Country of Origin as a Constraint to Internationalization

Abstract

Objective – Globalization has enabled the increase of competitiveness and opportunities for companies to sell their goods to worldwide consumers. Due to the wider range of products offered and increasing similarity of those products, the country of origin becomes an important variable when studying the evaluation process of foreign products. The origin of a product acts as a mark of quality, which ultimately influences the purchase intentions of consumers. When negative, this may act as a constraint on internationalization, making it difficult to accept a product from a certain origin. There is, therefore, a gap in how companies can mitigate and overcome a negative country of origin effect (COE). This study seeks to fill this gap and suggest strategies to overcome this issue. Methodology/Technique –The methodology applied in this study is the Grounded Theory. The data was collected from interviews with Portuguese entities, so different cases can be compared and discussed. Although Portugal’s image has changed over time, there remains a stigma associated with it. The most recent financial and political crisis has damaged the perception of Portugal in the international sphere, hence, it has been selected for the formation of a negative COE. Findings and Novelty – Some firms currently have existing strategies to resist the negative effect of country of origin, such as improvement of brand awareness, credibility and international visibility. To achieve that, companies must adopt a wide set of strategies which involve both defensive and offensive approaches. Type of Paper: Empirical Keywords: Country of Origin; Country of Origin Effect; Internationalization; Constraints; Grounded theory. Reference to this paper should be made as follows: Meneses, R.; Santos, S. 2019. Country of Origin as a Constraint to Internationalization, J. Bus. Econ. Review 4 (2): 105 – 113 https://doi.org/10.35609/jber.2019.4.2(5) JEL Classification: F6, F60, F69.