a study of effect of consumer ethnocentrism and...

ISSN: 2249-7196

IJMRR/March 2016/ Volume 6/Issue 3/Article No-7/379-391

Ashutosh Zunjur et. al., / International Journal of Management Research & Review

*Corresponding Author www.ijmrr.com 379

A STUDY OF EFFECT OF CONSUMER ETHNOCENTRISM AND COUNTRY OF

ORIGIN EFFECT ON PURCHASE INTENTION: AN EMPIRICAL STUDY OF

ELECTRONIC ITEMS

Ashutosh Zunjur*1, Dr. Lopez Joe Cajetan

2

1Asst. Prof, International Institute of Management Science, Pune, India.

2Prof, Matrix School of Management Studies, Pune, India.

ABSTRACT

Today in a cut-throat competitive marketplace every marketers is trying to study buying

behaviour of consumers. However due to high pace of changes it is becoming hard to study

buying behaviour and to know how consumers prefer products and service of a particular

company. There are factors, of course, which are considered by consumers while buying

things and which are well known by marketers like Brand, Price, Serviceability, and so.

However in India the impact of Consumer Ethnocentrism and Country of Origin effect are

not studied so as to guide marketers in forming strategies. This research investigates the

impact of Consumer Ethnocentrism (CE) and Country of Origin (COO) effect on purchase

intention of electronic items. Survey method was used to collect data. Data were collected

through pre-tested questionnaire (CET Scale, COO Scale and PI Scale). The study sample

consisted of 103 respondents. SPSS 13.0 version is used for statistical analysis of collected

data.T-test and ANOVA were used to prove hypotheses. The findings suggest that there is

significant relationship between age and CE and age and COO. It was also found that CE and

COO effect are negatively correlated and those who scored high on CE scale are reluctant to

buy foreign electronic items. Study also revealed that consumers who scored high on COO

scale are intended to buy foreign electronic items.

Keywords: Consumer Ethnocentrism, Country of Origin, Purchase intention, Anova.

1. INTRODUCTION

Liberalisation and globalisation have opened the gates for foreign multinationals to start their

operations in India. Therefore, today Indian consumers find so many alternatives to choose

from. This led to very high competition among the foreign and domestic marketers to attract

new customers. Such competitive marketplace enforces marketers to formulate unique

marketing strategies. To form effective strategies marketers have to understand market and

the factors those affect buying intentions of consumers. Many such factors have extensively

researched and vast body of literature is available currently. However compared to other

factors little research is conducted to find out effect of ethnocentricity and country of origin

on purchase intention. Therefore it‟s important to investigate the relationship between

consumer ethnocentrism, country of origin and purchase intention. This may help to expand

understanding of buying behaviour of Indian consumers.


Copyright © 2016 Published by IJMRR. All rights reserved 380

India is the second most populous country in the world, with over 1.2 billion people (July

2015), more than a sixth of the world's population. Already containing 17.5% of the world's

population, India is projected to be the world's most populous country by 2022,

surpassing China. India has more than 50% of its population below the age of 25 and more

than 65% below the age of 35. It is expected that, in 2020, the average age of an Indian will

be 29 years, compared to 37 for China and 48 for Japan1. This suggests that maximum of

total Indian population is „earning population‟ and they are willing to spend. This makes

Indian market lucrative. And therefore numbers of foreign and domestic players are trying to

spread their wings in India.

The city chosen for this study is Pune (Maharashtra State, India). There are numbers of

reasons for selecting Pune city for research. Aptly called „Oxford of the East‟ many

youngsters come here to take higher studies. Pune being a home for many leading

manufacturing and service organisations, attracted people who were in the search of jobs

from other parts of country. Eventually such people settled in Pune. This made Pune a multi-

cultured and diverse place, as people from across the country are settling here. Thus it was

thought that Pune would be appropriate place which will represent the population of whole

country. Being well educated and having modest life style, it was assumed that people from

Pune would be aware of different brands of electronic products along with their country of

origin.

Pre tested questionnaire were circulated among the samples through google forms. Out of 120

people 113 returned filled questionnaire and among these 103 responses were considered for

further analysis.

OBJECTIVES OF THE STUDY

1. To investigate the relationship between demographics and Consumer Ethnocentrism for

electronic items

2. To investigate the relationship between demographics and Country of Origin effect for

electronic items

3. To find out if Consumer Ethnocentrism, Country of Origin and Foreign Products‟

Purchase Intention are correlated.

2. LITERATURE REVIEW

2.1 Consumer Ethnocentrism

Consumer ethnocentrism is defined (Shimp and Sharma, 1987, p. 280) as “the beliefs held by

consumers about the appropriateness, indeed morality, of purchasing foreign-made products.”

Consumers who are ethnocentric believe that purchasing imported products is unpatriotic,

causes loss of jobs, and hurts the domestic economy.

Soumava Bandyopadhyay (2014) investigated the effects of consumer ethnocentrism and

country-of-origin perceptions on product evaluations by consumers in the emerging Indian

market. A structural equation model was developed and tested for this purpose. A field study

was conducted to measure consumer ethnocentrism and perceived images of India, the United

States, Japan, and South Korea as countries, and evaluations of products from these countries.

https://en.wikipedia.org/wiki/India

https://en.wikipedia.org/wiki/List_of_countries_by_population

https://en.wikipedia.org/wiki/World%27s_population

https://en.wikipedia.org/wiki/List_of_countries_by_past_and_future_population#Country_and_territory_breakdown_by_future_population.2C_from_2020_to_2050

https://en.wikipedia.org/wiki/People%27s_Republic_of_China



The study indicates that Indian consumers who are ethnocentric tend to have positive

perceptions of their own country and domestically-made products. It also revealed that the

ethnocentrism, however, does not translate into any negative perceptions of the United States,

Japan, and South Korea, or of products originating from these three countries.

Edi Purwanto (2014) investigated the effects of consumer ethnocentrism on perceived

domestic product quality, the effects of consumer ethnocentrism on domestic product

purchase intentions, and the effects of perceived domestic product quality on domestic

product purchase intentions especially in Indonesia domestic market. These findings show

low level consumer ethnocentrism among young people, low level of respondents‟ perception

on domestic product quality and low level of domestic product purchase intentions by

respondents.

Alexander Josiassenet al (2011) found that the strength of the relationship between consumer

ethnocentrism and willingness to buy is influenced by customer characteristics. Specifically,

age and gender are found to be important moderators of the consumer ethnocentrism-

willingness to buy relationship.

B. Candan et al (2008) studied the effect of consumer ethnocentrism on purchase behaviour.

In their study they found that young consumers with high income are less ethnocentric and

they do not act ethnocentricity in their purchasing behaviour. They also came out with the

finding that consumers who prefer domestic products scored high on CETSCALE.

2.2 Country of Origin effect

Dr Rashid Saeed et al (2013) researched to find out influence of country-of-origin (COO)

factor on Pakistani consumers‟ evaluation of French cosmetics products. They found that

people of Pakistan are not highly ethnocentric and show no animosity towards foreign

products, which means that people don‟t evaluate French cosmetics negatively against

domestic counterparts and tend to buy them. The study also suggests that consumers with

high level of product knowledge relied more on COO related cues in their product evaluation

as compared to consumers with low level of knowledge.

Alexander Josiassen(2009) suggested that less involved young consumers depend more on

COO image than will more involved young consumers. However, this does not mean that

COO image is unimportant for high-involvement products he further adds. His research also

pointed that young consumers considerably rely on the COO cue.

AhasanulHaque et al (2015) in their research investigated the influence of various factors on

purchase intention of buying foreign products. Findings of their research revealed that

country of origin image carries a significant positive impact on brand image and hence on

intention of buying foreign products whereas, ethnocentrism carries a significant negative

effect toward intention of buying foreign products.

Osama Ahmed Abdelkader(2015) had studied the effect of Country of origin on perceived

quality and perceived value of products. Inhis research study he found significant evidences

of the influence of Country of origin image on Perceived value and perceived quality of the

product. Moreover he also suggests that demographics- (age, gender and income) are

significantly related with the coo effect.



Harrychand D. Kalicharan, (2014) has reviewed several past empirical studies. Through this

review of literature he found that when consumers are aware of certain country

characteristics, they use coo cue in evaluation of product quality. Products produces are

positively evaluated by consumers compared to products from other emerging countries.

Further the author adds that consumers who show ethnocentricity tend to prefer local

products over to foreign products. Author through his review of literature also suggest that

the effect of coo in product evaluation can be reduced by emphasising more on products‟

attributes during promotions and campaigning.

David Bamber et al (2012) conducted an empirical research to model country of origin

effects, intention to purchase foreign products, ethnocentrism and foreign product knowledge.

It was demonstrated that significant correlation exists between ethnocentrism and purchase

intention of foreign products, and between purchase intention of foreign products and coo

effect.

3. HYPOTHESES

H1: There is significant relationship between age and consumer ethnocentrism.

H2: There is significant relationship between income level and consumer ethnocentrism.

H3: There is significant relationship between education level and consumer ethnocentrism.

H4: There is significant relationship between gender and consumer ethnocentrism

H5: There is significant relationship between age of consumer and COO sensitivity.

H6: There is significant relationship between gender of consumer and COO sensitivity.

H7: There is significant relationship between education level of consumer and COO

sensitivity.

H8: There is significant relationship between income level of consumer and COO sensitivity.

H9: Consumer ethnocentrism and COO sensitivity are significantly related.

H10: Consumer Ethnocentrism, COO sensitivity and foreign product‟s purchase intention are

significantly related.

4. RESEARCH METHODS

4.1 Research Instruments

Shimp and Sharma (1987) found that some consumers generally believe that buying products

that are locally manufactured is morally appropriate in a normative sense. This expression of

consumer ethnocentrism can serve as an essential stimulus for the decision to purchase

domestic or local products. They developed Consumers Ethnocentric Tendencies Scale

(CETSCALE) as a tool to measure the level of ethnocentricity. Several studies have used this

scale to measure the degree of ethnocentrism among different countries.

In the research, a scale of 17 variables has been used in order to measure the purchasing

behaviours of the respondents. The attempt is made to measure ethnocentricity in Pune city

by using CETSCALE (Shimp and Sharma).



Scale for measuring effect of COO was adapted from the research work of Lascu and Babbs

(1995). The original scale has 13 items. However for this study only 10 items were used from

original scale.The responses are measured on 7 point Likert Scale. The words from these

scales are modified to fit the context of this research.

Scale for Purchase Intention was adapted from Bamber et al (2012). This scale includes 5

items which were rated on 7 Point Likert scale.

4.2 Data collection

A „household‟ was considered as a sampling unit and the non-probability, convenience

sampling method was adopted to select the sample items. The sample chosen consisted of

120 respondents. Survey method is used to collect primary data from the respondents. The

questionnaire was sent to respondents (samples) through email (Google form) and their

responses are collected through the same medium.

Out of 120 respondents only 113 respondents filled and returned questionnaire. Out of these

113 responses 103 are finally considered for the analysis. For statistical analysis SPSS

version 13 is used.

5. ANALYSIS

Table 1: Demographic Profile of respondents

Characteristics Percentage

Gender Male 62

Female 38

Age (Years)

20-24 17

25-29 34

30-34 30

35 & above 19

Education

Graduate 25

Post Graduate 69

Professional Qualification 06

Monthly family income

(annual)

2.5- 5 lakh 13

5- 7.5 lakh 65

7.5 & above 22

5.1 Reliability Statistics of Scales-

Each of the four sub-scales demonstrated strong internal consistency with Cronbach alphas

between .895 and .951. The subscale statistics are shown in Table 2

Table 2: Subscale Statistics

Sub Scale Cronbach alpha

Consumer Ethnocentrism .951

Country of origin .895

Purchase Intention .939



5.2 Measurement of Consumer Ethnocentrism

Table 3: Consumer Ethnocentrism: Means and Standard Deviation Variable

No.

Items Mean Standard

Deviation

Q3. Buy Indian-made products. Keep India working 5.23 1.873

Q 16. We should buy from foreign countries only those products that we

cannot obtain within our own country

4.96 1.927

Q8 We should purchase products manufactured in India instead of letting

other countries get rich from us

4.63 1.493

Q2 Only those products that are unavailable in India should be imported 4.58 1.752

Q13 It may cost me in the long run but I prefer to support Indian products 4.45 1.408

Q4 Indian products, first, last and foremost 4.40 1.432

Q9 It is always best to purchase Indian products 3.97 1.691

Q1 Indian should always buy Indian products instead of imports 3.64 1.625

Q10 There should be very little trading or purchasing of goods from other

countries unless out of necessity

3.53 1.617

Q11 Indians should not buy foreign products, because this hurts Indian

business and causes unemployment 3.39 1.613

Q6 It is not right to purchase foreign products because it puts Indian

people out of a job

3.08 1.687

Q15 Foreign products should be taxed heavily to reduce their entry in India. 2.86 1.621

Q7 A real Indian should always buy Indian products 2.64 1.824

Q12 Restrictions should be put on all imports 2.54 1.418

Q14 Foreigners should not be allowed to put their products on our markets 2.53 1.423

Q17 Indian consumers who purchase products made in other countries are

responsible for putting fellow Indians out of work

2.46 1.496

Q5 Purchasing foreign-made products is anti-Indian 2.45 1.650

Mean Score 3.60

The ethnocentrism measure used consisted of an inventory of 17 attitudinal statements with a

Likert scale where „1‟ represented “Strongly Disagree”, „7‟ meant “Strongly Agree” and „4‟

meant “Neither Agree nor Disagree”. The average mean score across all 17 items as shown in

the table 3 is 3.60, indicating that Indians are not highly ethnocentric with regards to the

purchase of “foreign” or “Indian” products. The highest rating (5.23) was for statement no. 3,

“Buy Indian-made products. Keep India working”, while the lowest (2.45) was on item no. 5,

“Purchasing foreign-made products is anti-Indian”. However, since the standard deviations of

these statements were all above one, such opinions were widely shared.

5.3 Measurement of Country of Origin

Table 4: Country of Origin: Means and Standard Deviation Variable

No.

Items Mean Std. Dev.

Q6 A person should always look for the country of origin when buying an

electronic item that has a high risk of malfunctioning eg. Mobile Phone

4.38 1.19735

Q4 I look for the "Made in...." labels from electronic items 4.37 1.37905

Q1 When buying expensive electronic product i always seek what country it is

made in

4.35 1.48660

Q5 Seeking country of origin is less important for inexpensive electronic items

than expensive ones

4.33 1.27870

Q10 If I have less experience with the product, i search for country of origin

information of the product to help me make more informed decision.

4.29 1.24956

Q2 To make sure that i buy highest quality of electronic product i look what

country the product made in

4.24 1.20021

Q3 I feel it is important to see country of origin of electronic product while

deciding to buy

4.24 1.36817

Q7 I look for country of origin information to choose the best product 4.17 1.12978



available particularly in electronic category

Q8 I find out country of origin of electronic product to determine the quality

of electronic product

4.05 1.23176

Q9 When i am buying a new electronic product the country of origin is the

first piece of information that i consider

3.72 1.34615

Mean Score 4.21

COO sub scale was consisting of 10 items and each one was measured on 7 point Likert

Scale. On this scale 1 means “Strongly Disagree” and 7 means “Strongly Agree”. The mean

score of COO scale is 4.21, (as shown in Table-4) indicating that people from Pune city are

neutral about coo effect. The highest rating was for item no. 6 “A person should always look

for the country of origin when buying an electronic item that has a high risk of

malfunctioning eg. Mobile Phone” which was approximately 4.38 and lowest rating 3.7 was

on item no. 9. “When I am buying a new electronic product the country of origin is the first

piece of information that I consider”.

5.4 Measurement of Foreign products Purchase Intention

Table 5: Foreign products Purchase Intention - Means and Standard Deviation

Variable

No

Items Mean Std.

Dev.

Q2 I will buy many electronic products from other countries this year 3.67 1.69999

Q3 I feel happy buying foreign electronic goods 3.46 1.60744

Q4 For me, there is a certain excitement about shopping for Electronic goods

from other countries

3.42 1.52447

Q1 Compared with my friends, I intend to purchase more electronic products

from other countries

3.38 1.77740

Q5 I am pleasantly surprised when I see electronic goods from faraway

places when I am shopping

2.81 1.42628

Mean Score 2.4

Sub scale for Purchase Intention was consisting of 5 items, which were rated on Likert scale

(7 Points). On this Likert Scale 1 meant “Strongly Disagree” and 7 Meant “Strongly Agree”.

As it can be seen from Table-5 Mean Score for this sub scale is „2.4‟ which indicates that

people do not intend to buy foreign products.All itemswere rated below 4 which suggest that

people did not agree with these statements.

5.5 Hypotheses Testing

H0: There is no significant relationship between age and consumer ethnocentrism.

H1: There is significant relationship between age and consumer ethnocentrism.

Table 6: ANOVA (Age and Consumer Ethnocentrism)

From table-6 it is observed that the significance value is less than 0.01. Thus it indicates

significant relationship between age and Consumer Ethnocentrism. Hence we accept H1.



That means older age people show high consumer ethnocentrism than that of younger age

people.

H0: There is no significant relationship between income level and consumer

ethnocentrism.

H2: There is significant relationship between income level and consumer ethnocentrism.

Table 7: ANOVA (Income level and Consumer Ethnocentrism)

The significance Value is greater than 0.05. Thus it indicates no significant relationship

between income level and Consumer Ethnocentrism. Hence we reject H2. That means

income level of consumer and consumer ethnocentrism tendency are not related to each other.

H0: There is significant relationship between education level and consumer

ethnocentrism.

H3: There is significant relationship between education level and consumer

ethnocentrism.

Table 8: ANOVA (Education Level and Consumer Ethnocentrism)


between education level and Consumer Ethnocentrism. Hence we reject H3. That means

education level of consumer and consumer ethnocentrism tendency are not related to each

other

H0: There is no significant relationship between gender and consumer ethnocentrism

H4: There is significant relationship between gender and consumer ethnocentrism

Table 9: Independent Samples Test (Gender and Consumer Ethnocentrism)



From table-9 it is clear that Sig. value (2-tailed) for t-test for Equality of Means is greater

than 0.05. It indicated that there is no significant relation between Gender and Consumer

Ethnocentrism. Hence we reject H4.

H0: There is no significant relationship between age of consumer and COO sensitivity.

H5: There is significant relationship between age of consumer and COO sensitivity.

Table 10: ANOVA (Age and COO effect)

Sum of

Squares

df Mean Square F Sig.

Between Groups 73.339 4 18.335 68.089 .000

Within Groups 26.389 98 .269

Total 99.728 102

The significance Value is equal less than 0.01. Thus it indicates significant relationship

between age and COO. Hence we accept H5.

Table 11: Model Summary (Age and COO effect)

Model R R Square Adjusted R

Square

Std. Error of

the Estimate

1 .825(a) .681 .678 .60746

a Predictors: (Constant), Age

From above table-11 it has been seen that R value is 0.825. From the table it is observed that

the coefficient of determination i.e. the R-square (R2) value is 0.681, which representing that

68.1% variation of the dependent variable (Average country of origin effect) is due to the

independent variable (impact of age), which in fact, is a strong explanatory power of

regression.

Table 12: ANOVA (b) (Regression Model)

Model Sum of

Squares

df Mean

Square

F Sig.

1 Regression 79.565 1 79.565 215.614 .000(a)

Residual 37.270 101 .369

Total 116.835 102

a Predictors: (Constant), Age

b Dependent Variable: Average COO

From the table, it is identified that the value of F-stat is 215.614 and is significant as the level

of significance is less than 5% (p<0.05). This indicates that there was a statistically

significant association between age and COO effect.

Additionally, this also indicated that the null hypothesis is rejected and alternative hypothesis

is accepted. Hence it can be concluded that Age and COO effect are significantly related.

H0: There is no significant relationship between gender of consumer and COO

sensitivity.

H6: There is significant relationship between gender of consumer and COO sensitivity.



Table 13: Independent Samples Test (Gender and COO effect)

From Table-13 it is observed that significance value is greater than 0.05. That indicates no

significant relationship between gender and coo sensitivity.

H0: There is no significant relationship between education level of consumer and

COOsensitivity.

H7: There is significant relationship between education level of consumer and COO

sensitivity.

Table 14: ANOVA (Education Level and COO effect)

Sum of

Squares


Between Groups .794 4 .199 .712 .586


Total 28.117 102


between education level and COO. Hence we reject H6.

H0: There is no significant relationship between income level of consumer and COO

sensitivity.

H8: There is significant relationship between income level of consumer and COO

sensitivity.

Table 15: ANOVA (Income Level and COO effect)

Sum of

Squares


Between Groups 3.819 4 .955 2.965 .023


Total 35.379 102

Table-15 shows that the significance value is greater than 0.01. Thus it indicates no

significant relationship between income level and COO. Hence we reject H7

H0: Consumer ethnocentrism and COO sensitivity are not significantly related

H9: Consumer ethnocentrism and COO sensitivity are significantly related

Table 16: Correlation (CE and COO effect)



The sign of the correlation coefficient indicates the direction of the relationship (positive or

negative). As here the sign is negative it indicates that CE and COO are inversely related.

Since 0.682 is relatively near to 1, this indicates that CE and COO effect are correlated.

Hence accept H9.

H0: Consumer Ethnocentrism, COO sensitivity and foreign product’s purchase

intention are not significantly related.

H10: Consumer Ethnocentrism, COO sensitivity and foreign product’s purchase

intention are significantly related.

Table 17: Correlation Matrix (CE, COO and PI)

CE COO PI

Correlation CE 1.000 -.682 -.860

COO -.682 1.000 .654

PI -.860 .654 1.000

From the table it can be seen that CE, COO and PI are significantly correlated. Also CE and

COO are inversely related. Whereas COO and PI are positively related. Hence accept

alternate hypothesis H10.

6. FINDINGS AND DISCUSSION

1. This investigation finds that elderly people show more consumer ethnocentrism than that

of younger generation.Majority of past research works on ethnocentrism have supported this

finding. This may be because elderly people tend to be more patriotic compared to young

people. To express their patriotism elderly people may engage themselves buying (or

preferring) domestic goods and services (than foreign goods and services). On the other hand

young people being more open to other cultures, and having modest lifestyle make them less

ethnocentrism compared to older age people.

2. The investigation also finds that younger consumers seek COO of electronic products.

This suggests that young consumers have different perceived image of different countries in

their minds and they prefer products from particular country.

3. Consumer Ethnocentrism and COO are inversely related. That mean consumers with high

ethnocentric tendency are interested towards foreign electronic products.

4. This study reveals that younger people are less ethnocentrism compared to older people,

and relationship between CE and COO is negative. This explains why younger consumers

seek COO

5. COO and PI are significantly positively related. This indicates that consumers who seek

country of origin cue while buying products tend to buy foreign products over local/ domestic

products.

6. CE, COO and PI, are significantly related.

From these findings following model is developed



Model 1: Correlation between CE, COO and PI

7. RESEARCH IMPLICATIONS

Findings of the study entail important strategy implications for the business firms, especially

the multinational ones. Firms interested in operating in the consumer goods market in India,

for instance, can divide the Indian consumers into two broad segments: one segment may

comprise of older age people who are ethnocentric and other segment may be of young age

people who are not averse to imported products/ services.

More detailed study of characteristics of people from these two segments may guide

organisations to form their positioning and marketing mix strategies. Marketers of domestic

products may find it useful to place product in the segment of ethnocentric people. So they

can focus more on this segment for positioning. If domestic marketers want to penetrate into

young consumers‟ segment then such marketers must form campaigning which may appeal to

consumers that it comes from foreign country.

On the other hand marketers of foreign brands should focus primarily on less ethnocentric

(young people) segment for penetration in India. Such marketers who want to penetrate in

India can make use of brand/ product names which may indicate buyer the country of origin.

If foreign multinational wants to launch a product for elderly people then foreign products‟

marketers should form a campaign in such a manner that elderly people should feel as if the

product is domestic. Using domestic names for the brands and products can be one way of

doing this.

8. LIMITATIONS AND SCOPE FOR FUTURE STUDIES

1. Questionnaire to measure COO sensitivity included questions only related to COO. As a

result effect of COO may be magnified. No other factors like Brand, Price, and Service

Quality etc. was investigated. Whereas earlier researchers found that there is significant

impact of these factors on foreign products evaluation and purchase intention. So effect of

COO should be studied along with the impact of other important factors, which presumably

are used by consumer in evaluation process.

2. The present sample is skewed toward young age people and high income group. People

from other ranges of Age group and Income group should also be included in samples. Future

study may involve samples with variations in demographics, so as to make sample more

representative of entire population.

3. The study may be carried out focusing different product category and in different location

of the country so as to make findingsgeneralisable.



Acknowledgment: Authors acknowledge Mrs VandanaMohanty for her unconditional

support and guidance.

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