Consumer Ethnocentrism On Intention To Purchase Local Products

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The previous chapter discussed the background of the study, problem statement and objectives of the study. In this chapter, theoretical background of consumer ethnocentrism, role of demographics imported product judgment, intention to purchase local products and effects of perceived economic threat will be discussed. Ethnocentrism The term “ethnocentrism” has been introduced to the world as a sociological phenomenon in the beginning of 19th century by William Graham Sumner. This term has been developed from two terms “ethnic” and “centrism” where ethnic gives the meaning of cultural heritage and centrism refers to taking a moderate position Barger (2003). 

Sumner defined ethnocentrism as: “The view of things in which one’s own group is the center of everything, and all others are scaled and rated with reference to it. … Each group nourishes it’s own pride and vanity, boasts itself superior, exalts it’s own divinities and looks with contempt on outsiders.” (Sharma et al., Consumer Ethnocentrism, 1987: 27) Ethnocentrism is a universal phenomenon, which can be observed mostly in intergroup relations (Lewis 1976). Barger states that everybody makes false assumptions about others’ ways based on their own limited experiences and they are not even aware they are being ethnocentric. It has also being argued that ethnocentrism is a part of human nature (Lynn 1976; Mihalyi 1984; Rushton 1989). 

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According to LeVine and Campbell 1972 there are specific properties, which can be observed of ethnocentrism such as the tendency of

  1. identifying different groups;
  2. to see events in terms of group’s own interests (economical, political and social);
  3. to see its own group as the center of the universe and to consider its way of life as superior to all;
  4. to be suspicious and humiliating in other groups;
  5. to view their own group as superior, strong, and loyal;
  6. to see other groups as lesser, weak, and dishonest disturbances. 

Apart from the arguments of ethnocentrism, Fullmer introduced the term “xenocentrism” in 1940. Xenocentrism is an attitude where people consider other cultures are superior to their own culture. So the always try to analyze their lives centered to the perceived superior cultures (Kent and Burnight, (1951). Kent and Burnight (1951) argue that this concept describes the situation where people try to change their decisions by rejecting their own cultural values of the in groups. Consumer Ethnocentrism Ethnocentrism was firstly introduced as a sociological perspective and then it was viewed through anthropological and biological perspectives. Later it became a psychological construct linked to consumer psychology where scholars argued that, consumers might buy home country products instead of imported products due to their ethnocentric feelings (Levine and Campbell, 1972). 

Consumer ethnocentrism consists of same properties of general ethnocentrism, but through the economic domain (Balabanis & Diamantopoulos, 2004). The concept ‘consumer ethnocentrism’ was introduced by Shimp and Sharma in 1987. It was defined as; “the beliefs held by consumers about appropriateness, indeed morality, of purchasing foreign made products”. According to sharma et al. (1995) there are specific characteristics of consumer ethnocentricity. First, consumer ethnocentrism is a result of one’s concern for the home country, where the fear of imports might create a negative impact to the domestic economy. Second, it drives consumers intention to not to buy foreign made products. Highly ethnocentric consumers consider purchasing imported products not only as an economic issue but also as a moral problem. In extreme cases, consumers buy domestic products over imported products regardless of their lower quality with the involvement of morality. Third, it is related to the individual level of disapproval toward imports where the aggregated level shows the overall consumer ethnocentricity of the social system. Ethnocentric perception of a consumer leads the person to be bias towards purchasing domestic products where a non-ethnocentric consumer consider the product merits than it’s origin; quality, price, trendiness and other desired features (Shimp and Sharma, 1987). In the marketing field it represents the in-group or the out-group orientation of people (Parts Vida, 2011). 

With the globalization and international marketing the gravity of this concept in the marketing field has increased (Caruana, 2005, Jacoby, 1978 and Shimp, 1984 in Nadiri & Tumer, 2010; Sharma & Shimp, 1987). Consumer ethnocentrism can only be seen in situations where a domestic product is available for the existing foreign products (Singh & Upadhyay, 2006) and the people judge home nation as superior to any other nation (Chun-yan, 2008). According to empirical findings of consumer ethnocentrism associated researches, it depicts that consumer ethnocentrism effects the production evaluation and purchase intention for imported products (Shimp and Sharma, 1987; Sharma et al., 1995; Nguyen et al., 2008; Cumberland et al., 2010; Bandyopadhyay et al., 2014). Statistical analysis conducted by Herche (1992) has depicted that purchase intention of domestic products can be positively impacted by consumer ethnocentric tendency. However, Bandyopadhyay et al. (2014) have discovered that consumer ethnocentrism might not always lead to negative judgment of imported products. But it could effect negatively to the intention of purchasing foreign products (Klein et al. (1999) and Sharma et al. (1995)) Measurement tools of consumer ethnocentrism In order to measure the ethnocentrism in general of people, Adorno et al., (1950) developed a four dimensional scale to differentiate between ethnocentric and non ethnocentric people relating the ethnic minorities in the USA. Warr et al. (1967) developed another ethnocentrism scale to the US context based on E-scale, and Chang and Ritter (1976) attempted to build a scale to measure the ethnocentric tendencies of black American students. With the recognition of consumer ethnocentrism in the field of marketing, researches tried to develop a scale to measure the ethnocentric tendencies of customers. 

Shimp (1984) was able to develop the first successful scale to measure consumer ethnocentrism on the context of automobile buying behavior of US customers. Based on the previous literature he employed behavioral aspects; normative beliefs of customers, behavioral intentions and other several eccentric measures to asses the consumer behavior and distinguish between ethnocentric and non-ethnocentric customers (doctoral thesis, 2013). But according to Luque-Martinez et al., (2000), rather than measuring the tendency of customers to buy domestic products, this scale evaluates customers’ attitudes and beliefs toward domestic and foreign brands. Afterward Shimp &Sharma (1984) developed very comprehensive CETSCALE (Consumer Ethnocentric Tendency Scale), uni-dimentional with 17 items, to measure the consumer ethnocentrism in the context of America. This scale is not product specific and it consists of emotional dimensions regarding purchasing foreign goods and relating those acts to the domestic industry and economy (Herche, 1992). It measures “tendency” and not of the attitude of people towards domestic and foreign products (Sharma & Shimp, Consumer Ethnocentrism: Construction and Validation of the CETSCALE, 1987, p.281). 

The scale became very popular and has been validated with a high level of internal reliability in various economies; developed (Dursula et al. 1997), developing (Caruana 1996), newly industrialized (Sharma et al. (1995), and post transitional (Good and Huddleston 1995) economies. Most of the previous studies have proven convergent, discriminant, and nomological validity as well (Doctoral). Although original CETSCALE was developed as a uni-dimensional scale, some researchers debates it consists of more dimensions. Luque-Martinez et al. (2000) states CETSCALE consists of two components, “hard ethnocentrism” with 10 items and “soft ethnocentrism” included 7 items. However a research done in Malaysia, comparing validity and the reliability of the two models concluded that one-dimensional CETSCALE is a better measurement Poh et. al, (2011 ). Based on rational validations, some researches declare hard ethnocentrism with 10 item scale measures Consumer Ethnocentrism Tendency more accurately. A study done in Czech Republic and Turkey by Balabanis et al. (2001), Evanschitzky et al. (2008) in Germany, Othman et al. (2008) in Malaysia have resulted higher level of reliability approximated to a 0.90 of alpha value. Later more shorten versions of CETSCALE have also been developed. Altintas and Tokol (2007) and Aruskeviciene et. al., (2012) adapted the 6-item version of CETSCALE. Furthermore a 4-item reduced version has depicted a higher level of reliability (e.g. Cleveland 2009; Vida, et al., 2008). With reference to the above content, it is evident that CETSCALE is very effective in measuring degree of ethnocentrism of customers. 

Researchers have commonly accepted that CETSCALE represent the degree of CET (doctoral). Original CETSCALE adapted 7-point Likert scale ranging from 1 (strongly disagree) to 7 (strongly agree) to record the responses of the consumers. For the reduced 10-item scale the total score of the responses will lie between 10 to 70. High CETSCALE scores represents a high level of CET and low CET score represents a low level of CET (Forinstance, Durvasula et al.,1997). Taking mean values of the studies into consideration, ethnocentric tendency of customers in a country can be categorized into low (score range from 10-30), medium (score range from 30-50) or high (score range from 50-70) (doctoral). In this thesis, CETSCALE will be employed to assess the degree of consumer ethnocentrism among consumers of University of Peradeniya in four dimensions of demographics: gender, age, income level and education level. Demographic characteristics of consumer ethnocentrism Socio-demographic characteristics are one of the most important group of antecedents of consumer ethnocentrism along with social-psychological, economic and political factors (Shankarmahesh, 2006). Level of consumer ethnocentrism varies from person to person (Josiassen et al., 2011). Marketers and researchers find that identifying and segmenting groups of consumers with similar demographic characteristics is more effective than targeting each individual consumer (Shankarmahesh, 2006). So this research will focus on demographics and how it influence the consumer ethnocentrism in the context of University of Peradeniya, Sri Lanka. Age Earlier empirical findings prove that the level of consumer ethnocentrism differ with the age groups. Age is positively related with the level of consumer ethnocentrism, where older people are usually found to be more consumer ethnocentric than younger people (Klein et al., 1999; Caruana, 1996). 

This argument can be backed by the fact that older people are more patriotic and conservative (Ueltschy, 1998, Matysek, 2010) and younger people display cosmopolitanism and they have more changed cultural beliefs (Shankarmahesh, 2006). Shimp and Sharma (1987) also argues that older people are more ethnocerntric due to the fear of losing jobs due to the foreign competition. This finding has been acquired by many researchers; (Josiassen et al.,2010; Watson & Wright, 2000; Shah & Ibrahim, 2012; Nadiri & Tumer, 2010). So the hypothesis will be derived as: H1a: Older Sri Lankan people are more consumer ethnocentric than younger Sri Lankan people Gender According to the previous research findings extent of consumer ethnocentric tendency of a person vary with the gender. But the results are not consistent among countries (Siamagka, 2009). Many studies show women are more ethnocentric than men (Bandyopadhyay & Muhammad, 1999; Klien & Ettenson, 1999; Shah & Ibrahim, 2012), which is backed by the argument that female consumers tend to be more conservative, collectivist and agreeable to already established practices (Shankarmahesh, 2006). On the contrary some studies show that men are more ethnocentric compared to women (Bannister and Saunders 1978; Bannister and Saunders 1978) and some other studies that there is no significant impact that gender has on consumer ethnocentrism (Caruana 1996). In this research we hypothesize that; H1b: Consumer ethnocentrism varies depending on the gender of the consumers Education Education level also has been found to impact the level of consumer ethnocentrism of a person. 

Higher educated people are less ethnocentric compared to the people with lower educational levels (Sharma et al. (1995) and Ueltschy (1998). This argument can be explain by the fact that with higher education levels, people get more opportunities to travel abroad and get exposed to more foreign cultures (Siamagka, 2009). Yet another research has shown that there is no interactive relationship between consumer ethnocentrism and education level Han (1988) and Balabanis et al. (2001). This leads to the hypothesis; H1c: Higher-educated Sri Lankan consumers are less ethnocentric than lower- educated Sri Lankan consumers Income Level Most of the previous studies show a negative relationship between consumer ethnocentrism and income level (Nadiri & Tumer, 2010; Urbonavicius et. al, 2010; Shah & Ibrahim, 2012; Bawa, 2004; Pentz, 2011). This argument can be backed by the notion that higher income consumers travel more, which leads to a greater openness and cosmopolitan perceptions (Sharma et al., 1995) (Matysek, 2010) so they consider foreign products more favorably compared to domestic products. 

However Han (1988) states that level of income is not a good predictor of consumer ethnocentrism, which means a higher income might not necessarily exhibit a less consumer ethnocentrism level of a person. Since most of the literature supports the fact that higher income consumers have consumer ethnocentric tendencies, following hypothesis is derived; Sri Lankan consumers with higher income are less ethnocentric than Sri Lankan consumers with lower income. Imported Product Judgment Product judgment is evaluating a particular product based on perceptions of consumers (Nguyen,2017). Consumer’s perception is affected by extrinsic and intrinsic factors. As an example, country of origin and country of production have considerable effect on consumer’s perception towards the product attributes (e.g., Peterson and Jolibert, 1995; Bruning, 1997; Ulgado and Lee, 1998; Knight, 1999; Pecotich and Rosenthal, 2001; Kaynak and Kara, 2002; Nguyen et al., 2008). In developing countries, above mentioned factors leads to a favorable judgment of imported products. On the contrary consumer ethnocentrism would make people value the home country (own group) products more favorably and devalue products belong to the out-group due to the beliefs of morality and inappropriateness of buying foreign products (Shimp and Sharma, 1987; Klein et al., 1998). This lead to the hypothesis; H2. 

A negative relationship between consumer ethnocentrism and imported product judgment is expected Purchase Intention for domestic products In the literature intention has been defined as the decision to act in certain manner (Fishbein and Ajzen (1975) or an individual’s “sence of his or her conscious plan to exert effort to carry out a behavior” (Eagly and Chaiken (1998, p.68). Taken the above into consideration, purchase intention describes consumer’s purchasing decision to fulfill their needs. According to Rahman et al., (2012) it covers the aspects “willingness to consider buying”, “buying intention in the future” and “decision of repurchase”. Purchase intention is influenced by ethnocentric tendencies and product judgment of foreign products (Klein et al., 1998). As Han (1988), Herche (1992), Olsen et al. (1993) and Klein et al. (1998) states, purchase intention of domestic products is positively impacted by consumer ethnocentrism. So the hypothesis will be derived as; H3. A positive relationship between consumer ethnocentrism and intention to purchase local products is expected Perceived Economic Threat The concept perceived economic threat and it’s moderating effect was introduced by Sharma et al. (1987). The researcher states that perceived economic threat includes personal economic threat and domestic economic threat. When the county is exposed to excessive foreign competition and local economy is threaten, imported products are viewed negatively. Also the fear of losing one’s or own relation’s job due to foreign competition makes a person feel negative towards imported products (Shimp, 1995). It has been found through research that people who are in industries, which are, threaten by foreign competition, have higher ethnocentric tendencies. Siamagka (2009) stated perceived economic threat as a moderator soften or strengthen the effect of consumer ethnocentrism on attitudes or intentions. So the hypotheses are as follows; H4a: Perceived economic threat moderates the relationship between consumer ethnocentrism and Imported product Judgment H4b: Perceived economic threat moderates the relationship between consumer ethnocentrism and Intention to purchase local product 2.8 Summary of the Chapter This chapter included the literature related on the study as Small and Medium Enterprises, social networking and social networks, the importance of the social networks, differences in social networking behavior with sex of the business operators. This chapter end with the conceptual framework which was built-up based on the literature and follow-up hypotheses.  


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