people's perceptions of foreign hotel chains in china's market: an empirical study of the...

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People's Perceptions of ForeignHotel Chains in China's Market:An Empirical Study of theEffects of Country-of-Originand Corporate IdentityLianxi Zhou PhD a , Iain Murray a & Brian Zhanga University of Guelph , Guelph, Ontario, CanadaPublished online: 14 Oct 2008.

To cite this article: Lianxi Zhou PhD , Iain Murray & Brian Zhang (2002) People'sPerceptions of Foreign Hotel Chains in China's Market: An Empirical Study of theEffects of Country-of-Origin and Corporate Identity, Journal of Travel & TourismMarketing, 11:4, 43-65, DOI: 10.1300/J073v11n04_04

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People’s Perceptions

of Foreign Hotel Chains

in China’s Market–

An Empirical Study

of the Effects of Country-of-Origin

and Corporate Identity

Lianxi Zhou

Iain Murray

Brian Zhang

ABSTRACT. This paper reports an experimental study concerning

country-of-origin stereotypes that are associated with service quality

perceptions about foreign hotel chains in the mindset of the Chinese peo-

ple. Results suggest that, as for most consumer products, a country ste-

reotypical effect exists for foreign hotel chains. In addition, it also was

found that the country stereotypical effect tends to diminish by providing

background information of corporate identity, especially for less known

foreign hotel chains. Although generalizability of specific findings is

limited by the sample utilized, this study does draw the attention of re-

searchers and practitioners to the issue of signalling effects of coun-

try-of-origin and corporate identity in the context of foreign hotel chains

operating in China’s market. [Article copies available for a fee from TheHaworth Document Delivery Service: 1-800-HAWORTH. E-mail address:

Dr. Lianxi Zhou and Dr. Iain Murray are affiliated with the University of Guelph,Guelph, Ontario, Canada. Brian Zhang is employed in the hospitality (lodging) industry.

Address correspondence to: Iain Murray, PhD, School of Hotel and Food Adminis-tration, University of Guelph, Guelph, Ontario, Canada NIG 2W1 (E-mail: [email protected]).

Journal of Travel & Tourism Marketing, Vol. 11(4) 2001http://www.haworthpressinc.com/store/product.asp?sku=J073

2001 by The Haworth Press, Inc. All rights reserved. 43

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<[email protected]> Website: <http://www.HaworthPress.com> © 2001by The Haworth Press, Inc. All rights reserved.]

KEYWORDS. Country-of-origin, corporate identity, China, foreign ho-

tels, service perception

INTRODUCTION

Foreign expansion of hotel services in China’s hospitality market hasgrown rapidly over the past few years. There are currently more than 30foreign-owned and operated hotel chains in China, and the sourcingcountries include the United States, Japan, and Hong Kong (Shundich1997). Almost all of these hotels operate at the mid- to up-scale levels. AsChina’s economy continues to grow, the opportunities for global hotelchains operating in this large emerging market are enormous (Martin andWeinstein 1995). In response to the market potential, foreign competitionis expected to become more intense than ever before (Shundich 1996).

Two challenging issues facing hotel executives and managers re-garding the competition of global chains in China’s hospitality marketare the positioning and communication strategies. An interesting ques-tion which arises is whether the country-of-origin and corporate iden-tity of a foreign hotel chain should be promoted to guide the strategicpositioning of the services in China. While it has been documented ex-tensively in the marketing literature that a product’s country-of-originhas a significant effect on consumer perceptions of product quality (Pe-terson and Jolibert 1995; Papadopoulos and Heslop 1993; d’Astous andAhmed 1999), no such effect has been reported as it relates to qualityperceptions of hotel services. As is the case with some consumer goods,a global hotel chain doing business in foreign markets may be in a lessadvantageous position when it comes from a country with an unknownor less favourable stereotype in hospitality services. On the positiveside, however, a chain may use its country-of-origin as a selling point inmarketing communications (e.g., advertising) when it is associated witha more favourable country image.

In addition to country-of-origin, corporate identity of a hotel chainalso may need to be communicated in order to enhance people’s percep-tions of service quality. Corporate identity is concerned with both visual(e.g., name and logo) and verbal elements of the company (Olins 1990;Bernstein 1984; Lewis 1990). It represents who the company is, what itstands for, and some judgement of reputation and popularity. In many

44 JOURNAL OF TRAVEL & TOURISM MARKETING

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service sectors such as hotels, corporate identity is equivalent to brand-ing of products in the manufacturing sector (Schmitt and Pan 1994).Hence, managing corporate identity of a hotel chain should have a simi-lar effect to branding in regards to its influence on consumer percep-tions of product quality. Particularly in foreign markets, where thegeneral qualities of corporate identity of a hotel chain are relatively lessknown, building and managing the identity of the hotel should contrib-ute positively to perceptions of its service quality. Although the impor-tance of corporate identity for foreign hotels in China’s market has beenacknowledged (Schmitt and Pan 1994), little information is available toassist in the strategic use of corporate identity in affecting quality per-ceptions of hotel services.

This study is designed to assess country-of-origin stereotypes for ho-tels, as well as corporate identity of hotel chains and their effects on per-ceptions of service quality in China’s market. If there is a country-of-origin stereotypical effect associated with hotel services in the market, ahotel manager may choose to adopt a “country-of-origin image” strat-egy if the stereotype is positive. If corporate identity is also important inshaping service perceptions, then building and managing the intangibleasset of corporate identity deserves appropriate attention. In this case, a“corporate image” strategy should be pursued as well. Moreover, therelative importance of country-of-origin versus corporate identity in ex-plaining perceptions of hotel services may also provide managerial im-plications for global hotels in China’s market.

BACKGROUND AND RESEARCH HYPOTHESES

As is the case with consumer goods, factors influencing people’s per-ceptions of hotel service quality are both intrinsic and extrinsic (Lewis1990; Herbig and Milewicz 1994). Intrinsic factors, such as facilities,flavor and variety of food, and professional look of service employees,involve the physical composition of the services provided. Extrinsicfactors, on the other hand, involve external, but service-related ele-ments which may include price, hotel name, country-of-origin, and cor-porate identity. Though both country-of-origin and corporate identity ofa hotel are extrinsic factors, the former is at the country level and the lat-ter at the corporate or “brand” level. Hence, their salience on qualityperceptions of hotel services is expected to be different.

In the context of hotel services, Bojanic (1996) examined the rela-tionship between price and perceived service quality, and found that

Zhou, Murray, and Zhang 45

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price was generally significant to perceptions of hotel service quality.However, within the four major hotel segments–budget, moderatelypriced, high priced, and luxury–there were some noticeable differences.For example, the relationship between price and perceived service qual-ity was not significant for the budget and high priced segments. There-fore, the author claimed that there might be other extrinsic cues used byconsumers to determine service quality.

Country-of-Origin Stereotypes of Foreign Hotel

Country-of-origin of hotel, as one of the external factors, is examinedin this study. Consumers are known to develop country stereotypes fromtheir social and consumption environment (Hamilton 1979). Country ste-reotypes have been generally found to exist for consumer goods. The vastmajority of the empirical findings indicate that country stereotypes areproduct specific (Hong and Wyer 1989; Wall, Liefeld, and Heslop 1991;Papadopoulos 1993), related to particular quality dimensions (Li andDant 1997; Thakor and Katsanis 1997), and vary with the level of eco-nomic development of the source country (Cordell 1992; Andaleeb1995). For example, consumers often come to believe that French wine,Italian leather, German beer, and Japanese electronics are the “best.”Products from industrialized countries tend to be evaluated more favor-ably than those from less developed countries. Stereotyping of this natureis less country-product specific; instead they involve products in generalwithin the target country. In this regard, product evaluations are deter-mined on the basis of country category. In some cases, however, countrystereotypes are associated with ethnocentric tendencies toward home-country product offerings, regardless of whether or not their home coun-try actually produces high-quality products (Han 1988; Klein, Ettenson,and Morris 1998; Keillor and Hult 1999).

The phenomenon of country stereotypes appears to be more compli-cated when it relates to service industries. Unlike physical products,services involve intangibility, heterogeneity, and inseparability of pro-duction and consumption (Zeithaml 1981; Parasuraman, Zeithaml, andBerry 1985). These unique features pose more challenges to consumersin forming country stereotypes on the basis of service quality provided.It is expected that country stereotypical bias against products originat-ing from nations with a lower level of economy, predominately illus-trated in the literature on consumer goods, would apply to the context ofhotel services. Specifically, one would think that service quality per-ceptions will be more positive when the hotel chain comes from an in-


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dustrialized country than when it comes from a less developed or adeveloping country.

Alternatively, however, there may be a tendency to favor indigenoushotel services over foreign ones due to a possible emotional attachmentto national pride or the impact of ethnocentrism (Thonw and Hill 1999).In fact, China’s popular press indicates that some local Chinese compa-nies are trying to take advantage of the emerging ethnocentrism of Chi-nese consumers by promoting goodwill and pride of national brands. Arecent study provides empirical evidence suggesting the existence ofethnocentrism regarding perceptions of foreign products in the minds ofChinese consumers (Klein, Ettenson, and Morris 1998). When this re-sult is transferred to service perceptions of hotel chains, one may expectthat country stereotypical bias would occur against hotels originating inforeign countries.

The possibility of a home-country advantage for hotel chains existsnot only because of a sense of national pride, but may also be a result ofconsumers’ beliefs that hotels from their own culture would provide thebest localization of service offerings. Thus, it may be expected that ho-tels tend to be more favorably perceived when they come from a coun-try known for its similar culture (in relation to home country) than whenthey come from a country known for its dissimilar culture.

Although all three forces–country category, ethnocentrism, and cul-tural similarity–are expected to contribute to country-of-origin effectson perceptions of hotel services, we have no prior reasoning to suggestwhich aspect will play a more important role, particularly in the contextof China’s hotel market. Therefore, it is hypothesized that coun-try-of-origin of a hotel will have a significant effect on people’s percep-tions of hotel service quality. To draw a distinction between specificand overall quality perceptions, as in the case for country-of-origin ef-fects for product evaluations (Han 1989; Hong and Wyer 1989; Sauer,Young and Unnava 1991), the first two hypotheses are formulated asfollows:

H1a: There is a stereotypical effect of country-of-origin of the ho-tel on individuals’ perceptions of specific service dimensionsassociated with the hotel.

H1b: There is a stereotypical effect of country-of-origin of the ho-tel on individuals’ overall attitudes toward the hotel.


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Corporate Identity of a Hotel

As indicated earlier, corporate identity for service providers such ashotels resembles “branding.” Firms often use brands to inform con-sumers about unknown product attributes and to ensure the credibilityof product claims (Erdem and Swait 1998). Similarly, corporate iden-tity of hotel services also may be used as market signals to improveconsumer perceptions about service attributes and increase confi-dence in service positions. Particularly when consumers are not famil-iar with the service providers, or are uncertain about the servicesprovided, corporate identity as a signalling information cue may bemore desirable.

There is empirical evidence to support the importance of corporateidentity on goods and services evaluations. For example, a survey bySelame (1988) indicated that the majority of respondents had more fa-vourable feelings toward companies with which they were familiar, andthese feelings were transferred to the goods and services they bought.The significant success of Du Pont, both at home and abroad, has histor-ically been accompanied by a corporate campaign aimed at increasingfamiliarity in the public, thus leading to favorability (Gregory 1991,p. 21). More importantly, Nishio (1989) reported that a good corporateimage affects consumers’ evaluations of product attributes, which inturn determines product selection. Taylor, Miracle, and Chang (1994)found that advertising in Japan is often used to communicate corporateinformation in an effort to get the audience to a point where they feelboth familiar and friendly with the company. In most parts of Asia, in-cluding China, corporate recognition leads to familiarity and familiaritycontributes to favorability. This nature of logic is likely to be more validfor managing people’s perceptions of service providers. The uniquefeatures to services (e.g., intangibility) require consumers to come toknow service providers much better through activities such as promot-ing corporate identity.

In the marketing literature, there is a great deal of empirical evidenceto suggest that country-of-origin stereotypical effects tend to becomesmaller when other product information is provided (Peterson andJolibert 1995). In particular, researchers (Johansson and Nebenzahl1986; Cordell 1992; Tse and Gorn 1993) have found that a coun-try-of-origin stereotypical bias becomes smaller for known brands (ver-sus less known or unknown brands). Thus, there is reason to believe thata hotel chain tends to be more favorably perceived when its corporateidentity (i.e., “branding” information for hotel service) is known versus


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unknown. This favorability may lie in both service quality perceptionsand overall attitudes toward a foreign hotel chain. Consequently, ournext two hypotheses are:

H2a: Corporate identity of a hotel, when known, will result inmore favorable perceptions of specific service dimensionsassociated with the hotel than when the corporate identity isnot known.

H2b: Corporate identity of a hotel, when known, will result inmore favorable overall attitudes toward the hotel than whenthe corporate identity is not known.

Country-of-Origin of Hotel and Corporate Identity Interaction

An interesting issue here concerns the relative importance of coun-try-of-origin information and corporate identity of a hotel in explain-ing individuals’ perceptions of hotel service quality and attitudestoward a foreign hotel. The relevant research findings in the productliterature also may be applicable to the study of hotel service percep-tions and attitudes. For consumer goods, empirical evidence suggeststhat positive branding information tends to result in greater benefitsregarding consumer evaluations when the information is provided inconjunction with an unfavorable country image than when it is givenalong with a favorable country image (Tse and Gorn 1993; Leclerc,Schmitt, and Dube 1994). This means that when country-of-origin andbranding are positively related, their effects on product evaluationsare not additive, but rather redundant. In the phenomenon under ourconsideration, similar results may be expected. Specifically, we as-sume that the presence of corporate identity will lead to a greater bene-fit for individuals’ perceptions about hotel service and attitudestoward a hotel when the hotel is known for a negative country associa-tion (versus when it is known for a positive country association). Inthis case, corporate identity becomes more salient in contributing toservice perceptions and affective evaluations. These potential interac-tions of country-of-origin of a hotel and corporate identity are there-fore formulated in the following hypotheses:

H3a: Corporate identity information will have a greater effect onindividuals’ perceptions of specific service dimensions whenthe hotel is less favorably associated with a source country


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than when it is more favorably associated with a source coun-try.

H3b: Corporate identity information will have a greater effect onindividuals’ overall attitudes toward a foreign hotel when thehotel is less favorably associated with a source country thanwhen it is more favorably associated with a source country.

RESEARCH METHOD

Research Design

An experiment was conducted to test the research propositions statedearlier. In this study, country-of-origin of hotel and corporate identity ofhotel were manipulated independently, and their effects on two sets ofmeasures–hotel service quality perceptions and attitudes toward a for-eign hotel–were examined. A 3 × 2 between-subjects factorial designwas used, with three modes of country-of-origin information (HongKong Hotel, American Hotel, and Japanese Hotel), and two modes ofcorporate identity information (Presence vs. Absence). Table 1 depictsthe six experimental conditions under consideration.

The selection of country-of-origin modes was guided by China’spopular press which indicated the emerging trend of foreign expansionincluding Hong Kong-, American-, and Japanese-based hotel chains inChina’s hospitality market. While the United States and Japan representhighly developed countries, Hong Kong is perceived by the Chinese asa newly industrialized region (Cateora and Graham 1999, p. 24). In ad-dition, chains from these three countries represent distinctly differentcultural orientations, with the American chain as Western, and both theJapanese and the Hong Kong chains as Eastern. The Hong Kong chainis more Chinese-oriented than the Japanese chain.


TABLE 1. Experimental Conditions

Country-of-Origin of Hotel

Hong Kong Hotel American Hotel Japanese Hotel

Corporate Identity ofHotel

Presence 1 2 3

Absence 4 5 6

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Experimental Manipulation

Both country-of-origin and corporate identity of a hotel were manip-ulated by providing realistic but fictitious background information.(See Exhibit 1.) It should be noted that to increase the validity of the re-sults, the background information about the fictitious hotels was actu-ally drawn from several real magazine ads featuring foreign-basedhotels in China’s market. The inclusion of hotel features and other in-formation was designed to simulate real life scenarios, and to induce asense of responsibility from the respondents.

The information was presented in a similar format to that found inmost of the magazine ads. All of the information (including instructionsand questionnaire explained later) was first prepared in English, and thefinal copy was constructed through back translation and pre-tested witha number of Chinese students at a major university in North America.All these efforts were expected to improve the quality of subjects’ re-sponses.

Subjects

A convenience sample of 96 students was recruited at a major univer-sity in China and paid a token monetary incentive for their participation.Subjects’ ages ranged from 18 to 37, with a mean age of 22 years. Themajority of respondents were in a business and hospitality managementmajor, and almost 73% of the respondents were male. We anticipatedmost of them might have indirect exposure to and knowledge of foreignhotels through relevant courses in hospitality management.

While we acknowledge that university students are not the target seg-ment for upscale hotels, such as the hypothetical ones used in this study,these subjects do serve as a relatively homogeneous group for testingour theoretical interest. As such, the variations in their responses couldbe largely attributed to the manipulation of the two experimental factors(i.e., country-of-origin and corporate identity of hotel), rather than otheruncontrollable variables including consumer knowledge of, and actualexperience with, foreign hotels. Since the primary focus of this studywas to examine whether or not country stereotypical effects exist forforeign hotels operating in China, using the student subjects addressedmuch of the concern over internal validity. The lack of generalizabilityto the actual target market of upscale hotels is acknowledged. The pur-pose of this research, however, was to draw the attention of researchersand practitioners to the issue of country stereotypes in relation to for-


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eign hotels. The expected results may be used as a reference for foreignhotel managers who may deal with the emerging target segment in thenear future.

Procedure

Respondents were randomly assigned to one of the six experimentalconditions (see Table 1). Each respondent was asked to participate in astudy which “examines people’s perceptions of the ‘Grand View Hotel’which is owned and managed by Hong Kong1 Dream River HotelGroup.” They were told that “the Hong Kong (or American, or Japa-nese) hotel group has just expanded their business operations in China’shospitality market, and are concerned with how you will perceive thisnew hotel. In this short survey, you are invited to provide your percep-tions on the new hotel in this emerging market.” They were then in-structed to form impressions based on the information provided in theadvertisement (see Exhibit 1).


EXHIBIT 1. Ad Stimuli

Grand View Hotel

Ideally located in the heart of the city is the Grand View Hotel. Its 330 well-appointed roomsinclude 298 standard rooms, 22 superior rooms and 10 executive suites. It provides a varietyof restaurants. Banquet and meeting facilities are also available.

• Late check-out until 4:00 p.m.

• In-house movies and satellite TV

• Complimentary shuttle service between hotel and airport

• Complimentary use of fitness center and indoor swimming pool

GRAND VIEW HOTEL

Managed by Hong Kong1

Dream River Hotel Group

Company Background2

Dream River Hotel Group is a famous Hong Kong1

hotel management company with a longhistory. Its commitment to offering high standards plus attention to quality control and cus-tomer service has earned a high reputation. The group is a sponsor of Chinese Children’sWelfare Fund and National Disabilities Aid Centre. Dream River Hotel Group operates 12 up-scale hotels in China and plans to have 8 more under its flag in 3 years.

1“Hong Kong” was replaced with “American” or “Japanese,” depending on the experimental conditions de-picted in Table 1.2Company background information was not given in the conditions of absence of corporate identity.

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After reading the information, the subjects were presented with aquestionnaire that measured their perceptions of hotel service qualityand attitudes toward the hotel. In addition, respondents also were re-quired to provide some demographic information. To ensure that therewas no demand effect relating to the country-of-origin information, asis commonly a concern in the relevant marketing literature, respondentswere finally asked to indicate the purpose of the study. None of themrecognized our true intent. After debriefing, they were released from theexperimental room.

Dependent Variables

Subjects’ perceptions of hotel service quality and overall attitudes to-ward a hotel were measured in this study. A list of nine service beliefswas adapted from SERVQUAL, the widely used instrument for servicequality measurement (Parasuraman, Zeithaml, and Berry 1988). For thepurpose of this study, only the beliefs that are relevant to pre-experienceperceptions and also considered (in pretests) meaningful by the Chinesesubjects were included. These service beliefs are presented in Table 2.Each of the beliefs was measured on a seven-point Likert scale, with 1being strongly disagree and 7 being strongly agree. Using a factor anal-ysis, these nine items were reduced to three factors. The first factor, la-beled Employee Competence, consisted of the following four items:(1) patient and sensitive service employees; (2) prompt and quick ser-vices provided by employees; (3) friendly and warm service employ-ees; and (4) well-trained service employees. The second factor, labeledComfortableness of Stay, consisted of three items: (1) a comfortable ho-tel to stay in; (2) quality food and beverage; and (3) a feeling of being aspecial and valued guest. The third factor, labeled Service Reliability,represented the two remaining items: (1) quick response to serviceproblems; and (2) consistent quality of service. The percentages of thevariances explained by the three factors were 22.89, 21.98, and 16.38,respectively. The Cronbach alpha and factor loading for each belief di-mension are given in Table 2.

As for the measurement of overall attitudes toward a hotel, afour-item (unfavorable/favorable; unsatisfactory/satisfactory; unlik-able/likable; bad/good) seven-point semantic differential scale wasused. These items have been widely employed to measure affectiveevaluations for goods or services in the marketing literature (Ajzen andFishbein 1980). The use of multiple items has been considered appro-priate to capture the complexity of attitudinal judgments. A Cronbach’s


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alpha value of .90 was obtained for the composite measure. This is con-sistent with results reported by previous researchers in the field (Ajzenand Fishbein 1980).

RESULTS AND ANALYSIS

MANOVA and ANOVA were performed to examine the impact ofcountry-of-origin information and corporate identity of hotel chain ontwo sets of dependent variables–specific perceptions and overall atti-tudes. Results obtained from a two-way MANOVA showed a signifi-cant main effect of country-of-origin of hotel on specific perceptions ofservice dimensions (Wilks’ lambda = .726, p < .000; Hotelling’s = .359,p < .000; Pillai’s = .286, p < .000). Univariate analysis (see Table 3) re-vealed that the main effect was significant for all of the three belief di-mensions: employee competence (F (2, 90) = 3.45, p < .05),comfortableness of stay (F (2, 90) = 9.95, p < .05), and service reliabil-ity (F (2, 90) = 2.59, p < .10). The mean ratings (Table 4) show that theHong Kong chain was rated highest on all three beliefs. The Scheffetest, however, indicated that there were significant differences betweenthe Hong Kong and Japanese chains in terms of subjects’ perceptions ofemployee competence (p < .05) and comfortableness of stay (p < .10).


TABLE 2. Results of Factor Analysis for Perceptions of Specific Service Beliefs

Service Beliefs Cronbach alpha and Loading

Factor 1 - Employee Competence Alpha = .76

Patient and sensitive service employees 0.835

Prompt and quick services provided by employees 0.710

Friendly and warm service employees 0.621

Well trained service employees 0.553

Factor 2 - Comfortableness of Stay Alpha = .73

A comfortable hotel to stay in 0.811

Quality food and beverage 0.677

A feeling of being a special and valued guest 0.629

Factor 3 - Service Reliability Alpha = .68

Quick response to service problems 0.839

Consistent quality of service 0.653

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The Hong Kong chain differed from the American chain only in percep-tions of service reliability (p < .10). There were no significant differ-ences between the American and Japanese chains in all three beliefs(p > .10).

These results supported the notion that a country stereotypical biasdoes exist in the area of hotel services. Similar to the general findingsobtained from previous studies on country-of-origin effects involvingphysical products, the effect of country stereotype on service percep-tions was found to vary along with specific service dimensions. Thus,hypothesis 1a was supported.

Similarly, a significant main effect of corporate identity on specificservice beliefs was obtained from the multivariate analysis (Wilks’lambda = .844, p < .05; Hotelling’s = .184, p < .05; Pillai’s = .156, p <


TABLE 3. MANOVA (Univariate) Results for Perceptions of Specific ServiceBeliefs

Source

Dependent

Variables

Sum of

Squares Df

Mean

Square F Sig.

Intercept Competence

Comfortableness

Reliability

1824.398

2072.042

1868.253

1

1

1

1824.398

2072.042

1868.253

1622.188

2631.680

1628.255

.000a

.000a

.000a

COO1 Competence

Comfortableness

Reliability

7.762

15.674

5.943

2

2

2

3.881

7.837

2.971

3.451

9.953

2.590

.036b

.000a

.081c

Identity2 Competence

Comfortableness

Reliability

.844

.116

10.336

1

1

1

.844

.116

10.336

.750

.147

9.008

.389

.702

.003a

COO ×Identity

Competence

Comfortableness

Reliability

2.734E-02

3.086

.953

2

2

2

1.36E-02

1.543

.477

.012

1.960

.415

.988

.147

.661

Error Competence

Comfortableness

Reliability

101.219

70.861

103.266

90

90

90

1.125

.787

1.147

Total Competence

Comfortableness

Reliability

1934.250

2161.778

1988.750

96

96

96

1 Country-of-Origin2 Corporate Identitya Significant at α = .01b Significant at α = .05c Significant at α = .10

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.05). However, the univariate analysis (see Table 3) revealed that onlythe belief dimension of service reliability was significantly affected bythe corporate identity information (service reliability: F (2, 90) = 9.01,p < .05; employee competence: F (2, 90) = .75, p > .10; comfortablenessof stay: F (2, 90) = .147, p > .10). The mean ratings (Table 4) show thathotel service was perceived as being more reliable when the subjectswere provided with corporate identity information about the hotel.While the significant effect of corporate identity information on sub-jects’ perceptions of service reliability was consistent with our expecta-tions, the insignificant results for the other two service beliefs(employee competence and comfortableness of stay) were somewhatsurprising. This may suggest that subjective judgments of employeecompetence and comfortableness of stay are perhaps less demanding


TABLE 4. Cell Means of Perceptions of Specific Service Beliefs

Corporate Identity of Hotel

Absent Present Row mean

Service Quality Perceptions (Anchor: 1 = strongly disagree; 7 = strongly agree):

(a) Employee Competence

Hong Kong Hotel 4.64 4.80 4.72

American Hotel 4.22 4.45 4.34

Japanese Hotel 3.94 4.11 4.02

Column mean 4.27 4.45

(b) Comfortableness of Stay





(c) Service Reliability





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and require less relevant information, compared to the perceptions ofservice reliability. Thus, hypothesis 2a was partly supported.

The relatively insignificant effect of corporate identity was also evi-dent in the absence of a significant two-way interaction involving coun-try-of-origin information and corporate identity on specific servicebeliefs (Wilks’ lambda = .925, p > .10; Hotelling’s = .081, p > .10;Pillai’s = .076, p > .10). It seems that subjects have little or no concernabout what the hotel chain stands for when judging specific service di-mensions. An alternative explanation could be that the corporate iden-tity information was not perceived to be diagnostic for specificevaluations of service quality. While country-of-origin of a hotel ap-peared to play a far more salient role than corporate identity informationin shaping subjects’ beliefs about hotel services, the insignificant effectof interaction between the two experimental variables provided no sup-port for hypothesis 3a.

In terms of overall attitudes toward a foreign hotel, the results of thetwo-way ANOVA (see Table 5) showed significant main and interac-tion effects: country-of-origin of a hotel [F (2, 90) = 5.96, p < .05], cor-

porate identity [F (1, 90) = 4.04, p < .05], and country-of-origin ×corporate identity [F (2, 90) = 3.59, p < .05]. A summary of the main andinteraction effects is shown in Table 6.

From panel A of Table 6, it can be seen that the row mean of the HongKong chain was the highest, followed by the American and Japanese


TABLE 5. ANOVA Results for Attitudes Toward Foreign Hotel Chains

Source

Sum of

Squares Df

Mean

Square F Sig.

Intercept 1964.303 1 1964.303 2885.770 .000a

COO1 8.113 2 4.057 5.960 .004a

Identity2 2.752 1 2.751 4.041 .047b

COO*Identity 4.884 2 2.442 3.588 .032b

Error 61.262 90 .681

Total 2041.313 96

1 Country-of-Origin2 Corporate Identitya Significant at α = .01b Significant at α = .05

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chains (4.87, 4.54, and 4.16). The results of the Scheffe test indicatedthat the significant difference was found only between the Hong Kongand Japanese groups (p < .05). There was no significant difference,however, between the Hong Kong and American chains, nor betweenthe American and Japanese chains. A closer examination of the rowmain effects (as shown in panel A of Table 6) confirmed that there is acountry stereotypical effect of foreign hotel chain on attitudes towardthe hotel. Thus, Hypothesis 1b could not be rejected.

As for the main effect of corporate identity, it was shown (panel A ofTable 6) that subjects expressed more favorable attitudes in the condi-tions involving the presence of corporate identity information. The col-


TABLE 6. Summary of Main and Interaction Effects on Attitudes Toward For-eign Hotel Chains

Corporate Identity of Hotel

Country-of-Origin Absent Present Row Mean RowMain Effect

Panel A. Mean attitude ratings and row and column main effects

Hong Kong Hotel 4.81 4.92 4.87 0.35

American Hotel 4.57 4.52 4.54 0.02

Japanese Hotel 3.67 4.64 4.16 −0.36

Column Mean 4.35 4.69 4.52

Column Main Effect −0.17 0.17

Panel B. Interaction effect of a hotel chain’s country-of-origin and corporate identity

Hong Kong Hotel 0.11 −0.12

American Hotel 0.20 −0.19

Japanese Hotel −0.32 0.31

Notes:1. Attitudes toward Foreign Hotel Chains (Anchor: 1 = strongly disagree; 7 = strongly agree).2. Row and column main effects are calculated by subtracting the grand mean from the respective row and column

means (Panel A).3. Interaction effects are extracted by subtracting the grand mean and the row and column effects from the cell means

(Panel B).

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umn main effects clearly indicate that attitudes toward a hotel becamemore positive when the corporate identity of the hotel was known (vs.unknown), supporting Hypothesis 2b.

Furthermore, according to Umesh et al. (1996), interaction effectsshould be isolated from the observed cell means in order to avoid TypeIV error (i.e., inappropriate interpretation of interaction effects by ex-amining cell means or mean differences). Following the approach sug-gested by Umesh et al., the interaction effects were extracted from thecell means. The results are given in panel B of Table 6. It is apparentthat the presence of corporate identity information had a greater effecton attitudes toward the Japanese hotel (known for less favorable coun-try stereotype) than that toward either the American or the Hong Konghotel (known for more favorable country stereotype). Specifically, itcan be demonstrated from the interaction terms that the magnitude ofthe effect size was the highest for the Japanese hotel (0.63), lowest forthe Hong Kong hotel (0.23), and in between for the American hotel(0.39). Consequently, the joint effects of corporate identity informationand the sourcing country of a hotel are consistent with Hypothesis 3b.

Taken together, the above MANOVA and ANOVA results showedthe existence of country-of-origin stereotype in relation to hotel serviceperceptions as well as overall attitudes toward a hotel. According to ourrespondents, the stereotypical effect was in favor of hotels with a HongKong or American origin, but not one of Japanese origin. On the otherhand, mixed results were observed concerning the impact of corporateidentity information. While the perceptions of specific service beliefswere generally not affected by the presence of corporate identity, sub-jects did have more favorable attitudes toward a hotel when the corpo-rate identity of the hotel was provided. More interestingly, it also wasshown that the benefit of corporate identity information on people’s at-titudes toward the Japanese hotel was significantly higher than thatfound for either the Hong Kong or the American hotel. This suggeststhat a country stereotypical bias, when negatively associated with hotelimage, can be counterbalanced by providing other meaningful relevantinformation.

DISCUSSION AND CONCLUSIONS

It is well known that consumers have broad but somewhat vaguecountry stereotypes that are typically associated with specific productcategories (Papadopoulos and Heslop 1993; Johansson and Thorelli


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1985). French perfume, Swiss watches, German automobiles, and Japa-nese electronics provide just a few examples. Ample evidence suggeststhat there is a tendency for consumers to react favorably to products thatare associated with country stereotypes or images (Papadopoulos andHeslop 1993). Studies also have demonstrated less favorable reactionsof consumers when there is a product-country mismatch (Roth and Ro-meo 1992; Kaynak and Cavusgil 1983).

Stereotyping of this nature, however, has not been examined in thehospitality industry. For example, one may question whether there is acountry stereotypical bias in favor of or against a hotel chain known fora certain country-of-origin. The issues that are related to the question in-clude which country has an advantage in shaping people’s perceptionsand affective responses, and how to counterbalance a negative countryassociation, if any. To address these issues, this study was designed tomanipulate two relevant variables–country-of-origin of a hotel and cor-porate identity–and tried to explore their impact on people’s percep-tions of hotel service as well as attitudes toward a foreign hotel.

While country-of-origin information may trigger country stereotyp-ing or ethnocentrism, the corporate identity manipulation concerns“brand-specific” image for service. These two experimental variablesrepresent extrinsic cues signaling market positions of hotel services. Al-though it has been recognized that extrinsic cues can be used as meansto influence people’s perceptions in regard to hotel services, little em-pirical evidence has been reported concerning the effects of these twovariables.

China is considered to be one of the largest hotel markets outsideNorth America, hence the focus on people’s reactions to foreign hotelchains in China’s hospitality market. The rapid growth of China’s econ-omy has provided dramatic opportunities for foreign hotel chains oper-ating there. The increase in number of foreign hotels, combined withcustomers’ demands for better service quality, have led to increasingcompetition. More and more hotel managers are realizing the impor-tance of capturing the customers’ attention and adopting a market orien-tation. Marketing communication and positioning strategy may welllead to a business advantage by enhancing perceptions of product dif-ferentiation. This study draws the attention of researchers and practition-ers to country-of-origin and corporate identity of hotel as potentiallyimportant variables.

One basic premise in country-of-origin effects is that images of asourcing country have a substantial impact on product evaluations. Re-search has shown that inferences about a sourcing country influence


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consumer perceptions of a product’s attributes and/or overall productevaluations (Han 1989; Hong and Wyer 1989). While it is generallyconsidered beneficial for a product to be associated with favorablecountry images, the benefit may not be capitalized when the productcategory mismatches the strength of the country stereotypes (Roth andRomeo 1992). Results of this study demonstrate the existence of coun-try-of-origin stereotypical effects in relation to hotel service percep-tions and overall affective responses, with the hotel originating fromHong Kong being associated with the most positive perceptions and af-fect, followed by the American hotel. In contrast, the Japanese hotelchain was negatively perceived by the subjects. Providing corporateidentity information appeared to have little impact on service percep-tions of a hotel, although it tended to enhance one’s affective attach-ment to the target hotel. This seems to suggest that corporate identitywas not perceived as diagnostic in forming service perceptions; rather,exposure to corporate identity improves familiarity, which then in-creases liking. Interestingly enough, the increase in liking was found tobe significantly higher for a hotel originating from a source countryknown for less favorable country stereotypes (versus more favorablestereotypes). In this case, the Japanese hotel benefited more by the pres-ence of corporate identity, as compared with either the Hong Kong orthe American hotel chain.

These findings suggest that country stereotyping is not only a phe-nomenon involving consumer goods, but hotel services as well. Moreimportantly, it seems that country stereotypical effects in the context ofhotel services differ somewhat from the extant literature for consumergoods. Contrary to significant advantages of foreign-made appeal formost consumer goods in China’s market (Li, Fu, and Murray 1997),subjects’ perceptions of both specific service beliefs and overall affec-tive judgments were in favor of the “home country” hotel (i.e., the HongKong-based hotel in this case). Even though hotels originating in Japanand in the United States were, in general, equally favored by the respon-dents, the Japanese-based hotel benefited more by providing corporateidentity information. Overall, it appears that Hong Kong- and Ameri-can-based hotel chains have a pioneer advantage in China’s hospitalitymarket (as indicated by country stereotypical effects). There also tendsto be a cultural sensitivity that favors home-country hotels. Thus, for-eign hotel chains operating in China may need to implement a corporateidentity strategy, while at the same time downplaying the country-of-origin of their hotel chain. Hotel chains with positive country-of-ori-gin images, such as Hong Kong chains, should, however, include that


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information in communication strategies and emphasize it in marketpositioning.

Limitations and Future Research

As acknowledged earlier, we tested our conceptual interest in coun-try-of-origin stereotypes underlying foreign hotel chains with the limi-tation of external validity. Since university students are not the targetsegment of foreign hotels in China, the findings of this study must be in-terpreted with the sample in mind. Although the results may not be ap-plicable to psychological states of the target segments (i.e., businesspeople), it appears to be desirable for researchers and practitioners todevote some attention to the issue of signaling effects of country-of-ori-gin and corporate identity in the context of foreign hotel chains operat-ing in China’s hospitality market. Clearly, there appears to be a linkbetween country-image stereotypes and hotel service quality percep-tions and attitudes, and the positive impact of corporate identity in rela-tion to relatively incongruent country images.

A field investigation of the conceptual propositions presented in thispaper, using target customers and real hotel chains, would substantiallyenhance the external validity of this study. The research could be con-ducted by selecting a group of foreign hotel chains located in major cit-ies in China (e.g., Beijing and Shanghai), and then soliciting the input ofbusiness travelers, with the help of each hotel chain. Upon their arrival,pre-consumption perceptions of hotel service quality and attitudescould be measured using a questionnaire in which the researcher wouldmanipulate country-of-origin information and corporate identity. At thesame time, their prior hotel experience and their knowledge of foreignhotels could also be collected. After their stay, a similar questionnairecould be used to see if there are perceptual changes as a result of actualconsumption experience. As such, the researcher can determine the ex-tent to which the signaling effects of country images and corporateidentity vary with hotel experience and knowledge of foreign hotelchains. This appears to be a fruitful direction for future research.

Another research path would be to identify possible causes for thecountry-of-origin effects obtained from this study. Specifically, the in-fluence of such variables as respondents’ ethnocentrism, familiaritywith country-specific hotels, or cultural similarity should be explored.Finally, this research may lead country-of-origin study and marketingimplications further in other service industry sectors, such as food and


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retail services, airlines, and banking. American fast food chains, for ex-

ample, may find it more effective to communicate with consumers in

China by employing a country-of-origin cue. It is expected that this re-

search may stimulate more inquiry into country-of-origin studies in the

service sector.

ENDNOTE

1. “Hong Kong” was replaced with “American” in the experimental conditions ofcell 2 and 5; “Japanese” in cell 3 and 6.

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SUBMITTED: 04/30/01REVISION SUBMITTED: 09/15/01

ACCEPTED: 10/30/01REFEREED ANONYMOUSLY


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people's perceptions of foreign hotel chains in china's market: an empirical study of the...

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