Pride and Prejudice! Promotion or Prevention? - Explaining and Mitigating Home Country Biases When Foreign Products Are More Typical

The preference for domestic products over foreign alternatives (i.e. home country bias) is well documented (Baughn and Yaprak 1996; Verlegh and Steenkamp 1999) and was shown to be caused by consumer traits such as consumer ethnocentrism and national identification (Verlegh 2007). However, whereas prior research held domestic versus foreign product quality constant in order to isolate and verify home country bias, this research project is interested in examining the potentially moderating role of product typicality. More specifically, we aim to investigate whether home country bias due to consumer ethnocentrism and national identification decreases if foreign products are perceived as more typical (e.g., Swiss watches or German car). Contrary to intuition, two pre-studies provide strong evidence that home country bias due to consumer ethnocentrism and national identification is even stronger if foreign products are perceived as more typical.

The findings are particularly alarming for companies with an ideal product-country match such as Swiss watchmakers or German car manufacturers. In an attempt to shed a more nuanced light on the mechanism of home country bias and on developing effective remedies to home country bias, regulatory focus theory (Higgins 1989) is applied. A first experiment revealed that home country bias due to consumer ethnocentrism nurtures if consumers are in a prevention focus which is likely to activate their perceived threat of (superior) foreign products. If consumers are brought into a promotion focus, on the other hand, home country bias due to consumer ethnocentrism is neutralized. We argue that this is because of consumers' activated motive to reward themselves with the best products, regardless whether these are domestic or foreign. Since a promotion focus is likely to make consumers' desire of belonging to a nation more salient, we expect an opposing interaction effect between national identification and regulatory focus on the tendency to buy domestic vs. foreign products. We plan to investigate this in a second experiment.

Aimed at providing companies with clear and practical recommendations on how to overcome home country bias and at increasing external validity of our findings, we are going to analyze how companies can bring their customers in either a prevention or a promotion mode with commercial campaigns. If our assumptions hold true, the latest claim of Mercedes Benz ("The Best or Nothing") clearly triggers a promotion mode and thus is likely to prevent foreign ethnocentric customers from underlying a home country bias and, beyond, induces German customers who identify with their country to buy Mercedes. To investigate this relationship, we will conduct comprehensive research based on both controlled experiments and field data