Negative Country-of-Origin Effects: The Case of the New Russia
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GeorgetownUniversity Abstract. With the political and economic changes in Eastern Europe, there is an increasing need to market successfully products from these countries in the industrialized world. This paper explores the extent to which the risk attitudes, political convictions, and country-of-origin associations of individuals affect the buying decision of a product from a controversial source country. On a theoretical level, it is investigated where in the decisionmaking process political convictions and country-of-origin effects emerge most forcefully. Hypotheses are tested empirically against survey data on farmers' evaluations of tractors from several countries, including the Russian-made Belarus. The data analysis involves the specification of a recursive system encompassing the steps the buyer goes through from product evaluation to purchase. The effects of political convictions, risk attitudes, and the country-of-origin connection are evaluated at each stage in the process. Implications are derived for potential strategies on the part of Russian manufacturers. BACKGROUND The emergence of a market orientation in the former Soviet Union has raised the urgent question of competitiveness of its products in Western markets.' Early indications are not positive, with products suffering from low quality and poor service. The Soviet tractor "Belarus" was introduced in the East Coast market of the United States in 1987. It is a newcomer in a field dominated by wellestablished Western makes (Deere, Ford, Massey and Deutz, for example) but its price, which is about 50% of comparable makes, has secured sales *JohnyK. Johanssonis the McCrane/Shaker Chairholderin InternationalBusiness and Marketingat GeorgetownUniversity. He has held faculty positions at the Universityof Washingtonand the Universityof Illinois, as well as many visiting appointmentsin several countries. **IlkkaA. RonkainenandMichaelR. Czinkotaare on the Facultyof Marketingand International Businessat GeorgetownUniversity.Theyareco-authorsof International Marketing (fourthedition)and International Business (thirdedition),both published by the DrydenPress. The researchwas supportedby the GeorgetownCIBER. Received:October1991;Revised:January,May,August& September1993;Accepted:September1993.
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JOURNAL OF INTERNATIONALBUSINESS STUDIES, FIRST QUARTER 1994
in new markets. This introduction of the Belarus provides the opportunity to test the accumulated country-of-origin (CO) knowledge under conditions of controversy. Furthermore,studying farmers' reactions to the Belarus may generate answers to critical questions on the market potential and marketing challenges for Russian products in the West. To accomplish this task, a model of the buying process that a farmer would go through in purchasing a tractor is first constructed. Identification of the major dependent variables allows assessment of t
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