Negative Country-of-Origin Effects: The Case of the New Russia

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 decision-making 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.