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When Nobody Knows Your Name: Country-of-Origin as a Reputational Signal for Online Businesses

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Abstract

Businesses competing online frequently face crowded markets where customers have low familiarity with most firms. In such markets, does a firm's country-of-origin constitute a reputational signal that will influence customers? We examine the question in the context of consumers making online product trial decisions on the web site Download.com. We find product risk moderates the relationship between negatively stereotyped country-of-origin signals and product trial, which is taken as a measure of customers’ reputational evaluations. These findings suggest that signals arising from negative country-of-origin stereotypes can be consequential, after controlling for other reputational signals about the firm or its products. The implication for managers is that stereotyping signals can influence customers in online markets, and they should be wary of disclosing any potentially stigmatizing information.

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Notes

  1. It should be noted that there is a large body of literature on how customers make trial and purchase decisions. However, it tends to focus on markets where customers are choosing from among more limited choice sets where producers are attempting to differentiate themselves from a much smaller set of competitive offerings than in the type of context examined in this paper. For example, a recent study of consumer packaged goods product categories found that the average number of brands in a category is eight, with a standard deviation of four (Steenkamp and Gielens, 2003), compared to the 100+ offerings in a product category in the context studied here. To our knowledge, scholars studying customer perceptions and decision making have not addressed the question of what kinds of reputational signals differentiate among firms when customers are unfamiliar with large numbers of producers.

  2. Please note that in making these arguments, we are not claiming that the converse is true. To our knowledge, there is no theoretical basis to believe that there are positive country-of-origin stereotypes in this research context, that any positive stereotypes will be diagnostic, or even that all countries in this market context are associated with relevant stereotypes. For example, we explored whether there might be a bias in favor of sellers from English-speaking countries since the web site is in English. Specifically, we investigated whether being from a country with English as an official language advantaged a firm in terms of the probability of being rated (number of user ratings) and the valence of ratings (both average user rating and CNET Editor rating), as well as our measure of reputation, product trial. T-tests comparing sellers from countries where English is versus is not an official language indicate that there are no differences in the means of these four variables: number of user ratings (t=0.80, p=0.424), valence of average user rating (t=0.155, p=0.909), valence of CNET Editor rating (t=0.317, p=0.752) and product trial (t=0.505, p=0.615).

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Acknowledgements

The authors are grateful for the research assistance of Anthony Lu and Nataliya Nebrat and the comments of participants at the Queen's University Organization Behavior Brown Bag Workshop. Financial support from the University of Toronto's Work-Study Program, the Entrepreneurship Research Alliance II and the Social Sciences & Humanities Research Council of Canada (grant number 720-142-07) is also acknowledged with thanks.

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  1. Rotman School of Management, University of Toronto, Toronto, ON, Canada

    A Rebecca Reuber

  2. Schulich School of Business, York University, Toronto, ON, Canada

    Eileen Fischer

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Reuber, A., Fischer, E. When Nobody Knows Your Name: Country-of-Origin as a Reputational Signal for Online Businesses. Corp Reputation Rev 14, 37–51 (2011). https://doi.org/10.1057/crr.2011.2

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