Made in China but sold at FAO Schwarz: country‐of‐origin effect and trusting beliefs

Abstract

Purpose The purpose of this paper is to investigate the moderating effect of trusting beliefs about a store on country‐of‐origin (COO) effects. The paper suggests that three trusting beliefs (ability beliefs, benevolence beliefs and integrity beliefs) about a retail store moderate negative effects of COO on product evaluation and purchase intention. However, under high manufacturer risk conditions, only benevolence beliefs moderate the negative COO effects. Design/methodology/approach The toy industry is chosen as the study context. The first three hypotheses are tested with survey data collected from 224 participants. The last hypothesis is tested with data collected from 338 participants. Hierarchical moderated regression was used in the testing of the hypotheses. Findings The results show that while only benevolence and integrity beliefs about a store weaken the negative effect of COO on product evaluations, all three trusting beliefs lessen the negative impact of COO on consumers' purchase intentions. However, when manufacturer risk is high, only benevolence beliefs have a significant moderating effect. Practical implications The findings show that manufacturers can reverse the negative cycle, or at least minimize their losses, if they choose those retailers that consumers have high trusting beliefs about as their channel members. Similarly, if they can signal that they are benevolent and honest stores, retailers can balance their customers' negative evaluations of products made in certain countries with negative image. Research limitations/implications Given the recent product recalls and concerns, the toy industry presents an ideal case to study the effect of trusting beliefs on COO effects. Nonetheless, the focus on a single industry does limit the generalizability of the findings. The authors recommend that future researchers examine these relationships in studies focusing on other product categories. Originality/value To the best of authors' knowledge, this is the first study that investigates the impact of individuals' trusting beliefs about a store on COO effects.