Hearts and Minds: Investigating the Effects of Country of Origin on Consumer Response to an International Service Crisis

Abstract

This research advances our theoretical understanding of COO effects, and more specifically their cognitive and emotional/affective influences, in an international services organisation crisis context. This is achieved via decomposing the COO construct into cognitive and affective (positive and negative) country and people image i.e. country image cognitive, country image affective positive, country image affective negative, country person image cognitive, country person image affective positive and country person image affective negative (CIC, CIAP, CIAN, CPIC, CPIAP and CPIAN). Specifically, the study investigated the capacity of these distinct dimensions of COO to shape organisational trust and distrust (OT/OD) following a services crisis event in both a developed and emerging economy. The study also examined the extent to which consumer cultural congruence and country familiarity moderate the proposed relationships between COO effects and OT/OD. Lastly, this research contributes to a better understanding of the flow-on effects to subsequent consumer perceptions of attribution of blame for the event and consumer behavioural outcomes (such as future purchase intention and willingness to pay the same price or more post event). The proposed conceptual framework was tested in two divergent geographical and cultural locations (Australia and India). The research is comprised of both qualitative and quantitative methodologies. Qualitative findings provided stimuli for the quantitative stage employing an experimental study design. The final design (quantitative) employed 16 crisis scenarios based on various stimulus used in this study. Structural equation modelling (SEM) and comparison of means testing were used to analyse the data. The results of this study showed that an organisation’s home country and its people image both cognitive and affective (negative and positive), have the ability to significantly influence OT/OD and their subsequent influence on attribution of blame and consumer behavioural outcomes for a crisis event. Comparison of means testing showed that the service organisation with negative country image (China) consistently and significantly faced greater risk as compare to the organisation with positive CI (England). Subsequently, those organisations suffer lower levels of OT and higher levels of OD which, ultimately, leads to higher attribution of blame and diminished purchase intentions. Moreover, attribution of blame was higher for the intentional crisis with denial as response type tested and lower for the victim crisis along with apology as a response type tested. Additionally, for all crisis type tested, between the English and the Chinese service organisations, the organisation from developed country was strongly preferred each time. Additionally, the results of this study suggest that consumers show more trust towards service providers and their products when they feel a greater level of cultural congruence.