Importance of corporate image for domestic brands moderated by consumer ethnocentrism
| DOI | https://doi.org/10.1108/JPBM-09-2018-2020 |
| Pages | 257-272 |
| Published date | 01 August 2019 |
| Date | 01 August 2019 |
| Author | Weichen Teng |
Importance of corporate image for domestic
brands moderated by consumer ethnocentrism
Weichen Teng
Department of International Trade, Chinese Culture University, Taipei, Taiwan
Abstract
Purpose –Although consumers’tendency to support domestic companies by buying local products is growing, few studies discuss the corporate
branding for domestic brands. This study aims to help domestic brands develop corporate branding strategies by examining the effects of corporate
image of domestic brands on customers’purchase intentions.
Design/methodology/approach –This study investigates various aspects of corporate image, including product quality, corporate ability,
corporate social responsibility (CSR) and local-customer-first (a measure that is identified in this study). It conductsa survey (N= 283) andtests eight
hypotheses with bivariate regression analyses with SPSS, Hayes’PROCESS macro and structural equation modelling with AMOS to identify
significant relationships.
Findings –The results show that all aspects of corporate image have significant positive effects on customers’purchase intentions towards
domestic brands. However, the effect of CSR image on purchase intention is fully mediated by the corporate ability and product quality images,
whereas consumer ethnocentrism moderates the corporate ability and local-customer-first images.
Originality/value –This study contributes to the literature by examining the effect of corporate image on customers’domestic brand purchase
intentions in emerging economies when the product quality image in the country is low. This study also identifies a new factor, local-customer-first,
and its positive effect on purchase intention. It is recommended that domestic brands stren gthen their CSR, corporate ability and local-customer-first
images to gain local customers’support. Furthermore, it is found that corporate ability and local-customer-first are more highly valued by
ethnocentric consumers. These findings can help domestic brands develop corporate branding strategies.
Keywords Corporate social responsibility, Product quality, Consumer ethnocentrism, Corporate image, Corporate branding, Corporate ability,
Brand origin, Domestic brand
Paper type Research paper
1. Introduction
In the era of globalization, the retail market has become
increasingly competitive, as many local brands from different
countries are turning into global brands to compete in the
global market. As such, brand origin becomes an important
determinant of consumer purchase intention (PI). According
to a global consumer survey by Nielsen (2016), a leading
market research company, nearly three-quarters of the
respondents said that their purchase decisions are affected by
brand origin, which is as important ormore important than
other product characteristics, including price, function and
quality.
Meanwhile, another renowned market research company,
McCann, has found that consumers prefer their local brands
more in developed countries than in developing countries
(McCann, 2015).A Reuters’poll showed that up to 70 per cent
of US consumers expressed concern about whether the
products they bought were made in theUSA (Aeppel, 2017).
However, Credit Suisse Research Institute (CSRI, 2017) has
found that local brands are also increasingly leading market
shares in eight major emerging economies –Brazil, China,
India, Indonesia, Mexico, Russia, South Africa and Turkey.
Nielsen (2016) found that the main reasons for consumers in
developed countries preferring local brands are supporting
domestic companies and supporting the development of the
local economy, but consumers in developing countries support
their local brands due to nationalpride.
While modern consumers seem to increasingly support
domestic brands, an interesting question to study is whether
consumers support domestic brandsreluctantly or whether
their support is affected by aspects of corporate image such as
corporate social responsibility (CSR) practices, when surveys
have found that the number of conscious consumers and the
prevalence of ethical shopping are increasing (Bucic et al.,
2012;CSRI, 2017). Further,ifa domestic brand has a negative
corporate image,will consumers still support it?
Although previous studies have foundthat corporate image
such as CSR positively influences consumers’attitudes or PIs
(Lee and Shin, 2010;Pratihari and Uzma, 2018), few studies
have investigated the impact of corporateimage on consumers’
Thecurrentissueandfulltextarchiveofthisjournalisavailableon
Emerald Insight at: https://www.emerald.com/insight/1061-0421.htm
Journal of Product & Brand Management
29/3 (2020) 257–272
© Emerald Publishing Limited [ISSN 1061-0421]
[DOI 10.1108/JPBM-09-2018-2020]
This research did not receive any specific grant from funding agencies in
the public, commercial or not-for-profit sectors. On behalf of all the
authors, the corresponding author states that there is no conflict of interest.
Received 20 September2018
Revised 15 March 2019
11 June 2019
Accepted 13 June 2019
257
PIs towards local brands, particularlytowards information and
communicationtechnology (ICT) brands.
According to a report by Gartner (2018), a renowned
research and advisory company for the ICTindustry, in 2017,
worldwide sales of smartphones recordedthe first year-on-year
decline since they began tracking this market in 2004. The
global smartphone market is in transition; the adoption of
smartphones is nearing its peak in developed countries, and
growth is shifting towards emerging markets (Bajpai, 2016).
Additionally, local brands are competitive in their home
markets such as France, India, Philippines, Russia and Spain
and have emerged in countries as diverse as Indonesia and
Romania.
Due to the advancement of the ICT industry, which includes
the availability of open-source mobile platforms and cheaper
components and the ease of importing products from
manufacturers abroad, smartphone devices have converged in
terms of hardware and software capabilities,as well as material
and design. An increasing number of local smartphone brands
can offer more affordable smartphones to customers without
sacrificing product quality (PQ) and functionality.Thus,
attracting potential customers by offering better specifications
or greater functionalityis not enough for a smartphone brand to
distinguish itself from its rivals in the highly competitive
market. Instead, vendors are turning to brand management
strategies. For example, Fairphone, established in The
Netherlands, uses CSR as its core brand positioningstrategy of
developing ethical smartphones. Conversely, the Philippines’
local brand, MyPhone, which claims to be the first Filipino
mobile phone brand, positionsitself as nationalistic.
As competition in the smartphone industry is becoming
increasingly fierce and many local smartphone brands are
appearing in the market, it has becomeimperative to investigate
factors that influenceconsumers’support of local brands.
Taiwanese consumers’support of domestic smartphone
brands is an interesting case to study. Taiwan is one of the
major smartphone manufacturers in the world. In 2016, its
smartphone shipments accounted for 24.1 per cent of global
shipments, after Chinaand South Korea (MIC, 2017). Taiwan
is also a major supplier of Apple iPhone components, after
China, Japan and the USA (Apple, 2018). Taiwanese
electronics manufacturers, therefore, have proved their
competence in making smartphones. However, unlike other
countries where the top brands in the domestic market are
usually domestic brands, the top two smartphone brands in
Taiwan are foreign brands, Samsung and Apple, rather than
the Taiwanese brands, HTC, ASUS and Acer, which also sell
their products globally.
Why do Taiwanese consumers not support their home-
grown smartphone brands more? The probable direct or
indirect reasons proposed by ICT studies include perceived
usefulness, usability and enjoyment (Hong et al.,2017;
Nascimento et al., 2018), as well as aesthetics (design appeal),
functionality (perceived quality), brand value (brand
popularity) and cultural influences(Filieri and Lin, 2017;Kim
et al.,2016). Hsiao and Chen (2018) also identify and interface
convenience, software, hardware and appearance as possible
reasons. Most of thesereasons belong to the domain of product
branding. In addition, studies on local brands provide other
probable reasons such as ethnocentrism, perceived quality of
the local brand and local iconness (Özsomer, 2012),aswell as
the consumer culture of national ethnic identity (Sobol, et al.,
2018).
Are there other factors, such as the antecedentsof corporate
branding, which influence Taiwanese consumers’support for
local brands? Previous studies have indicated that corporate
image is an important factor that affects consumers’PI
(Nguyen and Leblanc, 2001;WilkinsandHuisman, 2014). As
Taiwan’s smartphone brands have sufferedunfavourable news
reports regarding marketing, as wellas management problems
due to the declining market shares in the competitive global
market in recent years, this study intends to explore how
Taiwanese consumers perceive their home-grown smartphone
brands, particularly in terms of corporate image andwhether
corporations’image affects consumers’PIfor domestic
smartphones.The objectives of this study are as follows:
understanding the concepts of domestic brand and
corporate image;
understanding the effects of corporate image of domestic
brands on consumers’PI; and
understanding the moderation effect of consumer
ethnocentrism (CE) in the relationships between corporate
image of domestic brands and consumers’PI.
To shed light on these objectives, this study conducts a
quantitative empirical analysis. An instrument was developed
and tested, ensuring that common method bias is prevented.
The valid sample (N=283)wasselectedfromasurveyof
college students and a factor analysis was conducted, which
extracted six constructs. The convergent and discriminant
validities were tested with average variance extracted (AVE).
Eight hypotheses and the effects of mediation and moderation
were tested by bivariate regression analyses with SPSS and
Hayes’PROCESS macro. The conceptual modelwas assessed
by structural equationmodelling with AMOS.
The results of this study suggest that domestic brands can
strengthen their corporate image regarding PQ, corporate
ability (CA), CSR and putting local-customers-first to gain
local consumers’support, particularly from ethnocentric
consumers. In addition, as e-commerce has made price
comparison and cross-border ordering easier, it is suggested
that the price discriminationpolicy against the local market that
has often been used by domestic brands in exported-oriented
countries to penetrate the global market should be carefully
used.
This study contributes to the literature by examining the
effect of corporate image on customers’PIs towardsdomestic
brands, with a focus on emerging markets. The CSR image is
found to be able to upgrade the PQ and CA images, and the
local-customer-first image can directlyenhance customer’s PI.
Because it takes time to change consumers’overall impression
of low PQ of products from emerging economies, the domestic
brands are recommended to enhancetheir CSR, CA and local-
customer-first images. The findings can help domestic brands
develop corporatebranding strategies.
The remainder of the paper is structured as follows: the
conceptual framework and methodology are described,results
are then discussed, theoreticaland managerial implications are
derived and followed bythe conclusions, limitations and future
research directions.
Importance of corporate image for domestic brands
Weichen Teng
Journal of Product & Brand Management
Volume 29 · Number 3 · 2020 · 257–272
258
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