International brand strategy and mode of entry in the services sector: lessons from the financial crisis

Abstract

A financial crisis can have severe implications for the long-term growth of financial institutions. We show that there are brand and mode of entry strategies that can help banks to survive under such difficult conditions. Research of country-of-origin (COO) effects is often very general and focused on tangible goods. Here we focus on how COO effects triggered by country-specific shocks impact the financial services sector during a financial crisis. We also investigate specific strategies that can help financial services organizations survive and grow. In particular, this study investigates how financial services organizations amplify or mitigate COO effects during a financial crisis in cases where country-specific shocks play a role. We show that brand strategy and mode of entry affect consumer evaluations of foreign banks. Two experiments were conducted among Dutch, German, Belgian, Swiss, Greek and American banking customers in the Dutch market. The use of a neutral brand name is generally preferable to using a country-related brand name. Greenfield investment can have a positive effect on bank performance compared to acquiring a local bank, especially when the country-of-origin image is more positive. Interestingly, the loss from a negative macroeconomic shock is limited for the greenfield strategy.