Domestic Bias Research Articles

The country-of-origin dilemma: domestic bias or need for transparency? Assessing consumer’s value of information for country-of-origin labelling in Italy

PurposeThe main objective of this study is to analyze consumers’ willingness to pay (WTP) for country-of-origin (COO) labels of two processed food products, disentangling the value of information (VOI) that consumers place on COO information from the value they place on specific countries of origin.Design/methodology/approachA convenience sample of 96 university students completed a face-to-face experiment that included a multiple price list and a discrete choice experiment. Data are analyzed employing interval censored regressions, and random parameter logit models.FindingsOur results indicate that, on average, consumers place a higher value on origin information when a country name is explicitly mentioned. Furthermore, COO information is, on average, more relevant to consumers for products with low involvement than for products with high involvement. Finally, the effect of ethnocentrism is heterogeneous across product categories.Research limitations/implicationsMandatory COO labeling may or may not reinforce domestic bias, depending on the rationale behind consumer support. If consumers are driven by blind ethnocentrism, it may lead to market inefficiencies. However, if they use COO as a cue to align their stated preferences with their choices, it will not. For this alignment to occur, consumers must be fully informed about product attributes, which requires new and smart methods of communicating product attributes.Originality/valueThe present study contributes to the literature on COO food labels, being the first in Italy to disentangle the VOI consumers place on origin information itself from the value they place on specific countries of origin. In addition, it is the first study that applies this methodology across different product categories, each of which has a different level of cultural sensitivity to consumers.

Separate National Apologies, Transnational Injustices: Second World War Oppression, Anti-Japanese Persecution, and the Politics of Apology in Five Countries

AbstractDuring the Second World War, several Allied countries oppressed Japanese diaspora groups (also known as Nikkei). The United States and Canada apologized in 1988; today, Brazil and Mexico face reparative demands for their persecution of Nikkei communities. There has been no integrated analysis of these interconnected injustices. This article offers a preliminary account, highlighting some of the key transnational factors involved. It also addresses the significant domestic bias of public discussions about the injustices, a bias that ignores the historical centrality of transnational forces in historical processes of anti-Asian oppression. We ask whether the possible spread of apology politics from the US and Canadian cases to Brazil, Mexico, and Australia might help to promote a new political awareness of the transnational character of the wartime oppression of Nikkei civilians in Allied countries. However, our analysis reveals that the politics of apology tends to promote domestic bias in public understandings of anti-Japanese racism. Indeed, to the extent that transnationality emerged in our cases, it was in the perverse form of “White civility” comparisons that chided countries in the Global South to emulate their allegedly more advanced apologetic counterparts from the North. Yet, there remain compelling reasons for domestic political apologies in our cases. The point is not to proscribe apologies but rather to understand their biases and, in the cases at hand, to use the spread of apology debates in our cases to promote a more widespread understanding of transnationality in the production of anti-Asian racism and White supremacy.

Looking at the brain: Neural effects of “made in” labeling on product value and choice

International business research posits that, under certain circumstances, consumers prefer goods manufactured in their own country regardless of their country of origin image. Yet the psychological origin of such Domestic bias remains unknown. This study presents a neuroimaging experiment developed in Spain. The task combined low and high involvement goods marked with Domestic “Made in Spain” and Foreign “Made in USA” (similar culture) and “Made in China” (different culture) labels. The findings reveal that Domestic goods always convey neural rewarding sensations. Neural aversive biases toward Foreign goods occur only when the products are culturally different and high involvement. These findings help improve business retailing strategies.

Better the devil you know: Home and sectoral biases in bank lending

This paper empirically investigates banks’ lending and the extent to which they are influenced by specific preferences in terms of geographical location and industry. We study whether banks develop a field of expertise and focus on it, or whether they prefer to grant loans quite evenly among countries and industries. We manually built an original database of syndicated loans for banks in the four major banking systems in the eurozone, to estimate the determinants of loans’ amounts between 2005 and 2013. Our findings highlight a domestic bias and a sectoral bias with banks lending larger amounts to their domestic borrowers and to industries they are more familiar with.

Evaluating domestic bias on airline passengers’ ratings: The moderating effect of cultural value orientation

Abstract We explore differences in airline passengers’ online ratings toward domestic and foreign carriers. Using a dataset of more than 380,000 airline passenger reviews obtained from TripAdvisor, we show that on average passengers express higher satisfaction (as proxied by their overall rating) for airline service encounters with domestic carriers, exhibiting a form of domestic bias. Using Hofstede’s framework, we examine how cultural dimensions influence the strength of this bias and find support for the moderating impact (positive and negative) of passengers’ cultural dimensions on their provided ratings toward domestic airlines. The study has theoretical and practical implications for international marketing researchers and airline operational planners.

Effects of Country of Origin in Product Categories: A Study Concerning Italy and Great Britain

This study examines country-of-origin in terms of the fit between two countries (Italy and Great Britain) and product categories. A framework is suggested which matches the importance of product category dimensions with the perceived image of the country-of-origin along the same dimensions. Such matches (or mismatches) can influence or not the customers in their decisionmaking process in a different manner concerning the country. Data collected from consumers in Italy and Great Britain demonstrate that strategic implications can increase sales in some category. This study has underlined the presence of an important domestic bias concerning convenience goods category, especially in food purchases. Instead, in specialty goods category, the customer seems to identify and prefer specific countries, and goods are critically evaluated for their origin.

How Government Procurement Measures Can Affect Trade

A number of countries used discriminatory government procurement policies as part of stimulus packages designed to alleviate the effects of the global economic crisis. This article collates and updates the evidence related to the size of procurement markets, the level of home bias they exhibit, and the effectiveness of multilateral and bilateral procurement agreements in reducing that bias. The share of procurement in GDP has been increasing gradually since 1995 with clear spikes during 2000–2002 and 2008–2010, the latter in response to the global economic crisis. The analysis presents evidence of domestic bias in government procurement markets, bias which has been increasing over recent years. The analysis in this article suggests that the results of international efforts to address home bias in government procurement have been mixed to date. The World Trade Organization’s Government Procurement Agreement (GPA) is found to reduce discrimination in procurement markets, although available – but limited – evidence does not indicate a significant effect for bilateral agreements. The evidence suggests liberalization of investment barriers undertaken in parallel with trade agreements increases the ability of those agreements to reduce discrimination. This suggests that countries negotiating procurement agreements could also benefit from negotiating investment agreements in parallel.

Effect of Perceived Crisis Response on Consumers' Behavioral Intentions During a Company Scandal – An Intercultural Perspective

Abstract In the context of a multi-national company scandal, namely Volkswagen's Dieselgate, we examine the effect of customers' perception of organizational crisis response on their revenge and avoidance intentions in different cultural settings. Using data collected in the US and in Germany, we are able to show that the perception of appropriate crisis response reduces customers' revenge as well as avoidance intentions. However, due to the domestic bias of German respondents, the mechanism linking perception of the organization's crisis response to the respective outcomes differs between Germany and the US. Our results demonstrate for the first time that domestic bias is not always associated with being an amplifier of positive factors; rather, in the context of an organizational scandal, it dampens the effects of organizational crisis response.

Broad and Narrow Country-of-Origin Effects and the Domestic Country Bias

ABSTRACTAcross three studies and three countries, this research specifies the effect of consumer ethnocentrism on domestic country bias. Extending extant research, it distinguishes the moderating effects of broad (country image, country production image) and narrow (country product category image) country-of-origin effects, demonstrating that the latter mitigate domestic country bias more strongly than the former. Moreover, nationality emerges as an antecedent of consumer ethnocentrism and domestic country bias. The findings enable international marketers to predict domestic country bias in different country markets. Additionally, this research advocates using a finer-grained, narrow view of country-of-origin effects, instead of a broad perspective.

European defence industry consolidation and domestic procurement bias

ABSTRACTHow have European cross-border defence industrial mergers and acquisitions affected domestic procurement bias among the major EU powers? This article departs from the findings of Andrew Moravcsik more than two decades ago suggesting that major West European states had no ingrained preferences for defence industrial autarchy. When cross-national armament projects were derailed, this could be attributed to political efforts of national defence industrial champions favouring purely domestic projects. As former national champions join pan-European defence groups, their preferences are likely modified. Does this shift procurement towards non-European “off-the-shelf” solutions which, according to Moravcsik, are favoured by defence departments? Or does it give impetus to a stronger preference for European as opposed to domestic systems? In this article, procurement patterns in the aftermath of cross-border defence industry consolidation will be analysed. Procurement bias is assessed in two industry segments characterised by pervasive consolidation.

Direct and indirect price discrimination in the automotive industries of the European Union

Using a panel dataset comprising of 51 models across 21 European Union member states, I estimate the effects of country-specific factors that make price discrimination profitable. Taking advantage of cross-country heterogeneities, I find that a domestic brand bias, per capita income, and income inequalities lead to significantly different prices across borders. The role of income inequalities is supported by a theoretical model of indirect price discrimination at the national level. We therefore conclude that not only direct international price discrimination, but also indirect national price discrimination is responsible for the observed price differentials across international borders, which are not likely to fully converge as long as the exclusive dealership system is in place, and significant demand-side differences still remain.

Product Designing through Conjoint Analysis and Curve Fitting of Financial Data: A Case of Birla Tyres

This case study focuses on the product designing of domestic bias tyres of trucks and bus. There are some attributes of tyres by which potential customers are focusing on these attributes but by taking the most significant attributes like “Application”, “After sales service” and “Rim size” and using the conjoint analysis technique the best combination has been selected. For financial data the curve fitting method of least square of straight line parabolic curve methods are applied for forecasting for the next 10 years and the comparative study also carried out for managerial implication of this company.

Impact of Culture and Patriotism on Home Bias in Bond Portfolios

Extant research has documented a substantial impact of culture and patriotism on equity home bias. This paper examines whether culture and patriotism influence home bias in bond portfolios. In this respect, I differentiate between two different aspects of home bias: domestic bias (overinvestment in domestic debt securities) and foreign bias (over- or underinvestment in debt securities issued by different host countries). The analysis uses the Coordinated Portfolio Investment Survey data over the 2004-2012 period and relies on extensive robustness checks based on four internationally recognized cross-cultural research projects: the GLOBE study of House et al. (2004), the Cultures and Organizations of Hofstede et al. (2010), the International Social Survey Program, and the World Values Survey. There is strong evidence that patriotism deters foreign investment and increases overinvestment in domestic bonds. Investors from countries with higher levels of uncertainty avoidance invest less in foreign debt markets.

Cultural Influences on Domestic and Foreign Bias in International Asset Allocation

This paper examines determinants of domestic (investors overweight their domestic market) and foreign bias (investors over- or underweight foreign markets) in international asset allocation from 26 developed and developing countries. In particular, we document robust evidence that country-specific variables on familiarity and cross-cultural variables have significant impact on portfolio allocation in country’s equity portfolios. Furthermore, we confirm significant influence of economic development and stock market development on both domestic and foreign bias, while the effects of indirect channels such as capital control or investor protection are only slight.

Cultural Influences on Domestic and Foreign Bias in International Asset Allocation

Cultural Influences on Domestic and Foreign Bias in International Asset Allocation

Does hosting the Olympic Games matter? Canada and Olympic Games images before and after the 2010 Olympic Games

A cross-national, longitudinal study of Canadian and US respondents examined impacts of the Vancouver Olympic Games (VOG) on images of the host country, Canada, and the Olympic Games (OG) itself. Questionnaires were completed before and after the VOG on four distinct attitude objects: Canada as a vacation destination, the country/people of Canada, and the VOG as a destination and an event. Repeated measures MANOVA indicated positive impacts of the VOG but differences across the two populations. Little change was seen in OG images and interest among Americans, but major improvements occurred among Canadians. Differences in perceptions of the domestic and foreign populations towards the host country appeared, confirming earlier research on domestic bias effects. Results indicated hosting the OG contributed to improved images for Americans of Canadians, Canada as a country and as a destination. Canadians evidenced increased pride in their own country. Findings indicated mutual positive benefits for Canada and the OG images and interest.

The Determinants of Domestic and Foreign Bond Bias

This paper studies the determinants of the domestic and the foreign bond biases and their evolution over time using aggregate bond allocation data from CPIS. Our results show that the home bias is prevalent across all countries, despite the decreasing of the domestic bias in most countries in the 1997-2009 period. We find that the domestic bond bias is lower in countries with higher economic development, higher restrictions on foreign capital transactions, more developed bond markets, higher familiarity, and higher efficiency of the judicial system. When investing overseas, investors also prefer to allocate their investments in countries with higher economic development, lower restrictions on capital flows, more developed bond markets, stronger judicial systems, and higher past returns. Additionally, we find that familiarity (i.e. geographic proximity, common language, and bilateral trade) is a major determinant to decrease the foreign bias. Finally, there is no evidence that investors’ bond allocations are explained by diversification opportunities as proxied by bond markets correlations.

The determinants of domestic and foreign bond bias

This paper studies the determinants of the domestic and the foreign bond biases and their evolution over time using aggregate bond allocation data from CPIS. Our results show that the home bias is prevalent across all countries, despite the decreasing of the domestic bias in most countries in the 1997–2009 period. We find that the domestic bond bias is lower in countries with higher economic development, higher restrictions on foreign capital transactions, more developed bond markets, higher familiarity, and higher efficiency of the judicial system. When investing overseas, investors also prefer to allocate their investments in countries with higher economic development, lower restrictions on capital flows, more developed bond markets, stronger judicial systems, and higher past returns. Additionally, we find that familiarity (i.e. geographic proximity, common language, and bilateral trade) is a major determinant to decrease the foreign bias. Finally, there is no evidence that investors’ bond allocations are explained by diversification opportunities as proxied by bond markets correlations.

Domestic and foreign country bias in international equity portfolios

Distinguishing two components of the preference for geographical proximity – the domestic country bias assessing investors’ holdings within the domestic market, and the foreign country bias assessing investors’ bilateral holdings within a particular host, I document a number of stylized facts related to international equity portfolios. First, investors in emerging countries hold systematically larger shares in their local markets compared to investors in developed countries. Second, while investors generally allocate trivial shares to most of the available destinations and completely disregard the remaining ones, I report several positive country bias ratios suggesting that the source country's investors overweigh the destination market. Third, the portfolio equity held in only a small number of destination markets generates much of countries’ existing foreign assets. I refer to this observation as the geographical shrinkage suggesting that the domestic bias coexists with an equally imperfect diversification of investors’ foreign asset holdings.

The Changing Nature of International Institutions in Europe: the Challenge of the European Union

The European Union is often compared to other political systems in order to better understand its basic features and how they structure politics. This article argues that this focus on comparative politics instils a domestic bias into the study of the EU, which also ignores the impact of enlargement. To remedy this, a comparison is suggested between the order of the EU as a regional international society and the order of the traditional, global international society as analysed by the English School of International Relations, and in particular by Hedley Bull. It is argued that the primary goal of the international order of the society of states, the preservation of states as its fundamental units, has been replaced by the goal of the preservation of peace in Europe. Consequently, the five core institutions of international order identified by Bull (balance of power, international law, diplomacy, war and great powers) have been modified or replaced. The new institutions of the European order are identified as the pooling of sovereignty, the acquis communautaire, multi‐managerialism, pacific democracy, member state coalitions and multiperspectivity. These sustain and enlarge a regional international society that not only combines international and domestic elements, but transforms politics to such an extent that it should better be called a multiperspectival society, confounding Bull’s expectation that the European integration will either lead to a European state or falter. This has potential ramifications for the organisation of international society at large, although whether the transformative potential of the EU can be realised remains to be seen, and will be decided above all in the EU’s treatment of its own borders.