marketing of domestically
made products overseas and of foreign-made goods in the domestic market, it is
128 important to understand the cognitive processing that underlies the attendant
purchase decision. Given the twin trends of product and market globalization
and the efforts of multinational firms to coordinate production platforms
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worldwide, that understanding is more necessary than ever before (Haubl,

1996a).
We extend knowledge of the COI/cognitive processing relationship by
building on the research of Han (1986, 1989). We refine Han's interpretation of
COI cognitive processing and, in the process, reveal that his model may be
partially misspecified. In contrast to much previous research, our study is
conducted in two very different cultures using several samples. Our findings
suggest that COI cognitive processing is considerably more complex than
implied by virtually all previous studies, particularly in the context of high and
low knowledge states. We devise a model which represents the associative
processing of human cognition on COI with greater precision and which can
accommodate, and reveal with greater clarity, the nature of cognitive
processing in foreign cultures. The integration of COI studies with research on
attitude formation may provide insights about how the origin cue affects
attitude and the subsequent purchase of products. In what follows, we examine
the COI construct and its linkage to studies of cognitive processing. We then
introduce and test a model which provides a refined, conceptual explanation of
the processing that occurs regarding COI.

Country-of-origin effects and cognitive processing

In the earliest investigation of the COI cognitive-processing link, Johansson et
al. (1985) found that consumers with specific product knowledge, and hence
high ability to evaluate a specific product, tend to rate products either more or
less positively than do subjects with less knowledge. The authors concluded
that research on COI effects should account for product experience and other
factors affecting prior knowledge of imported goods. Papadopoulos et al. (1990)
suggested that consumer perceptions of a given product's COI are based on
three components:
(1) cognitions, including knowledge about specific products and brands;
(2) affect, or favorable attitudes about home country goods; and
(3) conations, which are related to ultimate purchase behavior and are
equivalent to the standard tripartite attitude model.
Hong and Wyer (1989) investigated the linkage between COI and cognitive
processing modes under conditions of both impression formation and
 comprehension. Their results support the information elaboration hypothesis, Consumer
which predicts that COI may induce consumers to process other product country-of-origin
attribute information more extensively, with COI-inspired affect transferring as perceptions
a halo to other attributes of the country's product. They also investigated the
linkage between the time interval of knowledge about a product's country of
origin and information about its specific attributes (Hong and Wyer, 1990).
Maheswaran (1994) and Chao (1993) showed that product knowledge and the 129
salience of various product attributes can affect cognitive processing.
One might expect that increased product knowledge would reduce reliance
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on the country cue, but studies have shown that the opposite tends to be true
(Han, 1989; Johansson et al., 1985; Johansson and Nebenzahl, 1986). Johansson
(1989) developed a model of COI cognitive processing in part to explain this
phenomenon. He suggests that COI can act as a ``summary cue'' used by
consumers to encapsulate other product information in a way that reduces
cognitive effort. He speculated that consumers may, depending on their
circumstances, regard the country cue as a salient attribute of the product in
question and that this attribute may influence the consumer through affective
processes, as in the case of individuals who hold strongly patriotic feelings
about their own country (Han, 1988), or through behavioral intentions via
processes such as social norms (Fishbein and Ajzen, 1975). Johansson's (1989)
model is an important accompaniment to the empirical work of Han (1989).
Han (1989) attempted to explain COI effects through the halo and summary
construct models. The former is based on research suggesting that COI allows
consumers to infer the quality of an unfamiliar foreign brand (Bilkey and Nes,
1982; Erickson et al., 1984). This is similar to the role played by prices in
helping consumers infer the quality of a product when other relevant
information is lacking (Jacoby et al., 1971). Han's (1989) halo model, replicated
in Figure 1, implies that COI directly influences product attribute beliefs, which
in turn directly influence attitude toward the product; that is, a structural
relationship of the form COI ? beliefs ? brand attitude. The halo model
operates in consumers unfamiliar with the foreign product in question; that is,
consumers with low product knowledge (Han, 1989).
In contrast, Han's (1989) original summary construct model (Figure 2)
implies that, among consumers possessing high knowledge about the product

Figure 1.
Halo model
 International stimulus, COI may serve to summarize beliefs about product attributes, directly
Marketing affecting brand attitude; in other words, a structural relationship of the form
Review beliefs ? COI ? brand attitude. The notion is consistent with work by Jacoby
17,2 et al. (1971), who found that brand name can function as a summary cue into
which consumers consolidate previously acquired product information. Other
research also shows that nonbelief factors can serve as mediators of attitudes
130 (Mitchell and Olson, 1981). The summary construct view maintains that,
because short-term memory has limited capacity, consumers tend to
summarize or ``chunk'' information in a way that makes it easier to store and
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retrieve in long-term memory (Miller, 1956). Accordingly, consumers already

familiar with a country's products may abstract relevant information into the
COI cue. When later confronted with a product from the same country that
possesses attributes similar to those of the one originally abstracted in
memory, the consumer may infer its quality by simply accessing the country
cue. For example, if a Japanese possesses substantial knowledge about General
Motors (US) cars and believes them to be of low quality, she/he may infer that
Ford (US) cars are of low quality as well.
Our objective is to propose and test a new model of COI cognitive processing
which is both comprehensive and flexible, and which extends and improves
prior work by Han (1989). This ``flexible model'' is presented in Figure 3 and
provides an all-encompassing explanation of attitude formation, allowing
attitudes to be both directly and indirectly (through beliefs) influenced by COI.
The model is similar to an earlier one proposed by Erickson et al. (1984).

Hypotheses
The present study emphasizes the development and testing of a single unifying
model capable of describing cognitive processing of the COI construct in a
variety of purchase situations. The single flexible model (Figure 3) is a dual
antecedent framework and represents the associative processing inherent in
human cognition. The model reflects our view that attitudes regarding foreign
products are evoked, to the extent that country-of-origin information is known,
as a function of the simultaneous processing of COI and specific product

BLF1 1
Country 1
Attitudes
2 Image
BLF2
1 2 3 4 7 8

PPIM1 PPIM2 PPIM3 PPIM4 ATT1 ATT2

Figure 2.
Summary construct PPIM = product and people image measure
model (formative beliefs) BLF = beliefs measure
ATT = attitudes measure
 PPIM1
1
Consumer
PPIM2 2 country-of-origin
3
Country
Image perceptions
PPIM3 4 2
7 ATT1
PPIM4 1
Attitudes
BLF1 5
1 8 131
ATT2
Beliefs
6
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BLF2

PPIM = product and people image measure Figure 3.

BLF = beliefs measure Single flexible model
ATT = attitudes measure

beliefs. The emergence of and weight given to COI and beliefs, in turn, are
affected by such individual factors as product knowledge, product or country
involvement, and country stereotypes (Maheswaran, 1994).
In developing the flexible model, we considered both of Han's (1989) halo
and summary construct models (Figure 1 and Figure 2). The former implies
that, in the case of low product knowledge, the effect of COI on attitudes is
consistently mediated by product beliefs. The latter implies that, in the case of
high product knowledge, the effect of product beliefs on attitudes is
consistently mediated by COI. Both interpretations are questionable; in the low
and high-knowledge cases respectively, they suggest that COI and beliefs
cannot influence attitudes directly. In contrast, it is more probable that
consumers use both COI (when known to them) and product beliefs
simultaneously in varying degrees, regardless of the state of their knowledge.
Simultaneous processing of beliefs and COI can readily be represented in the
flexible model (Figure 3), as indicated by the coefficients g2 and b1.
Furthermore, it holds true, regardless of which contingency state high or low
knowledge is in effect. In essence, the flexible model provides an all-
encompassing explanation of attitude formation, allowing attitudes to be both
directly and indirectly (through beliefs) influenced by COI. The model can also
account for situational contingencies in cognitive processing as well as the
evolution of such processing over time. Finally, the flexible model is more
capable of portraying differences in attitude processing based on culture and
other fundamental differences that characterize the consumer. For example,
assuming that different nationalities give different emphasis to COI in shaping
product preferences, the flexible model can accommodate these variations.
This discussion leads to the following hypotheses regarding the single
flexible model. When a product's country of origin is known to the consumer.
H1: COI is a significant antecedent of attitudes;
H2: COI is a significant antecedent of product beliefs;
 International H3: Product beliefs are a significant antecedent of attitudes.
Marketing Furthermore, in light of research summarized earlier (Bilkey and Nes, 1982;
Review Erickson et al., 1984; Han, 1989; Jacoby et al., 1971; Miller, 1956; Mitchell and
17,2 Olson, 1981; Monroe, 1976 ), we expect:
H4: Under low-knowledge conditions, product beliefs influence attitudes
132 significantly more than COI influences attitudes;
H5: Under high-knowledge conditions, COI influences attitudes significantly
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more than product beliefs influence attitudes.

Methodology
In addition to using formative indicators to measure beliefs in the summary
construct model to replicate Han (1989) (Figure 2), we also operationalize the
construct with reflective indicators (Figure 4). This is done in light of
recommendations from several scholars that beliefs are more accurately
modeled with reflective indicators, as opposed to the methodology followed by
Han (e.g. Bagozzi, 1982; Kumar and Dillon, 1987). To maximize external
validity of findings, study data were obtained from large samples of consumers
in Japan and the USA. Before data collection began, interviews were conducted
with US and Japanese students at universities in both countries. Also, a survey
assessing familiarity with numerous product brands was performed among a
sample 38 students in Japan. Based on this procedure, Germany was chosen as
the foreign country of origin, automobiles as the product, and Mercedes Benz as
the brand name. In addition, Toyota and General Motors cars were included to
serve as controls and minimize potential demand and halo effects (Sawyer,
1975). Products were identified by well-known brand names to reflect real
shopping situations and to allow respondents to elicit a broader schema of
product-related information from memory.
Subsequently, an English-language questionnaire using 7-point scales was
created. One series of questions was anchored by strongly agree/disagree and
asked subjects about their beliefs (shown as ``Beliefs'' in the models) for each of
the car brands regarding six attributes: technically advanced, prestigious, good
serviceability, good workmanship, economically priced, and good quality

1 Country 1
Beliefs Attitudes
Image

5 6 1 2 3 4 7 8

BLF1 BLF2 PPIM1 PPIM2 PPIM3 PPIM4 ATT1 ATT2

Figure 4.
Summary construct PPIM = product and people image measure
model (reflective beliefs) BLF = beliefs measure
ATT = attitudes measure
 overall. The first five attributes were obtained from previous studies based on a Consumer
factor analysis of 14 items in research concerning consumer attitudes in Japan country-of-origin
and the USA (Han, 1986; 1988; Nagashima, 1977; Parameswaran and Yaprak, perceptions
1987). The final attribute (quality) was added to enhance the belief scale's
overall measuring ability.
COI (shown as ``Country Image'' in the models) was assessed using 14
indicators described in Parameswaran and Yaprak (1987), some of which 133
originally were culled from research on comparative marketing and cross-
national consumer behavior (Bilkey and Nes, 1982; Nagashima, 1977), with the
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remainder devised by Yaprak (1978). The indicators were presented as

statements regarding the people and products of the given country and
anchored by strongly agree/disagree. Attitude toward the act of purchasing the
various car brands from various countries (reflected as ``Attitudes'' in the
models) was assessed using a six-item scale (extremely unfavorable/extremely
favorable). Knowledge of cars was measured with scales drawn from Brucks
(1985). Subjects were asked to rate both their knowledge and familiarity with
cars. In reliability tests, the scales attained Cronbach's alpha of 0.91 in Brucks'
(1985) study and 0.95 in the present study.
The final questionnaire was then translated into Japanese based on the back-
translation method suggested by Douglas and Craig (1983). It was first translated
by a native-speaking professional translator and then reviewed for equivalence
by a bilingual Japanese professor in Japan. The questionnaire was then translated
back into English by a bilingual whose native language is English. Under the
supervision of one of the authors, both translators then collaborated to refine the
final version so that it was comprehensible to the native, while equivalent in
meaning. It was then tested with Japanese students in Japan and the USA.
Throughout the process, great care was taken to ensure that the English and
Japanese questionnaires were functionally and semantically equivalent,
especially regarding complex concepts such as attitudes (Douglas and Craig,
1983; Malhotra, 1991; Mullen, 1995; Sekaran, 1983).
To develop and refine study measures, data were collected from a separate
sample of household subjects, following procedures recommended by
Anderson and Gerbing (1988), Churchill, (1979), Douglas and Craig (1983),
Gerbing and Anderson (1988), and Nunnally (1978). For this part of the study,
600 copies of the Japanese questionnaire were distributed to a large class, one
copy per student, at a university in Tokyo. The students were instructed to
distribute the questionnaires to randomly chosen households in their
neighborhood (all students lived off campus), returning a few days later to
collect the completed forms. The 349 usable questionnaires returned reflect a
response rate of about 58 percent. Regarding respondents, the average age was
48 years and 68 percent were male. Forty-nine percent had a high school
education or less, 5 percent had some college, and the remaining 45 percent
were college graduates. Using this data set, questionnaire scales were tested
and refined into more parsimonious versions using confirmatory factor
analysis following the approach of Anderson and Gerbing (1982). Specifically,
 International the data were analyzed using the EQS structural equations modeling software
Marketing of Bentler (1992). The approach is similar to that employed in prior COI
Review research by Haubl (1996a) and Papadopoulos et al. (1988).
To establish convergent and discriminant validity in the study measures, a
17,2 measurement model reflecting causal relations among the observed variables
and theoretical constructs was created and tested. The results, along with
134 Cronbach's alphas as measures of reliability, are presented in Table AI in the
Appendix. Two of the alpha scores are somewhat low (Nunnally, 1978)
probably reflecting complex product dimensions, but the associated scales
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otherwise achieved very satisfactory results in confirmatory factor analyses.

We also elicited responses for all the questions in the Appendix for Japan/
Toyota and USA/General Motors as controls, but these results are not
specifically reported for brevity's sake. We report on the results of responses
regarding Mercedes cars from Germany only.
As shown in the Appendix, the measurement model attained adequate fit (w2
= 524.9 with 293 degrees of freedom; NFI = 0.975; NNFI = 0.987; and CFI =
0.989), with all measurement coefficients significant at the 0.01 level. In
addition, Lagrangian multiplier tests revealed that no item loaded significantly
on a construct for which it was not intended, reflecting satisfactory
discriminant validity. Results for the control studies were similarly robust.
The household data were used to analyze and refine the study measures. For
the main study, data were collected from samples of consumers in the USA and
Japan. The final Japanese questionnaire was administered to students at a
university in Japan, resulting in 310 usable responses. The English
questionnaire was administered a few months later to students at a US
university, resulting in 255 usable responses. Statistical comparisons were
made between the samples on such variables as age, sex, and school status.
The average age of Japanese respondents was 20 years, while that of the US
sample was 22 years. The Japanese sample consisted largely of males, while the
US sample was almost evenly divided between males and females. Both
samples consisted almost entirely of full-time students.
An important issue in cross-cultural research is that of choosing between
samples that are representative or samples that are directly comparable across
cultures. Households tend to be the most representative consumers but may
vary in demographic terms. Students are not the most representative
consumers, but they do provide similar matched samples. In our study,
comparability across cultures was most desirable and thus we focused on the
student samples. However, we also included the Japanese households sample,
partially as a check on the student sample.

Results
All four of the models presented in Figures 1, 2, 3, and 4 the halo model, the
formative summary construct model, the flexible model and the revised
reflective summary construct model of Han (1989) were tested using both the
household and cross-cultural data sets described above. Full latent construct
 models were estimated using EQS structural equations software (Bentler, Consumer
1992). Chi-square and other statistics indicate the fit of estimated models as country-of-origin
well as the strength with which one construct is causally related to another. perceptions
The results of these analyses are presented for the Japanese household data
(study 1) in Table I and the Japanese student data (study 2) in Table II, and the
US student data (study 3) in Table III. The flexible, halo, and formative
summary construct models each were tested under both high- and low- 135
knowledge conditions. Analysis under each knowledge state is a necessary test
of the flexible aspect of the flexible model and also allows for a complete test of
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the other models.

Knowledge
High Low

Flexible model w2=16.1 df=17 p40.52 w2=17.7 df=17 p40.41

COI ? Attitudes g2 0.13 0.37
COI ? Beliefs g1 0.50 0.78
Beliefs ? Attitudes b1 0.39 0.21 n.s.
Halo model w2=26.1 df=17 p40.073 w2=26.5 df=17 p40.065
COI ? Beliefs g1 0.48 0.68
Beliefs ? Attitudes b1 0.47 0.45
Summary construct
model (formative
beliefs) w2=22.9 df=17 p40.15 w2=23.43 df=17 p40.14 Table I.
COI ? Attitudes b1 0.52 0.92 Three models tested
g1 Beliefs ? COI 0.21 0.24 with Japanese
household data
Note: All coefficients were significant at the 0.05 level unless indicated n.s. (study 1)

Knowledge
High Low

Flexible model w2=28.93 df=17 p40.04 w2=23.69 df=17 p40.13

COI ? Attitudes g2 0.42 0.13 n.s.
COI ? Beliefs g1 0.58 0.73
Beliefs ? Attitudes b1 0.09 n.s. 0.42
Halo model w2=36.66 df=17 p40.004 w2=23.70 df=17 p40.128
COI ? Beliefs g1 0.73 0.75
Beliefs ? Attitudes b1 0.49 0.54
Summary construct
model (formative
beliefs) w2=28.93 df=17 p40.04 w2=23.18 df=17 p40.14
COI ? Attitudes b1 0.58 0.71 Table II.
g1 Beliefs ? COI 0.20 0.41 Three models tested
with Japanese student
Note: All coefficients were significant at the 0.05 level unless indicated n.s. data (study 2)
 International Knowledge
Marketing High Low
Review
Flexible model w2=37.2 df=17 p40.003 w2=10.5 df=17 p40.88
17,2 COI ? Attitudes g2 0.14 n.s. 0.18
COI ? Beliefs g1 0.64 0.53
Beliefs ? Attitudes b1 0.28 0.32
136
Halo model w2=37.4 df=17 p40.003 w2=12.92 df=17 p40.74
COI ? Beliefs g1 0.62 0.55
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Beliefs ? Attitudes b1 0.41 0.43

Summary construct
model (formative
beliefs) w2=37.2 df=17 p40.003 w2=10.5 df=17 p40.88
Table III. COI ? Attitudes b1 0.58 0.78
Three models tested g1 Beliefs ? COI 0.32 0.29
with US student data
(study 3) Note: All coefficients were significant at the 0.05 level unless indicated n.s.

Table IV presents tests for study 4, the reflective summary construct model
(Figure 4). As portrayed in the table and in contrast to Han's (1989) summary
construct model (Figure 2), in which beliefs indicators are depicted without
error and as directly antecedent to COI, the beliefs construct in the revised
model is explicitly measured with its own reflective indicators and associated
error, and is antecedent to COI (Bagozzi, 1982; Kumar and Dillon, 1987). In all,
we assessed six models the flexible, halo, and formative summary construct
models, each tested for the high- and low- knowledge states. These were tested
for each of the three respondent groups.

Knowledge
High Low

Study 1:
Japanese household data w2=18.6 df=18 p40.41 w2=28.15 df=18 p40.06
COI ? Attitudes 0.55 0.40
Beliefs ? COI 0.80 0.57
Study 2:
Japanese student data w2=29.37 df=18 p40.044 w2=28.65 df=18 p40.053
COI ? Attitudes 0.48 0.52
Beliefs ? COI 0.59 0.80
Study 3:
US student data w2=40.92 df=18 p40.002 w2=16.98 df=18 p40.53
Table IV. COI ? Attitudes 0.35 0.36
Summary construct Beliefs ? COI 0.68 0.56
model (reflective
beliefs) (study 4) Note: All coefficients were significant at the 0.05 level unless indicated n.s.
 Findings regarding the summary construct model reveal that, in five of the six Consumer
model cases, the fit of the formative beliefs model of Han (1989; Figure 2) is country-of-origin
superior to that of the revised reflective model represented in Table IV. Thus, perceptions
Han's formative beliefs formulation is relatively well confirmed. Overall chi-
square statistics indicate that the fit of the flexible model is equal to or better
than the fits for both the halo or summary construct models (study 1 in Table I).
Indeed, the fit of the flexible model is markedly superior to that of the others. 137
With regard to fit, in the low-knowledge condition, the flexible model
achieves the best performance of any model in all three studies. In the high-
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knowledge condition, the flexible model consistently outperforms Han's (1989)

halo model, exactly ties Han's (1989) summary construct model for the two
student studies and is superior to the summary construct model in the Japanese
household study. On overall fit measures, the flexible model consistently
outperforms the halo model in those situations (low knowledge) for which the
halo model was originally intended, and never does worse than the summary
construct model (Han, 1989) under high knowledge. Thus, in light of these
findings and the other advantages noted above, the flexible model appears to
represent COI cognitive processing reasonably well.
We now address findings regarding the relationships among the flexible
model's latent constructs for each of the data sets. All the coefficients depicting
the linkage between observed variables and latent constructs (ls) are, for the
flexible model in each study, significantly different from zero at the 0.05 level,
with the smallest l being 0.59. This outcome confirms the earlier finding of
substantial convergent validity in the construct measures. Regarding linkages
among the constructs themselves, in most cases across all three data sets,
parameter estimates for the flexible model are significant at the 0.05 level.
Moreover, as shown in Table V, the total effect of COI on attitudes tends to be
significant in both the high- and low-knowledge conditions.
These findings provide strong support for H1, H2, and H3. That is, whether
modeled in the high- or low-knowledge condition, COI tends to be a significant
antecedent of attitudes and beliefs; and beliefs are a significant antecedent of
attitudes.
However, the flexible model provides a mixed set of results across all three
data sets. The following observations concern the flexible model (Figure 3) in
the low-knowledge condition. In each sample the effect of COI on beliefs is
substantial and highly significant. The total indirect effect of COI on purchase
attitudes is large for all three studies, but there are differences in direct effects.

Knowledge
High Low

Study 1: Japanese household data 0.403 0.432 Table V.

Standardized total
Study 2: Japanese student data 0.473 0.440 effects of COI on
Study 3: US student data 0.316 0.350 attitudes
 International For study 1 (Japanese households), the direct effect of COI on attitudes is
Marketing substantial and statistically significant, while the direct effect of beliefs on
Review attitudes is not. In study 2, COI has no significant direct effect on attitudes, but
the influence of beliefs on attitudes is highly significant. Results in study 3 (US
17,2 students) are similar to those of study 2 (Japanese students) except that the
effect of COI on attitudes, while small, is statistically significant. H4, which
138 states that beliefs influence attitudes significantly more than COI influences
attitudes under low knowledge, is strongly supported in both study 2 and
study 3, and moderately supported in study 4 in which Han's (1989) summary
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construct model was recast using reflective beliefs. In study 1, however, the
opposite outcome emerges as COI strongly influences attitudes, while the
linkage with beliefs is insignificant.
Results for the high-knowledge condition in the flexible model reveal that, in
study 1 (Japanese households), COI has a small but significant direct effect on
attitudes, it has a very significant effect on beliefs, and beliefs have a
significant effect on attitudes. In study 2 (Japanese students), a very different
picture emerges. The direct effects of COI on attitudes and beliefs, as well as the
indirect effect of COI on attitudes are all highly significant, and the direct effect
of beliefs on attitudes is small and insignificant. Study 3 (US students) yields
yet a third result. The direct effect of COI on attitudes is not significant, but the
direct effect of COI on beliefs and of beliefs on attitudes are both significant,
with the first of these two being particularly high. Finally, the indirect effect of
COI on attitudes is very substantial. H5 states that, under high knowledge, COI
influences attitudes significantly more than beliefs influence attitudes. The
hypothesis is strongly supported in study 2 (Japanese students) but is not
supported in the other studies. Indeed, for each of studies 1, 2, and 4, the
parameter coefficients are actually opposite the predictions. Hence, the results
for H4 and H5 are mixed.
In the aggregate, the total effects of COI on purchase attitudes appear to be
substantial. Nonetheless, our results suggest very distinct processes
underlying the thinking patterns of the various respondent groups. On the one
hand, particularly striking are the divergent results under both knowledge
conditions between Japanese households and students. The diversity of results
shows that the flexible model is quite robust in detecting differences among
cross-cultural respondent groups. Two-group structural equations models
testing (Bentler, 1992; Hayduk, 1987), comparing the results of studies 2 and 3,
confirmed the statistical significance of the noted differences in each case.
Furthermore, and more important, results for the flexible model imply that
different cultures rely on the same cues for attitude formation but process them
differently.

Discussion and managerial implications

Han (1989) modeled COI and beliefs as operating independently on product
attitudes, depending on the consumer's knowledge state. Our findings suggest
that both COI and beliefs simultaneously influence attitudes, under both low-
 and high-knowledge conditions. In addition, the flexible model appears to be a Consumer
more accurate depiction of the complex processing that occurs during thinking country-of-origin
about imported goods. Furthermore, the robust, network nature of the flexible perceptions
model as well as the significant divergence in results between the two Japanese
samples shows that COI cognitive processing is considerably more complex
than implied by earlier studies (e.g. Bilkey and Nes, 1982; Erickson et al., 1984;
Han, 1989). 139
An interesting consistency in the results is that of beliefs, which are strongly
influenced by COI regardless of the respondents' degree of product knowledge.
Downloaded by UNIVERSITY OF SOUTHERN QUEENSLAND At 10:28 14 October 2014 (PT)

The finding implies that Han's (1989) summary construct model may be
misspecified. Moreover, both the low-knowledge US and Japanese student
samples tend to use beliefs, with little use of COI, to infer product attitudes.
This outcome weakens Han's (1989) halo model interpretation. Overall, while
Han's (1989) findings may hold some value in explaining COI effects, further
research is clearly needed.
In contrast, the flexible model presents a unified approach to understanding
consumer use of COI information in forming purchase attitudes. In the presence
of strong group differences in situational buying and product knowledge, the
use of multiple samples over two cultures indicates the robustness and
sensitivity of the flexible model. Moreover, it can accommodate differences in
attitude processing based on culture. The findings reveal that the model
represents the flexible, associative processing inherent in human cognition
with greater precision and explanatory power than previous work in this realm.
To the extent that consumers are sensitive to country-of-origin information, the
flexible model implies that attitudes are, to a very substantial degree, the result
of simultaneous processing of product beliefs and COI. Specifically, buyers
possessing substantial product knowledge tend to form attitudes based on both
product beliefs and COI. Results for the low-knowledge case are less clear but
still roughly consistent: attitudes seem to be based largely on the COI
stereotype, with beliefs playing a less definitive role. In the main, the flexible
model seems to be a substantial improvement in the modeling of COI and
beliefs in the formation of purchase attitudes.
Two basic questions remain to be addressed. First, what can account for
differences in responses between the Japanese and US samples? Second, why
are responses of Japanese households different from those of Japanese
students? Answers to these questions are undoubtedly rooted in differences in
the basic cultures of Japan and the USA. Research from anthropology,
sociology, and other domains suggests that Japanese and US purchase
behaviors vary in numerous ways (e.g. Hall and Hall, 1987; Reischauer, 1995).
Much of Japanese buying emphasizes not only needs satisfaction but also
complex motives, such as display, power and prestige, repayment, social
obligations, investment in future favors, and the intense desire to maintain
societal harmony (Herbig, 1995; Reischauer, 1995; Tobin, 1992).
Herbig (1995) has pointed to numerous factors that distinguish consumers in
Japan from those in the USA and other Western countries. In general, the
 International Japanese consumer desires to maintain oneness with a particular peer group, is
Marketing less sensitive to pricing, tends to rely on word-of-mouth product
Review recommendations from peers, dislikes hardsell promotion approaches, is
treated more respectfully by merchandisers, expects high-quality products, and
17,2 tends not to complain about negative product experiences. Aaker and
Maheswaran (1997) recently showed that the collectivist nature of Japanese
140 consumers tends to distinguish them from the individualist character of
consumers in the USA.
As for differences between the responses of Japanese households and
Downloaded by UNIVERSITY OF SOUTHERN QUEENSLAND At 10:28 14 October 2014 (PT)

students, we note that the latter sample was 82 percent male compared to 68
percent for the household sample and 49 percent for the US sample. Thus, some
differences in the results may be due to gender-based factors. For example,
Hofstede (1984) found that Japan is a strongly masculine society, with males
attaching more importance to ``showing off,'' ``performing,'' and appearing self-
confident. Hence, relative to other cultures, Japanese men may tend to think
they know more about cars than they actually do. Such a cultural trait could
influence the manner in which high-knowledge Japanese students process COI
information. Other scholars also emphasize gender influences in the purchase
patterns of Japanese consumers (Herbig, 1995; Tobin, 1992).
Overall then, COI does influence purchase intentions. Our findings reveal
considerable external validity in that we have assessed key relationships in two
very different cultures. Thus, in light of our findings and those of other
scholars in foreign settings (e.g. Bannister and Saunders, 1978; Nagashima,
1977) we can conclude that the linkage between COI and purchase intentions
appears likely to hold throughout the world. Managers must design products
and associated marketing accordingly. Where a COI is perceived as negative,
the producer must minimize any reference to the origin country and may need
to engage in substantial promotional efforts in order to overcome embedded
stereotypes.
Additional findings suggest that the role of COI is substantially more
complex than has been suggested in previous research. Managers must
consider COI in combination with specific product beliefs, such as beliefs
regarding quality and pricing. Consumers consider products within the
framework of a ``neural network'' of attributes and associations. It is likely, for
example, that sufficient quality and/or sufficiently attractive pricing could, in
some settings, permit the buyer to overcome a negative COI. It is also likely
that where COI perceptions are sufficiently positive, the exporter may be able
to command premium prices.
Similarly, positive COI images may attenuate negative perceptions of other
product attributes, such as high prices or lower quality. In the cross-cultural
context, buyers are likely to elicit a variety of associations in the purchasing
process.
Findings also suggest that COI is an important antecedent to product
attitudes regardless of the buyer's specific product knowledge. It appears that
product knowledge influences the extent to which COI is relied upon to infer
 product quality, but definitive statements regarding the specific role of high Consumer
and low knowledge do not follow from our results. That is, it cannot be country-of-origin
categorically stated that high- or low- knowledge states about a given product perceptions
will be associated with a particular degree of reliance on the COI cue for
reaching a purchase decision. This outcome contrasts with earlier findings of
Han (1989).
Our findings suggest the product knowledge/use-of-COI relationship is 141
complicated, particularly across foreign cultures, and merits further scholarly
inquiry. They also imply that the role and use of specific product knowledge
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can vary significantly across cultures.

An important limitation of this study is that the questionnaires obtained
data at a single point in time. Although we used structural equations modeling
which can overcome most of the disadvantages of survey-based designs
(Bagozzi and Yi, 1989), the results are generally less robust in studies
investigating linkages such as those explored here. Future research may
benefit from the use of experimental designs that can model causally related
constructs with respect to temporal sequencing of events, that is, longitudinal
research.
In addition to further examination of the general processes associated with
COI cognitive processing, future scholars may want to delve more deeply into
the cultural factors that give rise to specific purchase cognitions among people
in various nations. It is likely, as suggested here, that culture plays a large role
in consumer behavior. One area of potential interest is peer pressure and other
societal influences relevant to the subjective norm of Fishbein and Ajzen (1975).
Fishbein is perhaps the leading proponent of the view that, in addition to
beliefs, social pressures can play a critical role in the formation of purchase
attitudes. It is expected that the subjective norm plays an especially large role
in cultures that strongly emphasize social discipline and group conformity
(Hall and Hall, 1987; Hofstede, 1984). Its role should be investigated in future
research.
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Appendix

Standardized Cronbach's
Construct item coefficient SE t-value alpha

COI People 0.86

People are well educated 0.725 0.055 13.23
Emphasis on technical/vocational training 0.775 0.049 15.66
People are hard working 0.761 0.060 12.69
People are creative 0.596 0.063 9.53
People are friendly and likable 0.474 0.065 7.35
Technical skills of work force are high 0.812 0.055 14.86
Country actively participates in international
affairs 0.637 0.059 10.76
People are motivated to raise living standards 0.660 0.057 11.65
People produce highly technical products 0.769 0.060 12.79

COI Products 0.55

Products made with meticulous workmanship 0.740 0.064 11.51
Products are distributed worldwide 0.491 0.070 7.03
Products need frequent repairs (reversed poles) 0.277 0.070 3.97
Products are long-lasting; durable 0.644 0.074 8.65
Country is friendly in international affairs 0.375 0.061 6.17

Beliefs 0.67
In general, Mercedes Benz (Toyota, General
Motors) cars made in Germany (Japan, the USA)
are . . .
technically advanced 0.775 0.063 12.21
prestigious 0.485 0.057 8.48
of good serviceability 0.478 0.084 5.67
Table AI. of good workmanship 0.855 0.073 11.71
Measurement model economically priced 0.362 0.098 3.70
and confirmatory factor of good quality overall 0.969 0.066 14.76
analysis (continued)
 Standardized Cronbach's Consumer
Construct item coefficient SE t-value alpha country-of-origin
perceptions
Attitudes 0.90
Suppose Germany, Japan, and the US had a car
equal in ______ , what would be your attitude
toward purchasing a car from each of the 145
following countries (Germany, Japan, USA)?
(extremely unfavorable/extremely favorable)
Downloaded by UNIVERSITY OF SOUTHERN QUEENSLAND At 10:28 14 October 2014 (PT)

technical advancement 0.719 0.078 9.22

prestige 0.809 0.077 10.51
workmanship 0.858 0.065 13.29
price 0.805 0.073 11.03
serviceability 0.851 0.068 12.51
overall quality 0.812 0.064 12.69
Notes: All t-values were significant at the 0.01 level
All scales were anchored by ``strongly agree/strongly disagree'' except as noted
Model fit: Chi-square = 524.9
293 degrees of freedom
Bentler-Bonett Normed Fit Index = 0.975
Bentler-Bonett Nonnormed Fit Index = 0.987
Comparative Fit Index = 0.989 Table AI.
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