Country Resources, Country Image, and Exports: Country Branding and International Marketing Implications

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A country's economic, political, and socio-cultural institutions have always been regarded as important determinants of a company's exports and international marketing strategies. With the recent thinking about countries becoming more like a
  JOURNAL OF GLOBAL MARKETING, VOL. , NO. , –./.. Country Resources, Country Image, and Exports: Country Branding andInternational Marketing Implications Qin Sun a , Audhesh K. Paswan b , and Margie Tieslau c a Department of Marketing, Logistics & Operation Management, Glenn R. Jones College of Business, Trident University International, Cypress, CA,USA;  b Department of Marketing and Logistics, College of Business Administration, University of North Texas, Denton, TX, USA;  c Department of Economics, College of Arts and Sciences, University of North Texas, Denton, TX, USA KEYWORDS Country image; countrybranding; exports;institutional theory; paneldata model; resourceadvantage theory ABSTRACT A country’s economic, political, and socio-cultural institutions have always been regarded as impor-tant determinants of a company’s exports and international marketing strategies. With the recentthinking about countries becoming more like a brand, these factors should impact a country’s mar-keting and branding strategies. There has been a call for more research on how countries can usetheir institutions and resources to enhance their globalization efforts. This study intends to 󿬁ll thisgap by examining the relationships between country institutions and resources, country image, andexports based on institution theory and resource advantage theory. Both archival and primary datafor 󰀲󰀴 countries over 󰀱󰀲 years (󰀱󰀹󰀹󰀵–󰀲󰀰󰀰󰀶) were used to assess a random-effects panel data model. The results reveal the signi󿬁cance of economic development and communication infrastructure onexports. In addition, country image was found to indirectly affect exports. The theoretical and practi-cal implications on country branding and international marketing conclude the article. Introduction The in󿬂uence of a country’s environmental factors(e.g., culture, economic conditions, technology, geog-raphy, policies, etc.) and country image on multi-national corporation’s (MNC’s) strategies have beenextensively investigated in the global marketing lit-erature (Leonidou, Katsikeas, & Coudounaris, 2010;Raven, McCullough, & Tansuhaj, 1994; Vrontis & Thrassou, 2007), and national differences have beenfound to strongly in󿬂uence MNC’s international mar-keting strategies and practices (Levitt, 1983). Someof the extant studies in this area have approachedit from consumers’ perspectives and focused on thepreferences for foreign products or services (Ahmed& d’Astous, 2003; Cheng, Chen, Lai, & Li, 2014; Hamzaoui-Essoussi, 2010; Rosenbloom & Haefner, 2009; Taewon & Smith, 2008). Others have looked at a MNC’sstandardizationoradaptationstrategies(Ryans,Griffith, & White, 2003; Shoham, 1999) or the brand equity after merger or acquisition (Lee, Chen, & Guy,2014). Very few have extended this line of thinkingto the country level and have treated a country as amultinational corporation or a brand. There is a need CONTACT  Qin Sun  Plaza Dr., Suite , Cypress, CA , USA to look at countries as corporations and explore theantecedents of their exports-related strategic issues atthe national level due to increasingly growing com-petition in today’s interconnected global marketplace(Seno-Alday, 2010). This study empirically examinesthe impact of national resources and institutions (e.g.,cultures, economic conditions, technology, geography,policies, etc.) on a country’s exports.The impetus for this study comes from the fact thatpublic policymakers, especially from emerging coun-tries, overtly attempt to increase exports using coun-try branding tactics (Beverland & Lindgreen, 2002;Chan, Chan, & Leung, 2010). There is an increasingconsensus that a country could be seen as a brand(O’Shaughnessy & O’Shaughnessy, 2000; Papadopou-los&Heslop,2002;Sun&Paswan,2011,2012),andthe countries, especially those from the emerging group,can change and improve their country-brand image,which in turn will enhance their exports. For exam-ple, a country’s food can help boost its country imageand thus enhance consumer evaluations of other prod-ucts from the focal country (Jo & Kim, 2014). Thus,countriesneedtode󿬁nehowtheywanttobeperceivedso they can improve and leverage their resources, ©  Taylor & Francis Group, LLC  󰀲󰀳󰀴 Q. SUN ET AL. image, reputation, and brand values to enhance theirexportsandinvestmentopportunities.Countrybrand-ing is considered a tool to build, maintain, or changecountry-brand image. The resources and institutionsof a country are the antecedents of country brand-ing strategies and activities, and because of the het-erogeneity of resources and institutions across differ-ent countries, each country can differentiate itself andenhance its exports. Since most of the extant researchon place and country branding is qualitative, there is aneed for empirical studies to provide more normativeguidelinesforcountrybranding(Gertner,2011).Giventhe increasing interest in country branding amongresearchers, practitioners, and government agencies,the 󿬁ndings of this study should offer signi󿬁cant the-oretical, managerial, and public policy implications.This study makes several contributions. First, to thebest of our knowledge, this study is the 󿬁rst attempt toempirically explore the relationships between exportsand social-cultural, economic, political, and geo-graphic factors. Second, direct and indirect effects of country image on exports are examined, clarifying theimportance of country image in exports. Third, basedon resource advantage and institutional theories, thisstudyexaminestheimpactsofacountry’skeyresourcesandinstitutionsonitsexportsusingdatafrom24coun-tries over 12 years (1995–2006) to get a more realisticpicture of these relationships.The following section details the underlying theo-ries, identi󿬁es our proposed hypotheses, and explainsthe factors that areincluded in the econometric model.This is followed by a description of the panel datamodel. Next, we identify the data sources and explainthe reasoning behind the selection of the countriesincluded in our study. Then, a one-way random-effectspanel data model is developed and assessed. Finally,the󿬁ndingsandimplicationsoncountrybrandingandmarketing are discussed. Literaturereview One of the commonly used theoretical frameworksfor explaining the globalization strategies of 󿬁rmsis the resource advantage theory (Hunt & Morgan,1995, 1996). According to this theory, the compar- ative advantages of a 󿬁rm’s resources will lead to itscompetitive advantage in the marketplace position,which will result in the 󿬁rm’s superior 󿬁nancial perfor-mance. Although resource advantage theory focuseson 󿬁rms or organizations, we argue that a country can be regarded as a “big” 󿬁rm or organization with alarge number of stakeholders. Similar sentiments havebeen voiced in the country branding (Beverland & Lindgreen, 2002; Paswan, Kulkarni, & Ganesh, 2002), international business (Seno-Alday, 2010), and globalmarketing literature (Chan et al., 2010). Thus, like any  organization, a country can achieve superior “󿬁nan-cial” performance (increased exports, for example)by strategically employing its resources to achieve acompetitive advantage in the global market. In thisstudy, we identify several critical resources based onthe literature in international business, global mar-keting, and country branding, and attempt to connectthese factors with a country’s exports.Another commonly used theoretical framework for explaining international marketing is institutionaltheory (Brouthers, 2013; Brouthers, O’Donnell, & Hadjimarcou, 2005; DiMaggio & Powell, 1983; Powell & DiMaggio, 1991; Wu & Chen, 2014). The literature relying on institutional theory suggests that a country’spolitical, regulatory, cultural, and structural (includ-inginfrastructure)institutions signi󿬁cantlyin󿬂uenceacountry’s import and export activities. Although thereis a debate in the literature regarding the impacts of resource heterogeneity on MNCs’ international mar-keting and management strategies across differentcountries, it generally is agreed that the differencesin cultural, social, and economic factors, governmentregulations, infrastructure conditions, and the imageof exporting countries in󿬂uence the employment of adaptation/standardization strategies of the exportingcompanies (Park, 2006; Ryans et al., 2003). Research on country branding also highlights the potentialin󿬂uence of these national-level factors on a coun-try’s exports (Anholt, 2003; Dinnie, 2008; Kotler &  Gertner,2002).Basedonthisreview,thisstudyfocusesonsevenfactorscapturingkeynationalinstitutionsandresources, and examines their relationship with coun-tryexports.Thesefactorsarediscussedinthefollowingsections, along with the associated hypotheses. Culturalfactors—Individualism/collectivism The literature on international business has high-lighted the role of cultural value of a country onan MNC’s international marketing strategies (Park,2006; Ryans et al., 2003) and their entry mode (Shenkar, 2001). Hofstede’s (1980) cultural dimension  JOURNAL OF GLOBAL MARKETING 󰀲󰀳󰀵 is one of the most commonly used frameworks in theinternational business and brand management liter-ature (Craig, Douglas, & Grein, 1992; Erdem, Swait,& Valenzuela, 2006; Gürhan-Canli & Maheswaran,2000). Among Hofstede’sculturaldimensions,individ-ualism/collectivismisfoundtobeacriticalfactorin󿬂u-encingconsumer’sbrandevaluationandpurchasedeci-sions (Pharr, 2005). For example, the collectivism of ChineseAmericansimpactstheirautomobilepurchaseprocesses and decisions (Wu, 2011). Brands that rein-force the collectivist consumers’ need to belong to agroup could enhance their evaluation of product qual-ity and purchase intention (Erdem et al., 2006).Bycomparison,individualisticconsumersrelymoreon personal experiences and less on interpersonalinformation exchange to make brand judgments. Sincecollectivistic consumers tend to conform to norms andgroup behavior while individualistic consumers aremore likely to seek hedonic experiences, we can expectthat country branding strategies would be aligned withtheculturalcharacteristicsofeachcountry(Ryan,2008;Wetzel, 2006; Widler, 2007). For example, countries with collectivistic cultures are likely to focus more onthereinforcementofgroupmembershipandaffiliation,while those with individualistic cultures may promoteindependence and freedom. Although it is reasonableto think that individualistic consumers favor individ-ual cultural values while collectivistic consumers pre-fer collective cultural norms, extant work is somewhatambivalent in terms of evidence on this issue. In thisstudy, the culture of a country is considered as the cul-tural orientation of people in the country, speci󿬁cally individualism and collectivism.The literature on brand management notes that thepurpose of branding is to create positive and favorablebrand image and to increase the 󿬁nancial performanceof the product, the place, or the country. For example,SimonandSullivan(1993)suggestthatproductbrand- ingintendstoincreaseacompany’ssales,revenues,andnet cash 󿬂ows. Similarly, place branding seeks to pro-mote positive destination image to attract more vis-itors (Blain, Levy, & Ritchie, 2005), and the objec-tive of country branding is to promote positive coun-try image to attract foreign tourists, increase exports,andencourageforeigndirectinvestment(Anholt,2003;Dzenovska, 2004; Florek & Conejo, 2006). This discussion suggests that country image, whichrefers to consumers’ perception of a country, servesas an extrinsic cue to evaluate a country’s products(Peterson&Jolibert,1995;Vukasoviˇc,2012)andithasasigni󿬁cantin󿬂uenceonthecountry’sexports(Shoham,1999; Wang, Li, Barnes, & Ahn, 2012) due to its in󿬂u- enceonconsumerpurchasebehaviorandbrandloyalty (Lee, Chen, & Guy, 2014). For example, consumers arewilling to pay a premium price for imported productsfromcountrieswithamorefavorableimage(Koschate-Fischer, Diamantopoulos, & Oldenkotte, 2012), while they may not like to buy products from countries withan inferior image (Giraldi, Ikeda, & Campomar, 2011).In terms of antecedents, a country’s geography, history,art, music, famous citizens, product brands, stereo-types, hosting of major sporting events such as theOlympics, and other factors have a strong impact oncountry image (Kotler & Gertner, 2002; Papadopou- los & Heslop, 2002; Skoko & Vukasovi´c, 2008; Sun& Paswan, 2012). In general, developed countrieshave better country image than developing countries,and fare better in terms of investment and business.Developing countries usually face more challengesthan developed countries, such as unfavorable image,inadequacy of resources for a branding program,a much smaller asset base, and lower internationalattention (Ahmed & d’Astous, 2003; Florek & Conejo,2006). Therefore, this study takes country image as amoderating variable and hypothesizes that it impactsthe relationship between a country’s cultural factorsand exports. This leads to the following hypotheses: H1: A country’s cultural orientation (i.e., individualism vs. collectivism) will be positively associated with thecountry’s exports.H2: A country’s image moderates the relationshipbetween its cultural orientation and its exports. Economicfactors—Economicdevelopment ofacountry  The Country of Origin (COO) literature revealsthat the economic development of a product’s COOhas a signi󿬁cant in󿬂uence on the consumers’ brandevaluation and purchase behavior. Consumers show preferences for products from economically developedcountries rather than those from less developed ordevelopingcountries(Ahmed&d’Astous,2003).Wangand Lamb (1983) found that consumers were mostwilling to buy products made in economically devel-oped countries with a Western cultural base, whileRosenbloom and Haefner(2009) showed that the most  󰀲󰀳󰀶 Q. SUN ET AL. trusted global brands were from the United States.For example, Indian consumers, even those who holdstrong nationalistic sentiments, regard foreign brandsas higher quality and more reasonably priced alterna-tives(Kinra,2006).Inotherwords,economicallydevel-oped countries have more favorable country imagethan less developed countries, which is likely to haveapositiveeffectontheirexports.Inaddition,thecoun-try brand image of economically developed countrieswill further enhance the effect of economic develop-mentonexports.Theseargumentsleadtothefollowinghypotheses: H3: A country’s level of economic development is posi-tively associated with the country’s exports.H4: A country’s image moderates the relationshipbetween its level of economic development and itsexports. Productfactors—Reputablebrandsowned byacountry  Since consumers have stereotypical impressions abouta product’s COO, even though they may not be awareof a brand’s srcin or assume an srcin other than theactual one, their evaluation of and intent to purchase aproductfromaspeci󿬁ccountrywillbeimpactedbythepreexisting perceptions about the products (Verlegh & Steenkamp,1999).Forexample,Francehasagoodrep- utation in perfume, Italy in leather and fashion, Japanin electronics, Germany in cars, and Switzerland inchocolate. These associations impact consumers’ eval-uations of the products from a speci󿬁c country (Insch& McBride, 1998) and their purchase intention (Tse,Kwan,Yee,Wah,&Ming,1996).Inaddition,customerswho possess a favorable image of a country are likely to have positive attitudes toward other products fromthat country (Gürhan-Canli & Maheswaran, 2000).Further, consumer satisfaction with an export nation’sproducts could eventually build a favorable image forthat country (Chan et al., 2010). As the number of favorable products or brands associated with a speci󿬁ccountryincreases,anypositiveattitudeheldbythecon-sumers toward that country will be reinforced, whichwill strengthen the favorable country image they haveand increase their purchase intention toward the prod-ucts from that country. Consequently, we hypothesizethat: H5:Acountry’scurrentinventoryofreputablebrandshasa positive impact on the country’s exports.H6: A country’s image moderates the relationshipbetweenitsinventoryofreputablebrandsanditsexports. Industryfactors—Reputableindustriesinacountry  In line with the arguments presented regarding favor-able images about the products/brands from a coun-try, favorable attitudes toward the industries that pro-duce those products also can be seen as a criti-cal determinant of exports, while negative attitudescould hinder exports (Giraldi et al., 2011; Koschate-Fischeretal.,2012).Forexample,thenegativeimageof Chinese home appliances among Brazilians poses agreat challenge to China. On the other hand, sinceSouth Korea has a reputation for manufacturing high-quality smartphones, tablets, and televisions, con-sumers and investors are likely to hold favorable atti-tudes toward the electronics industry of South Korea.Further, country image is likely to become more pos-itive if a country has more reputable industries. As aresult, it is argued that: H7: A country’s inventory of reputable industries has apositive impact on the country’s exports.H8: A country’s image moderates the relationshipbetween its inventory of reputable industries and itsexports. Infrastructurefactors—Communicationinfrastructure The economics literature documents the signi󿬁cantimpact of infrastructure on the competitiveness of acountry (Bui & Perez, 2010; Ridley, Yee-Cheong & Juma,2006).Ontheonehand,advancedinfrastructurecould nurture economic growth, increase the attrac-tivenessofthecountrytoforeigninvestorsandvisitors,and stimulate its exports (Justman & Teubal, 1995).Ontheotherhand,inferiorinfrastructurecouldinhibita country’s economic growth and discourage exports(Gamble, 2007). For example, the quality of a nation’sinfrastructure can pose a threat to its export perfor-mance,aswiththecurrentsituationinGreece(Vlachos& Patsis, 2004). Likewise, the failure to maintain orimproveinfrastructureplacesexportersinsub-SaharanAfricancountriesataseriouscompetitivedisadvantage(Yeats & Amjadi, 1999). Thus, we hypothesize that: H9: A country’s infrastructure is positively associatedwith the country’s exports.  JOURNAL OF GLOBAL MARKETING 󰀲󰀳󰀷 H10: A country’s image moderates the relationshipbetween its infrastructure and its exports. Geographicfactors—Naturalcommercialresourcesofacountry  The favorable image of a place with which a product isassociatedgivesitacompetitiveadvantageintheworldmarket (Agrawal & Kamakura, 1999). Since countriesinherit heterogeneous natural resources, people have varying perceptions of different regions of the worldandtheirevaluationsofthecountriesvarywiththespe-ci󿬁clocationsofthecountries(Gertner&Kotler,2004).For agricultural products, the variations in climateand natural resources in different regions of the worldin󿬂uence consumers’ belief toward the food productsfrom different countries (Verlegh, 2001). Jo and Kim(2014) also found that people are more favorably dis-posed towards foods from opposite-hemisphere coun-tries than those from neighboring countries. Geo-graphicdistancebetweenmarketsalsoisfoundtoin󿬂u-ence a country’s export marketing strategies (Roth & O’Donnell, 1996). Therefore, it is reasonable to believethat, to promote its exports, a country should takeinto consideration its geography and related resourceswhen designing country branding and export strate-gies. However, there is no clear consensus of the direc-tion of this effect in the literature. Therefore, it ishypothesized that H11: A country’s geographic factors have an impact onthe country’s exports.H12: A country’s image moderates the relationshipbetween its geographic factors and its exports. Politicalfactors—Theeconomicfreedomindex  Political factors also are identi󿬁ed as in󿬂uential envi-ronmental forces for exports (Shoham, 1999). Anation’sinternationalpoliticalactionsandforeignpoli-cies have potential impacts on the way people out-side the focal country perceive it (Rawson, 2007). Acountry’s overall political image could result in bothpositive and negative perceptions by people in differ-ent regions (Nye, 2004), which in󿬂uences foreign con- sumers’ intent to purchase products exported fromthat country (Shoham, 1999). Therefore, countriesfrequently employ public diplomacy strategies toalleviate a negative image or boost the positiveassociations of a country (Melissen, 2005). However,the literature fails to indicate the direction of this rela-tionship between a country’s foreign policies and itsexports. Thus, we hypothesize that: H13: A country’s foreign policies have an impact on thecountry’s exports.H14: A country’s image moderates the relationshipbetween its foreign policies and its exports. Thetheoreticalmodelandestimationtechnique This study uses a panel data model to analyze the rela-tionships between critical national resources and insti-tutionalfactors,countryimage,andexports(Figure1).The panel data model offers two main advantagesover pure cross-section or pure time-series modelsalone. First, it is able to simultaneously analyze thefactors that affect exports both over time  and   acrosscountries. This also allows us to capture any cross-country effects that may exist over time, and any cross-time effects that may exist across countries. Second,the panel data model is able to explicitly capture non-measurable factors, or “unobserved effects,” which dif-ferentiateonecountryfromanotheroronetimeperiodfrom another. The unobserved effects can be capturedby using either a 󿬁xed-effects model, where unob-served effects are viewed as simple autonomous shiftsof the regression function, or a random-effects model,where unobserved effects are viewed as random vari-ables. Our analysis makes use of the random-effectsmodel since the 󿬁xed-effects model cannot includetime invariant regressors, which are present in thisstudy. In particular, the variables that capture culture,products, industries, and geographical factors do not vary over time in the data set. We estimate both one-way random-effects models, in which the unobservedeffects are assumed to exist only in the cross-sectiondimension, and two-way random-effects models, inwhich the unobserved effects are assumed to exist inboth the cross-section dimension and the time dimen-sion.First, we build a basic panel data model without themoderator(i.e.,countryimage).Theone-wayrandom-effects panel data model is:EXP it  = α + β 1 CULTURE i + β 2 GDPPC it + β 3 BRAND i + β 4 INDUSTRY i + β 5 INFRA it + β 6 NATRES i + β 7 EFI it + µ i + ε it  (1)
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