Today, the service sector contributes to a major part of the GDP of the most developed countries, while the share of services of the total export of these countries is comparable low. This constitutes certain challenges for the internationalisation of services. With regard to the use of “country-of-origin effects” (COO), the special service characteristics create challenges for service companies, e.g. by the inseparability of service provision and consumption. When decisions on the market entry options are made and local staff is favoured to expatriate staff, incongruence in the COO facets occurs which is difficult to hide. Based on the research on products, this might reduce COO’s positive effects on service consumers’ quality expectations (ESQ). In this context, the question arises whether information on training in the company’s home country (CTI) can reduce the aforementioned negative effect.
In order to examine the existence of these relationships, an online provided self-administered experiment was created. Using a non-probability sample of 100 Germans, respondents were asked to rate two different service examples with regard to the ESQ. In each example, the country of the person providing the service (CPI) was manipulated to be congruent as well as incongruent to the company’s origin. In addition, the CTI was added to incongruent service examples.
Table of Content
1. Introduction
1.1 Services and their Economic Importance
1.2 The Challenging Internationalisation of Services
1.3 Country-of-Origin and its Effects on the Internationalisation of Services
1.4 Purpose of this Work
1.5 Research Questions
1.6 Objective
1.7 Structure of this Work
2. Internationalisation of Services
2.1 Characteristics of Services
2.2 Motives for Internationalisation
2.3 Entry Modes
2.4 Factors Influencing the Selection of Entry Modes
2.5 Approaches to Systematise Services and their Potential for Internationalisation
3. COO Effect
3.1 Critical Analysis of the COO Literature with regard to Products
3.2 Mode of Action of COO Effects
3.3 Critical Analysis of the COO Literature with regard to Services
3.4 COO as Multi-Facet Construct
4. Methodology
4.1 Problem and Research Questions
4.2 Theoretical Framework: Hypothesis, Variables and Manipulations
4.3 Research Design
4.4 Sampling Process
4.5 Research Instrument
4.6 The Pilot Study
4.7 Selection of Services
4.8 Method of Analysis
4.9 Gaining Confidence on the Results
5. Results of the Main Study
5.1 Demographic Information
5.2 Preliminary Work: Calculating the ESQ Value
5.3 Manipulating the CPI Information
5.4 CTI Information in Service Offers with Incongruent CPI Information
5.5 CTI Information to Outbalance Negative Effects based on Incongruent CPI Information
5.6 Summarizing the Results
6. Conclusions and Limitations
6.1 Background
6.2 Conclusions
6.3 Limitations
6.4 Further Research
Research Objectives and Key Themes
This work examines how country-of-origin (COO) effects influence consumer quality perceptions in the service sector, particularly focusing on the challenges posed by incongruence between the company's origin and the origin of the personnel providing the service. It aims to determine if providing information about staff training in the company's home country can mitigate negative impacts on service quality expectations, thereby informing entry mode decisions for international service firms.
- Internationalisation strategies and entry mode decisions for service firms.
- Country-of-origin (COO) effects as extrinsic quality cues.
- The impact of COO incongruence on consumer perception of services.
- Mitigation of negative effects through supplementary information (e.g., training).
- Empirical analysis using SERVQUAL dimensions and Wilcoxon Signed Ranked Tests.
Excerpt from the Book
1.1 Services and their Economic Importance
In the era of globalisation, not only products are increasingly traded around the world, rather services turn out to become an essential element of international trade. Javalgi and White (2002) expect the twenty-first century to be described as “the century of the proliferation of international services” (p. 577). According to Marchetti and Roy (2009) “gone are the days when services used to be considered as non-tradables”, (p.xix). This is evidenced by the fact that in 2009, services to a value of $ 3.4 trillion were traded worldwide (WTO, 2010a) and as the international trade statistics does not cover all services defined by the GATS1, the actual trade is expected to be even higher2.
However, it is not only the dimension which makes it worth drawing attention to, it is rather the pace of growth. The export of commercial services more than doubled from 2000 ($ 1.5 trillion) to 2009 ($ 3.4 trillion) (WTO, 2010a), while the merchandise trade only grew by 3 % annually from 2000 - 2009 (both export and import) (WTO, 2010a). Furthermore, in 2006 to 2008, more than 60 % of worldwide annual foreign direct investments (FDI) were invested in services, while this accounted only for 50 % in 1990 to 1992 (see following figure ) (UNCTAD, 2010).
Summary of Chapters
1. Introduction: Highlights the growing economic importance of the international service sector and outlines the research objective regarding COO effects.
2. Internationalisation of Services: Reviews characteristics, motives, and entry modes for international service firms, emphasizing the role of inseparability.
3. COO Effect: Analyzes existing COO literature for products and services, defining the halo effect and summary construct, and introducing the multi-facet COO approach.
4. Methodology: Describes the design of the online experiment, the formulation of hypotheses, and the use of SERVQUAL dimensions to measure expected service quality (ESQ).
5. Results of the Main Study: Presents the findings from the experiment, showing that incongruent CPI reduces ESQ, while CTI information helps compensate for this effect.
6. Conclusions and Limitations: Summarizes the study’s findings, discusses managerial implications for international service providers, and identifies limitations for future research.
Keywords
Country-of-origin (COO), Internationalisation of services, Service quality (ESQ), Entry mode, SERVQUAL, Consumer perception, Multi-facet construct, Incongruence, Country-of-person image (CPI), Country-of-training image (CTI), Marketing strategy, Cross-sectional research, Consumer behaviour, Foreign direct investment, Globalisation.
Frequently Asked Questions
What is the core focus of this research?
This research investigates how country-of-origin effects impact consumers' quality expectations for services, particularly when there is a mismatch between the origin of the company and the service provider.
What are the primary themes covered?
The work explores service internationalisation, COO effects, consumer quality perception, the role of service personnel, and the potential of training information to mitigate negative perceptions.
What is the main research objective?
The primary goal is to examine if COO still affects service quality perceptions under incongruent conditions and to test if specific information (like training location) can counteract these negative effects.
Which methodology is employed in this study?
The author utilized descriptive, quantitative cross-sectional research, employing an online self-administered experiment with 100 German respondents to test hypotheses through the Wilcoxon Signed Ranked Test.
What topics are discussed in the main body of the work?
The main chapters provide a literature review on service internationalisation and COO theory, a detailed methodological framework, the results of the main experimental study, and subsequent conclusions.
Which keywords best characterize this work?
The core keywords include Country-of-origin (COO), Internationalisation of services, Service quality (ESQ), Entry mode, and SERVQUAL.
How does service personnel origin affect quality perception?
The study finds that consumers tend to associate higher quality with congruent information (where the service provider's origin matches the company's origin) compared to incongruent scenarios.
Can information about staff training compensate for negative effects?
Yes, the results indicate that providing information about staff training in the company's home country can help increase service quality expectations, in some cases fully compensating for the negative impact of incongruent personnel origins.
Are the findings generalizable to all service sectors?
The author emphasizes that the study is limited to "soft" services characterized by high face-to-face contact and does not claim broad generalizability, but rather provides a basis for future empirical research.
- Quote paper
- Nils Peters (Author), 2011, The country-of-origin affect on perception of services, Munich, GRIN Verlag, https://www.grin.com/document/179414
