Overcoming the Negative Product Quality Image of Manufacturers in Emerging Economies

Abstract

Abstract Companies from emerging economies often suffer from perceptions of negative quality for their products. This study investigates, using an experimental design, how manufacturers in emerging countries can make use of warranty strategies to overcome their negative product quality image. Contrary to what is proposed in the warranty literature, our study shows that the use of better warranties for products designed and manufactured by firms in the emerging countries does not improve their product quality image. This is because of the “too good to be true” suspicion by consumers. Strategic alliances with firms in developed countries to produce hybrid products also may not be effective in overcoming the poor quality image for firms in emerging countries. A comprehensive warranty package such as providing full repair and replacement of parts is also effective in altering consumers' trepidation of hybrid products originating from countries of low repute. Implications for strategic alliances between firms in the developed and emerging economies are discussed.