Country of Origin and Destination Effects in Buyer Decision Making: A Relationship Perspective

Abstract

Gaps between the perceptions of buyers and sellers on the relative strengths of competing purchasing options are likely to exist in any commercial market. In the case of international trade, one contributing factor is likely to be the Country of Origin effect, the stereotyping by buyers in one market of suppliers or products from another. While this effect has been studied, particularly in the context of consumer buying, no previous work exists comparing the gaps between the perceptions of commercial buyers in one country and the views held by suppliers in a second country. This research examines the buying decision making of UK retail buyers of textiles/clothing and compares it with the perceptions held by Portuguese textiles/clothing suppliers on how UK buyers make decisions when deciding between sourcing options in the two countries. The research methodology involves the use of a multi-criteria modelling technique (JAS). Buyers were asked to imagine that they were considering a ‘new buy,’ where they could source from either the UK or Portugal. Suppliers were asked to place themselves in the role of the buyers and to undertake the same methodology. The gaps in perception are discussed in the context of the Country of Origin effect and labelled as the Country of Destination effect. Six buying criteria, identified from the general literature on buying and that specifically on retail buying were used to model the buying decision. These were: cost, work quality, delivery time, responsiveness to requests, innovative ability and good design ideas. Respondents were asked to evaluate the relative importance of each criterion and rate each source (the UK or Portugal) on all criteria. The resultant scores for each source were used to identify, using the multi-criteria decision model, which sourcing option a buyer would select. The methodology was repeated with Portuguese suppliers who were asked to adopt the role of a UK buyer in answering the same questions. One hundred and two UK retail buyers in 35 companies and 66 Portuguese suppliers from 40 companies were interviewed in personal, face-to-face interviews. Qualitative as well as quantitative data were obtained, so that the author could better understand the decision making process being modelled. The work is unique in its attempt to combine the buying and COO literatures. The context of commercial rather than consumer buying for a COO study is unusual, as is the dyadic nature of the interview process. The main contribution from the work is the identification of what is labelled the ‘country of destination’ effect and its linkage to buyer characteristics. The practical contributions from the work include the conclusion that while Portuguese suppliers recognise the nature of the stereotyping of them by UK buyers, they underestimate the scale of this effect. Portuguese companies need to educate the British market as to their true potential.

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