INTRODUCTION

Brands and products evoke perceptions that have the potential to affect the overall image of their country of origin and to contribute to national reputation. National reputation is a collective judgment based on impressions of a variety of factors including foreign policy, responsible government, people and culture, tourism, economic strength, and brands, products, and exports (Anholt, 2002, 2007; Passow et al, 2005; Wang, 2006b). Whereas reputation management, which includes nation branding, is something a country proactively does, a country's image is something it has and exists in the perceptions of audiences. People do not actively seek, but rather passively take in, information about other countries (Lee et al, 2008). Furthermore, receivers of messages may not differentiate whether their perceptions about a country come from official government sources and purposeful nation branding or from other sources of communication.

The purpose of the current study is to see if a positive perception of a product brand will lead to a more positive perception of the country of origin of the brand, the understanding of which can help assess the potential role of business in public diplomacy and national image building. It differs from previous studies about country-of-origin effect (COO) in that rather than looking at how perceptions of a country affect perceptions of the country's products, it considers the COO model in the opposite direction, and asks if brand image affects the perception of the country in which the product is made.

GLOBAL BUSINESS AND PUBLIC DIPLOMACY

Global companies and their brands touch the lives of more people than government representatives ever could (Goodman, 2006). Multinational corporations spend more money on communication than many governments. For example, the communication budget of Red Bull far exceeds the communication budget of Austria, its country of origin. For small and developing nations in particular, a positive association with an internationally known product brand could play a role in public diplomacy and national reputation. A nation's image is political and economic capital that reflects its standing in the international arena, which is a form of soft power (Wang, 2006a). Soft power emanates from influence that is communicated, intentionally or unintentionally, through a variety of sources including education systems, media and popular culture, science and technology, brands and products, and business practices (Nye, 2004). Examples range from cultural exports like music and movies to popular consumer goods that become iconic and strongly associated with their country of origin. Lee et al (2008), in long interviews used to measure the reputation of South Korea, found consumption of products from South Korea caused people to perceive the reputation of the country as ‘high technology’ and ‘advanced economy’. White et al (2011) found that corporations which are associated with the United States influence perceptions of that country through products as well as through corporate social responsibility and other business practices. The contention of these studies was that well-regarded companies can contribute to a favorable national reputation.

COUNTRY-OF-ORIGIN EFFECT

COO refers to how national reputation influences perceptions of products (that is, German engineering; Italian design). It is usually applied to measure consumer perceptions and purchase intentions, since companies and products are often associated with their countries of origin. The current study, however, considers COO from an inverse perspective. Rather than looking at how national reputation affects perceptions of brands and products, it measures how brand image affects country image to determine if a brand or product can influence the image of its country of origin.

Images and beliefs about a country affect assessment of its products (Han, 1989). Past research about COO has looked at how a country's reputation and image affects evaluations of products made in that country, which in turn impacts product evaluation and purchase behaviors of individual consumers (Larouche et al, 2005). Most COO studies are found in marketing and consumer behavior literature. Schooler conducted the first empirical test of COO and found that the name of the country specified on the ‘made-in’ label of a product affected the product's acceptance and success (Schooler, 1965). Since then, numerous studies have supported his contention, and have found that both rational and emotional variables link country image and product evaluation and purchase intention (Peterson and Jolibert, 1995; Verlegh and Steenkamp, 1999; Papadopoulos and Heslop, 2002; Kang and Yang, 2010).

Verlegh and Steenkamp (1999) conducted a meta-analysis of 41 previous country-of-origin studies, and found that country-of-origin is complex and includes cognitive, affective and normative reasons for associating products and countries. Overall, the impact of COO is stronger for perceived product quality than for attitudes and purchase likelihood. Factors including personal experience, emotional connection to the country of origin, and perceptions of a country's workforce and culture impact CCO effect. They also found that the level of economic development of the country was related to the evaluation of products from that country, with products from lower developed countries rated lower in terms of quality.

The central tenet of previous COO studies is that the association of a country and its products is based on a halo effect, which means that consumers use country image in product evaluation (Han, 1989). If beliefs about a country are positive, evaluation of the country's products and brands will also be positive. The current study, however, considers the COO model in the opposite direction and asks if brand image and perceived quality of a product will affect the perception of the country in which the product is made. The difference in conceptualizations is shown in Figure 1.

Figure 1
figure 1

(a) Country-of-origin (halo) effect (Han, 1989) and (b) Model for current study.

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The purpose of the current study is to see if a positive perception of a brand will lead to a more positive perception of that brand's country of origin. The study considers three brands that are marketed to a younger generation, using a young sample. The overall presumption is that brand attitude will have an effect on country image when the country-of-origin of a product is known. Based on the literature, the following three hypotheses are proposed: (Hypothesis 1) Knowledge of the country of origin of the brand will be positively related to country image. (Hypothesis 2) Brand image will correlate positively with country-of-origin image. (Hypothesis 3) Positive country image will increase (pre-and post-test) after the country of origin of the brand is known.

Countries and brands

Three countries and international brands were chosen for the study: Red Bull and Austria, Skype and Estonia, and IKEA and Sweden. Since the research was conducted in the United States, international brands targeted to a young market were chosen. It was presumed that American students (who were the participants in the study) may not have strong pre-existing perceptions of the countries of origin, but would likely have existing perceptions of the brands. An overview of the brands follows.

IKEA/Sweden: IKEA, founded in 1943 in Sweden, has stores in 38 countries that sell high-quality, low-cost home furnishings that appeal to a younger demographic; targeted customers are 20-35-year olds. Although it is now headquartered in the Netherlands (and before that in Denmark), product development is still headquartered in Sweden and IKEA is purposefully, closely associated with Sweden in its marketing practices. IKEA's colors, yellow and blue, are the colors of the Swedish flag. Humorous ads feature Swedes, and almost every advertisement includes a reindeer as a reminder of the origin of the campaign (Jefferys et al, 2008). IKEA stores serve Swedish meatballs and sell books about Sweden. Wästberg (2009) notes that to visit IKEA is to visit Sweden. Stores incorporate Swedish culture and traditions like ‘Midsommar’ in displays and marketing.

Red Bull/Austria: Red Bull, headquartered in Austria, was founded in 1984 and produces the world's leading energy drink sold in 161 countries. It continues to strategically increase its international market. In addition to sales of energy drinks (4204 billion cans in 2010), it also profits from Formula I racing and from hosting extreme sporting events that generate media coverage. Red Bull has become a case study in successful guerilla marketing aimed at hip young people with active lifestyles (Ingram, 2004). It uses sponsorships and Internet media rather than conventional advertising. The brand is more often seen on cars and sports gear than on cans. Red Bull does not make apparent attempts to associate itself with Austria, but rather positions itself as an international company.

Skype/Estonia: Skype was launched by three Estonian software developers in 2003 and is among the most popular online telephone applications, with more than 663 million registered users worldwide. Approximately 13 per cent of long distance calls are made using Skype. In early 2011, the company reported 30 million users online simultaneously. The median age of a Skype user is 25 years, but there are users in all age groups (www.skype-news.com; retrieved April 2011). Currently headquartered in Luxembourg, the Skype website does not directly associate the company with Estonia, but the country of Estonia makes efforts to associate itself with Skype. In March 2011, Tallinn Airport in Estonia's capital opened a dedicated Skype station, which allows Skype video chat in the booth. It was created by three Estonian companies as a reminder that Skype originated in their nation, and there are plans to roll out the futuristic-looking booths in other airports, hotels and shopping malls. The president of Estonia, Toomas Hendrik Ilves, actively attempts to associate Skype with Estonia (Landler, 2005) and believes the brand personality of Skype represents what Estonia wants to be – innovative and ambitious, not large in numbers, but large in ideas. In news conferences and interviews he has acknowledged that he promotes Estonia by mentioning Skype.

The following four questions were asked about the brands and their countries of origin in order to confirm their appropriateness for assessing the hypotheses: Research Question 1: How familiar are participants with the brands in the study? Research Question 2: What is the image of the brands? Research Question 3: Are the brands in the study associated with their country of origin? Research Question 4: Are participants more familiar with the brand or with the country? The following question was asked to see what benefits may come from associating a brand with a country – Research Question 5: Which country benefitted the most from association with the brand?

METHOD

The study used a method that blends survey and experimental design to test the effects of brand association on country image. The sample was 488 undergraduate students at a large university in the southeastern United States. Students in a variety of large courses voluntarily participated. Data were collected in five different classes during a two-week period in April 2011.

A long-standing debate in consumer research is whether student samples represent the ‘real world’. In their meta-analysis of 41 COO studies, Verlegh and Steenkamp (1999, p. 537) found that origin effect sizes do not differ between studies based on student samples and studies that use representative consumer samples.

Participants received a pre-test survey, stopped to watch a 4-min video (stimulus treatment) and then filled out a post-test survey. The pre-test included a brand image scale, country image scale and asked the name of the country of origin for the brand. The stimulus was a video (compiled by the researcher from videos found on You Tube) purported to be about travel in Europe, but that clearly linked the three products with their countries of origin, which was the independent variable. The post-test asked the name of the country of origin and repeated the country image scale. Both pre- and post-test surveys asked agreement with the statement, I have heard a lot about [country], and I would like to visit [country]. Purchase intention was not measured since it was not related to the purpose of the study. All participants received the same surveys and stimulus, but the order of questions was rotated among the questionnaires to avoid order effect. Three brands and countries were chosen in order to have multi-cue design for the study. Bilkey and Nes (1982) report that early studies of COO sued single-cue designs which inflate the effect size.

The country image scale used in this study was based on the Fombrun-Reputation Institute Country Reputation Index (CRI) developed by Passow et al (2005). Their 20-item scale is based on six dimensions: emotional appeal, physical appeal, financial appeal, leadership appeal, cultural appeal and social appeal, all of which closely correlate with Anholt's (2002) nation brand hexagon (exports, governance, investment, culture, people and tourism). The scale used in the current study incorporated dimensions found to be the drivers of reputation in the CRI, and also included items about perceptions of the nations’ products, consistent with product evaluation research (Verlegh and Steenkamp, 1999). Country image was measured with five items: [Country] has a well-developed economy; Products from [Country] are innovative and of high quality; [Country] is a beautiful Country; [Country] has well-educated citizens; and [Country] is a responsible member of the global community. Brand perception was measured with three items: How familiar are you with [brand]? What is your opinion about the quality of [name of brand]? How would you rate the overall image of [brand]? Items were measured on a 5-point semantic differential scale using the format recommended by Jaffe and Nebenzahl (1984) to increase validity when measuring the image of multiple countries in the same study for comparison. They found that questionnaires which allow respondents to answer all questions about a country before moving to the next country had higher validity and internal consistency than formats which listed the questions, then asked respondents to rate each country.

Data were analyzed using SPSS.

RESULTS

Of the 488 respondents, 42 per cent were male and 58 per cent were female; 96 per cent were born in the United States. The median age was 20.1 years. Because the specific items used in the study had not been previously used to test country image, a factor analysis of the scale was performed using a varimax rotation. All five items fit into one factor for all countries. The country image scales had different reliability for different countries. The Cronbach's alpha score for the scale when used to measure Sweden was 0.82 {M=19.72, N=253, SD=2.6}, for Austria was 0.76 {M=17.95, N=167, SD=2.48}, and for Estonia Cronbach's alpha was 0.75 {M=15.34, N=117, SD=2.09}. The lower reliability for Austria and Estonia is attributed to the fact that many of the participants were less familiar with those countries. For instance, for the statement, I have heard a lot about Estonia, 84 per cent were neutral, disagreed or disagreed strongly. Below are the results of the hypotheses and research questions.

Hypothesis 1:

  • Knowledge of the country of origin of the brand will be positively related to country image.

To test this hypothesis, independent sample t-tests were used to compare the participants who knew the origin of the brand before the treatment video with those who did not know the origin of the brand. There was a significant difference regarding country image between those who identified the country of origin correctly and those who did not. Participants who knew the country of origin of the brand had a higher country image score on the pre-test than those who incorrectly identified the country of origin. For Austria significance was, {t (486)=6032, P<0.001}; for Estonia, {t (486)=7.94, P<0.001}; and for Sweden, {t (486)=6.32, P<0.001}. Table 1 shows the means.

Hypothesis 2:

  • Brand image will correlate positively with country-of-origin image.

Table 1 Means for brand image scale
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This hypothesis was analyzed using a Pearson correlation to compare the variables that measured brand image and country image after the country of origin was known. There was a significant correlation for all three brands and countries, although the significance level was not as great for Skype and Estonia. The statistics were: Red Bull/Austria {r (488)=0.170, P<0.001}, Skype/Estonia {r (488)=0.104, P=0.02}, and IKEA/Sweden {r (488)=0.244, P=0.001}.

Hypothesis 3:

  • Positive country image will increase (pre-and post-test) after the country of origin of the brand is known.

As noted, almost everyone correctly identified the country of origin of the brands after watching the video, so this hypothesis was tested using a paired samples t-test (N=488). The hypothesis was supported with all countries showing a statistically significant increase in image in the post-test: Estonia {t(487)=−17.45, P<0.001}, Austria {t(487)=−30.44), P<0.001}, Sweden {t(487)=−11.09, P<0.001}.

Research Question 1:

  • Are participants familiar with the brands in the study?

The brands in the study were chosen because they were targeted at younger consumers. The data confirmed that the participants were familiar with the brands. Participants were asked how familiar they were with the brand (answered on a 5-point scale, not all familiar to very familiar). The mean familiarity with Red Bull was 4.6 (SD=0.68), mean familiarity with Skype was 4.4 (SD =0.87) and mean familiarity with IKEA was 3.6 (SD=1.24).

Research Question 2:

  • What is the image of the brands?

The image score was calculated using the three variables in the brand image scale. All three brands had a positive image among the participants (Red Bull M=3.9, Skype M=4.3, IKEA M=3.7), with Skype having the best image. Table 2 shows the full statistics.

Research Question 3:

  • Are the brands in the study associated with their country of origin?

Table 2 Difference in familiarity of brands and countries
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Before viewing the stimulus video, only 11.9 per cent of the sample (N=58) knew that Red Bull was from Austria. Only 7.4 per cent (N=36) knew Skype originated in Estonia, but 35.9 per cent (N=193) associated IKEA with Sweden, even though IKEA was less familiar than the other brands. Since the purpose of the video was to link the brand with the country, not surprisingly, almost everyone in the sample identified the correct country of origin in the post test: 94 per cent said Red Bull was from Austria, 96.1 per cent correctly identified Skype with Estonia, and 96.7 per cent said IKEA was from Sweden.

Research Question 4:

  • Are participants more familiar with the brand or with the country?

Paired samples t-tests were used to compare the item that measured familiarity with the brand and the item that measured familiarity with the country. In all three brands used in the study, familiarity with the brand was statistically significantly greater for the brand than for the country. Participants were most familiar with Sweden (53 per cent agreed/agreed strongly that they had heard a lot about the country), compared with 13 per cent for Austria and only 4 per cent for Estonia. Statistics are shown in Table 3.

Research Question 5:

  • Which country benefitted the most from association with the brand?

Table 3 Means for knowledge of brand origin and country image before treatment video
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This question was answered using a repeated measures ANOVA to compare the differences in country images before and after the treatment video. There was a significant interaction using Wilks’ Lambda F(2486)=72.75, P<0.001. Estonia showed the biggest change over time, indicating that it benefitted the most from association with Skype, confirmed by post hoc pairwise comparisons of the mean differences between the pre- and post-tests. All countries had significant differences, but the difference for Estonia was the greatest as shown in Table 4.

Table 4 Pairwise comparisons of country image means
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DISCUSSION

Globalization and the rise of international markets have increased the necessity for all countries to vie for a competitive identity (Anholt 2007). A country's brands can make a positive contribution to the overall image of a country and enhance its competitive reputation. The study shows a positive effect from brand to country, different from previous COO studies that have shown an effect from country to brand. Results were consistent across all countries and brands in the study.

The findings of the study have implications for how countries strategically address their national brands and how they combine them with the image of the country of origin, since brand image affects country image whether or not the effect is intentional on the part of the company or on the part of the country. In the three examples used in this study, there are three different relationships between the country and the brand. The country of Estonia makes a strategic effort to associate itself with Skype and to make the Skype brand a part of its national identity, examples of which are apparent in efforts of the business community and public remarks by the president of the country (Landler, 2005). As for IKEA, the company intentionally associates the brand with the country. Olle Wästberg, director of the Swedish Institute, believes IKEA does more for the image of Sweden than all governmental efforts combined (2009). Results of the study confirm the strong positive association between IKEA and Sweden and indicate that association with Skype would enhance the image of Estonia.

In the situation of Red Bull and Austria, neither the country nor the company makes apparent attempts to associate with the other. The Red Bull website, although extensive, does not connect its brand to Austria. Perhaps the company does not believe the image of Austria fits its brand image, or perhaps it wants to be a global brand not associated with a specific country. Wang (2006b, p. 45) states, ‘in their pursuit of commercial interests, corporations naturally shy away from engaging in discourses and activities deemed political and do their utmost to maintain their neutral status’. This suggests that often – perhaps with Red Bull – disassociation of an international company with its country of origin is intentional. Nonetheless, the results of the study suggest that Red Bull could affect Austria similarly to the positive way IKEA affects the image of Sweden. Red Bull had the highest familiarity of the three products and also a positive association; however, Austria was less familiar than Red Bull. The knowledge that Red Bull was a product of Austria improved the image of Austria among participants in the study. Furthermore, participants who knew that Red Bull was a product of Austria before seeing the stimulus video rated the image of Austria higher than those who did not know. Red Bull generates far-reaching media coverage on international television as well as through social media networks and Internet sites such as YouTube. The company has the resources and capability to reach more people than does the Austrian government. A strategic association between Austria and Red Bull could enhance the country's image and be a component of its public diplomacy. Companies such as Red Bull and Skype could be powerful diplomats for their respective countries as IKEA currently is for Sweden.

The study also suggests that brand association may be more important for less developed nations than for larger, more developed nations; Estonia benefitted the most from association with its brand. Verlegh and Steenkamp (1999) found that the level of economic development of a country was related to the evaluation of products from that country, with products from lower developed countries rated lower in terms of quality. In the inverse COO relationship found in the current study, a product that is evaluated highly can help the image of the country. The study found that for smaller, less-known countries (Austria and Estonia), beliefs about a brand led to beliefs about the country's innovation and overall image. Szondi (2008) notes that a primary need for many countries such as Estonia that are transitioning to democracy and a free market economy is to distance themselves from the old political and economic systems and to establish themselves as trustworthy partners in international relations. Successful businesses can send this message better than government. In some countries messages from the government might be viewed as propaganda, while corporate messages may be perceived as more credible.

The potential of corporate diplomacy

A nation's products and exports are part of its soft power. Perceptions of a country are based on many things and all aspects of a nation help form public opinion and shape its image. An implication of the study is that the public and private sectors could work together to shape a country's image. In other words, corporations that are willing to purposefully associate their international brands with their country of origin could enhance the image of their country, and thus play a role as non-state actors in the process of public diplomacy. Businesses have resources and expertise as well as a global worldview that is advantageous to public diplomacy, and building favorable country-to-country relationships in the global society is in the self-interests of business as well as governments.

Obviously, businesses and corporations cannot be involved in all aspects of public diplomacy and reputation management. However, business communication plays a role in building relationships, promoting trust and cultivating positive public opinion, which are beneficial to public diplomacy efforts.

Future research

The concept of intentionality of strategically associating brands and countries of origin warrants further study. The 2007 Private Sector Summit on Public Diplomacy, a cooperative initiative of the US State Department and the PR Coalition, recommended that American business develop practices that make public diplomacy a core element of international corporate public action. In other words, corporate diplomacy should be intentional and American businesses should associate themselves with their country of origin in order to promote understanding of American values and culture. However, many companies, especially international corporations, may be reluctant to associate themselves with a particular country. More importantly, companies may not want to be associated with a particular government of a country, which can change over time. Conversely, it could be potentially disadvantageous for a country to be too closely associated with a company or brand in the event that the company or brand experiences a crisis or scandal. Future research can more fully explore these concepts.

Limitations

The study looked at only three brands and three countries in Europe with a homogenous sample of young Americans. Different audiences will hold different perceptions based on their own backgrounds. As with any experiment, there may be an exaggerated stimulus effect. However, in this study, participants who knew a brand's country of origin before watching the video had a better image of the country than those who did not already know it.