The Role of Governments in Improving Country-of-Origin Effects
Tanizawa, Atsushi
2011
- Submitted in partial fulfillment of the degree of Master of Arts in Law and Diplomacy at the Fletcher School of Law and Diplomacy. Abstract: Consumers evaluate products not only by explicit attributes such as brand, price, or design but also by perception of country where those products are made. Such effects that country of origin has over products are called the country-of-origin effects. Many ... read moreresearchers have studied this topic since 1960s and the number of research articles on the country-of-origin effects was still high in 2000s. In addition to the academic researchers, there are many governments trying to brand their images in order to take an advantage of the country-of-origin effects. Advertisement campaigns and brand experience management programs, such as quality controls, are utilized for the branding. Building upon these researches and practices, the purpose of this thesis is to analyze possible conflicts between country image policies and industrial policies and to suggest ways to manage this friction. Governments need to consolidate the branding policies with other industrial policies because brand experience management programs can be in contradiction with economic competitiveness of industries. Excessive quality controls over products, for example, weaken innovative dynamism of industries by restricting activities of firms. Having said that, brand experience management programs are indispensable because, as previous cases indicate, advertisement campaigns are often insufficient. For instance, reputation of quality of Japanese products is largely a result of the regulatory export inspection mechanism. Therefore, it is important to harmonize branding policies and other industrial policies in order to utilize the country-of-origin effects as an effective tool for improvement of economic competitiveness. Consistency and flexibility are the keys for such harmonization. Firstly, governments should ensure that brand equity is consistent with strength of industries. For example, environmentally friendly aspect should be promoted if a concerned industry is strong at producing energy-efficient products. Such a branding policy does not require strong restrictions on industries. Furthermore, governments can guarantee to provide products having features that they promised. If there is no adequate strength to be highlighted, governments need to create the strength in the way that improves competitiveness of industries. Secondly, governments should monitor brand equity periodically and flexibly strengthen or weaken the degree of control as necessary. Otherwise, excessive controls will destroy innovative dynamism of industries. For instance, French wine is losing competitiveness partly because of inadequate labeling quality control mechanism. In the essence, harmonization of branding policy and other industrial policies effectively strengthen competitiveness of industries.read less
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