Does the direction of offshoring matter? Comparison of downward and upward offshoring strategies in changing consumers’ brand perception by brand tiers

Abstract

Offshoring strategies raise a critical question to defining the country images of brands, as offshoring results in discrepancies between the country-of-brand origin (COB) and the country-of-manufacture (COM) by relocating COM from the home to another country. Based on cognitive dissonance theory and social exchange theory, this study assesses the outcomes of apparel brands’ differing types of offshoring strategies by tracing consumers’ brand perception as these change after the revelation of offshoring information, particularly by comparing those outcomes between an upscale brand and a midmarket brand. Results from an experimental study revealed that a brand originating from a developed country’s offshoring from a developing country can significantly decrease brand credibility and prestige, while a brand originating from an emerging country’s offshoring from a developed country does not significantly improve those brand assets in either the upscale or the midmarket brand contexts. The paper concludes with a discussion of theoretical and managerial implications along with suggestions for future research.