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Consumer animosity in the global value chain: The effect of international production shifts on willingness to purchase hybrid products

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Abstract

The escalation of international offshoring and outsourcing in recent years has resulted in a proliferation of “hybrid products” for the typical multinational enterprise, with multiple country affiliations for branding, design, manufacture, assembly and parts sourcing. However, little has been written regarding the impact of consumer animosity on such hybrid activities, or the role of universal values in a hybrid production animosity model. In this paper we extend the consumer animosity literature to a firm's global integration activities for hybrid products. We posit that consumers’ willingness to purchase (WTP) a complex hybrid product is negatively affected by partial production shifts to an animosity-evoking country, and that self-reported animosity toward the country predicts lower WTP above and beyond consumer ethnocentrism and perceived product quality. In addition, we hypothesize a negative relationship between conservation values and WTP hybrid foreign products, and a positive relationship between openness values and WTP hybrid foreign products. A study of 319 US consumers revealed consistent support for these hypotheses, with the exception of the conservation values – WTP relationship. Practical implications and future research directions are discussed.

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Notes

  1. We focus on Schwartz's (1994) value system as opposed to Hofstede's (1980) system because Schwartz's system is appropriate for individual-level analysis, whereas Hofstede's system is more appropriate for cross-cultural comparisons (cf. Schwartz, 1997).

  2. We used a six-point scale with no “neutral” category because we believed this forced choice scale would cause respondents to consider their feelings associated with the scenario more carefully, and be more discriminating in their responses (cf. DeVellis, 2003).

  3. Two preliminary studies provided evidence of discriminant validity and internal consistency for the CES, JPQ and animosity scales. In the interest of space, we omit a detailed discussion of those results. We also compared the brief CES and JPQ scales used in our analyses with their longer, original versions (Klein, 2002; Shimp & Sharma, 1987). Results revealed that the short and long versions of these respective scales correlated very highly (CES, r=0.96; JPQ, r=0.98, p<0.001). Hence, use of the shorter scales did not appear to present a significant interpretation problem.

  4. The positive relationship between conservation and openness values may appear counter-intuitive, but it is not uncommon when measuring values, as individuals differ in their tendency to rate values as more or less important. To correct for scale usage, Schwartz (1994) recommends using the average response across all value items as a co-variate. We explored this possibility, but the average value was so highly correlated with the two value indexes that it introduced problems of multicollinearity. By including openness and conservation values in the same model, however, we are examining each value's relationship with WTP after controlling for the other value, which helps correct for individual differences in scale usage.

  5. Following an anonymous reviewer, we tested the significance of the path from animosity to JPQ and evaluated the extent to which the structural models were invariant across gender and experimental condition. In support of most prior animosity research, the path from animosity to JPQ was not significant (p>0.22). In addition, cross-group equivalence analyses (Brown, 2006; Kline, 2005) suggested invariance across gender and experimental condition (i.e., in no case did the unconstrained model show a significantly better fit to the data than the model in which the structural paths were made equivalent; p>0.49). Based on the latter findings, in our final models we present the results of the entire sample incorporating gender and experimental condition as predictor variables. We also evaluated whether animosity might interact with conservation and/or openness values. However, neither interaction was significant (p>0.42).

  6. We estimated the impact of production shifts to Iran and India (Figure 3) on US Toyota Corolla financial results by first calculating the percentage of variance in WTP explained by these two variables (12.58%, which is the sum of the squared coefficients for production shifts to India and Iran). Since we did not measure actual purchase or ownership, we calculated a range of financial impacts based on the percentage of variance explained in purchase change behavior by the willingness to buy variable in Shoham et al.'s (2006) study (14.44%) as well as the percentage of variance explained in actual ownership by the willingness to buy variables in Klein et al.'s (1998) and Klein's (2002) studies (23.04% and 18.73%, respectively). For example, the low-end impact was calculated as the R-square from our model (12.58%) times Shoham et al..'s variance (14.44%) times Toyota's CY06 US Corolla sales (387,388 vehicles), resulting in an impact of about 7000 vehicles. We consider this range to be a reasonable and conservative proxy for the actual financial impact. In fact, the Klein (2002) R-square calculation sits in the middle of the range and is a good point estimate for our study as it is based on Japanese car ownership and a US consumer sample.

  7. We tested for common methods bias in three ways. In two preliminary studies, we tested for socially desirable responding using a well-known scale developed by Strahan and Gerbasi (1972), and performed a Harmon's one-factor test and a confirmatory factor analysis (with one factor relating to all measurement model variables according to Podsakoff et al., 2003). Complementing these tests, in the current study we performed an additional confirmatory factor analysis (per Podsakoff et al., 2003). Results of all three analyses were favorable, suggesting that common methods bias was not a pervasive problem in the current study.

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Acknowledgements

We are grateful for the generous financial support of the Department of Management and Operations and the Department of Marketing at Washington State University. We also thank Area Editor Daniel Bello and four anonymous reviewers whose comments and guidance were instrumental in the development of this paper.

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Authors and Affiliations

  1. College of Business and Management, Northeastern Illinois University, Chicago, USA

    Charles A Funk

  2. Department of Management and Operations, College of Business, Washington State University, Pullman, USA

    Jonathan D Arthurs

  3. College of Business, Loyola University New Orleans, USA

    Len J Treviño

  4. Department of Marketing, College of Business, Washington State University, Pullman, USA

    Jeff Joireman

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  1. Charles A Funk
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Accepted by Daniel Bello, Area Editor, 12 January 2009. This paper has been with the authors for three revisions.

Appendices

APPENDIX A: SCALES

Japanese Product Quality (modified from Klein, 2002)

Products made by Japanese companies are carefully produced and have fine workmanship.

Products made by Japanese companies show a very high degree of technological advancement.

Products made by Japanese companies are usually quite reliable and seem to last the desired length of time.

Products made by Japanese companies are usually a good value for the money.

Consumer Ethnocentrism (modified from Shimp & Sharma, 1987)

It is not right to purchase foreign products because it puts Americans out of jobs.

A real American should always buy American-made products.

We should purchase products manufactured in America instead of letting other countries get rich off us.

Americans should not buy foreign products because this hurts American business and causes unemployment.

Animosity toward Canada

I do not like Canada.

I feel angry toward Canada.

I feel angry toward Canada because of their dependence on the US for their national security.

I cannot forgive Canada for their failure to support the US in the international arena.

Animosity toward Iran

I do not like Iran.

I feel angry toward Iran.

I feel angry toward Iran because they are not negotiating in good faith on the issue of nuclear weapons.

I cannot forgive Iran for their taking of US hostages in 1979.

Animosity toward India

I do not like India.

I feel that India is taking advantage of the US.

I cannot forgive India for their participation in outsourcing from US companies.

I cannot forgive India for their neglect of fair dealings with the US in the economic arena.

APPENDIX B: WILLINGNESS TO PURCHASE SCENARIOS

Canada scenario

The Toyota Corolla is a compact sedan manufactured by Toyota Corporation (a Japanese company) in its Ontario, Canada facility. The Corolla has won the J. D. Power and Associates quality award in its class for the past three years, and is regularly given a “recommended buy” rating by Consumer Reports magazine. At 30 million cars sold since its introduction in 1966, the Corolla is the best-selling car in the world.

Paragraphs added to Canada scenario for the India scenario

While over 97% of the parts for the Corolla are currently sourced from the Canadian operation, Toyota recently concluded an agreement with Daewoo Corporation, a South Korean auto manufacturer, to purchase their drive train (transmission and steering components) and engine components plant located near the Indian Ocean port of Bombay, India.

Toyota made this purchase in order to expand its Asian presence and to take advantage of the plant's world-class quality and overall cost advantage. Because of Toyota's strict supplier certification program for all components, this sourcing change will not affect the price, quality or styling of the Corolla, and the remainder of the car will continue to be produced in Canada.

Paragraphs added to Canada scenario for the Iran scenario

While over 97% of the parts for the Corolla are currently sourced from the Canadian operation, Toyota recently concluded an agreement with Daewoo Corporation, a South Korean auto manufacturer, to purchase their drive train (transmission and steering components) and engine components plant located near the Persian Gulf port of Abadan, Iran.

Toyota made this purchase in order to expand its Middle Eastern presence and to take advantage of the plant's world-class quality and overall cost advantage. Because of Toyota's strict supplier certification program for all components, this sourcing change will not affect the price, quality or styling of the Corolla, and the remainder of the car will continue to be produced in Canada.

Dependent Variable

Please assume that you are interested in purchasing a compact automobile. How likely is it that you would purchase the automobile described above?

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Funk, C., Arthurs, J., Treviño, L. et al. Consumer animosity in the global value chain: The effect of international production shifts on willingness to purchase hybrid products. J Int Bus Stud 41, 639–651 (2010). https://doi.org/10.1057/jibs.2009.29

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