Journal of Product & Brand Management

Does image of country-of-origin matter to brand equity?

Norjaya Mohd Yasin Mohd Nasser Noor Osman Mohamad
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To cite this document:
Norjaya Mohd Yasin Mohd Nasser Noor Osman Mohamad, (2007),"Does image of country-of-origin matter to brand equity?",
Journal of Product & Brand Management, Vol. 16 Iss 1 pp. 38 - 48
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Khalid I. Al-Sulaiti, Michael J. Baker, (1998),"Country of origin effects: a literature review", Marketing Intelligence &
Planning, Vol. 16 Iss 3 pp. 150-199 http://dx.doi.org/10.1108/02634509810217309
Francis Piron, (2000),"Consumers’ perceptions of the country-of-origin effect on purchasing intentions of (in)conspicuous
products", Journal of Consumer Marketing, Vol. 17 Iss 4 pp. 308-321 http://dx.doi.org/10.1108/07363760010335330
Adamantios Diamantopoulos, Bodo Schlegelmilch, Dayananda Palihawadana, (2011),"The relationship between country-of-
origin image and brand image as drivers of purchase intentions: A test of alternative perspectives", International Marketing
Review, Vol. 28 Iss 5 pp. 508-524 http://dx.doi.org/10.1108/02651331111167624

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 Does image of country-of-origin matter to
brand equity?
Norjaya Mohd Yasin
School of Business Management, Faculty of Economics and Business, Universiti Kebangsaan Malaysia, Selangor, Malaysia
Mohd Nasser Noor
Marketing Section, School of Management, Universiti Sains Malaysia, Penang, Malaysia, and
Osman Mohamad
Graduate School, Universiti Sains Malaysia, Penang, Malaysia

Abstract
Purpose – The purpose of this study is to explore the effects of brand’s country-of-origin image on the formation of brand equity.
Design/methodology/approach – To accomplish this, the brand equity of household electrical appliances, particularly televisions, refrigerators and
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air-conditioners, in the Malaysian market is examined. A conceptual framework in which brand’s country-of-origin image is postulated to influence the
dimensions of brand equity, which is made up of brand loyalty, brand awareness, perceived quality, and brand associations. These dimensions, in turn,
influence brand equity. Data were collected from consumers of household electrical appliances using probability sampling.
Findings – Factor analysis conducted on brand equity dimensions, produced three factors namely, brand distinctiveness, brand loyalty, and brand
awareness/associations. The regression analysis results show that brand’s country-of-origin image positively and significantly influences dimensions of
brand equity. The results also show that brand’s country-of-origin image influences brand equity, either directly or indirectly, through the mediating
effects of brand distinctiveness, brand loyalty and brand awareness/associations.
Research limitations/implications – The study investigates brand equity of durable goods of three product categories namely television, refrigerator
and air-conditioner. It only considers brand’s country-of-origin image as one of the sources of brand equity. The conceptual framework does not take
into consideration factors that moderate the influence of antecedent of brand equity on brand equity.
Practical implications – Producers of household electrical appliances should put greater emphasis in creating brand loyalty for their products. The
good image of brand’s original country should be highlighted in order to enhance the overall image of the brand. Favorable country image can also be
capitalized in brand-naming strategy.
Originality/value – This is paper important in identifying the sources of brand equity.

Keywords Brand equity, Country of origin, Brand image, Brand loyalty, Brand awareness, Malaysia

Paper type Research paper

An executive summary for managers and executive
readers can be found at the end of the article.
Introduction
Building strong brands has become a marketing priority for
many organizations today because it yields a number of
advantages. Strong brands help the firm establish an identity
in the market place (Aaker, 1996), less vulnerability to
competitive actions, larger margins, greater intermediary
co-operation and support and brand extension opportunities
(Delgado-Ballester and Munuera-Aleman, 2005). In
measuring the overall value of a brand, marketing
researchers and practitioners have begun to examine the
concept of “brand equity” (Aaker, 1991; Baldinger, 1990;
Keller, 1993) which has been referred to the tremendous
The current issue and full text archive of this journal is available at
www.emeraldinsight.com/1061-0421.htm
Journal of Product & Brand Management
16/1 (2007) 38– 48
q Emerald Group Publishing Limited [ISSN 1061-0421]
[DOI 10.1108/10610420710731142]
value that the brand name brings to the producers, retailers
and consumers of the brand.
The equity of a brand is the result of consumers’ perception
of it which is influenced by many factors. Brand equity cannot
be fully understood without carefully examining its sources,
that is, the contributing factors to the formation of brand
equity in the consumers’ mind. Most of the brand equity
research focuses on the marketing mix variables such as
advertising, distribution, price and product quality as the
contributing factors (Cobb-Walgren et al., 1995; Yoo et al.,
2000). However, not much attention is given to the non-
marketing mix factors. In the process of buying, consumers
are not only concern about the quality and price of a product
but also other factors such as the brand’s country-of-origin.
Many consumers use country-of-origin stereotypes to
evaluate products for example, “Japanese electronics are
reliable”, “German cars are excellent”, “Italian pizza are
superb”. Many consumers believe that a “Made in . . .” label
means a product is “superior” or “inferior” depending on
their perception of the country. Brands from countries that
have a favorable image generally find that their brands are
readily accepted than those from countries with less favorable
image. Since country of origin could be one of the influencing
factors in determining consumers’ choice, the purpose of this
study is to explore the effects of brand’s country-of-origin

38
 Does image of country-of-origin matter to brand equity?
Norjaya Mohd Yasin, Mohd Nasser Noor and Osman Mohamad
image on the formation of brand equity. To accomplish this
goal, the brand equity of household electrical appliances
particularly television, refrigerator and air-conditioner, in the
Malaysian market is examined.
To address this objective, this paper is organized as follows.
We begin by presenting the theoretical framework that depicts
the linkages between the variables of interest. Consequently,
we present a definition of the constructs under study, and
discuss the manner in which brand’s country-of-origin image
contributes to the development of brand equity.
Subsequently, the data collection procedures and variable
measures are discussed. The study hypotheses are then
presented based on the results of the exploratory factor
analysis. Finally, we discuss the results of regression analysis
and its implications for managerial practice and some
suggestions for future research are given.
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Theoretical framework
The conceptual framework of brand equity that guides this
study appears in Figure 1. This framework is built upon the
conceptual framework for brand equity presented by Yoo et al.
(2000) by incorporating country-of-origin image as the
antecedent of brand equity. In this model, the country-of-
origin image is treated as the independent variable, the
dimensions of brand equity as the mediating variables and
brand equity as the dependent variable. The brand equity
construct shows how individual dimensions of brand equity
are related to the brand equity. The antecedent of brand
equity is related to brand equity through the mediation of the
dimensions of brand equity. Therefore, to create, to manage,
and to exploit brand equity, the relationship between the
dimensions of brand equity and brand equity, and the
relationships between the antecedents and brand equity
dimensions must be determined.
Brand equity
Brand equity refers to the tremendous value inherent in a well-
known brand name. It appears when consumers willingly pay
more for the same level of quality due to the attractiveness of
the name attached to the product (Bello and Holbrook, 1995).
In the marketing literature, brand equity is referred to the
intangible brand properties. Brand equity arose from customer
brand-name awareness, brand loyalty, perceived brand quality
and favorable brand symbolisms and associations that provide a
platform for a competitive advantage and future earning
streams (Aaker, 1991). The equity that the strong brand
possesses can give the company a loyal consumer franchise that
could bring substantial returns to the firm. Similarly, the 1989
Marketing Science Institute defines brand equity as:
. . . the value that is added by the name and rewarded in the market with
better profit margins or market shares. It can be viewed by customers and
channel members as both a financial asset and as a set of favorable
associations and behaviors.
Figure 1 A conceptual framework of brand equity
39
Journal of Product & Brand Management
Volume 16 · Number 1 · 2007 · 38 –48
From these definitions, brand equity can be said as the value
incrementality due to brand name. Although the classic
definition of brand equity refers to the added value of the
brand endowed by its name, recent writings about brand
equity have expanded its definition to include a broad set of
attributes that drive customer choice (e.g. Yoo et al., 2000;
Rust et al., 2001).
Regardless of its definitions, brand equity actually
represents a product’s position in the minds of consumers in
the marketplace. It is precisely the well-established
representation and meaningfulness of the brand in the
minds of consumers that provides equity for the brand
name. Therefore, what the consumers think of a particular
brand determines the value it has to its owner. As suggested
by Kim (1990), a brand is the totality of thoughts, feelings,
sensations, and associations it evokes. Therefore, a brand is
said to have equity if it has the ability to influence the behavior
of those who behold the brand, routinizing their preference,
attitude and purchase behavior. Thus, for the purpose of this
study brand equity is defined as the “consumers’ favoritism
towards the focal brand in terms of their preference, purchase
intention and choice among brands in a product category,
that offers the same level of product benefits as perceived by
the consumers.” The consumers’ preference, intention to
purchase, and brand choice to a brand indicate the
consumers’ favorable responses to the marketing mix
elements of the brand in comparison with other brands.
Since customer-based brand equity occurs when the
consumer is familiar with the brand and holds some
favorable, strong, unique brand associations in memory
(Keller, 1993), preference, purchase intention and choice
behavior of a brand indicates the existence of brand equity.
Brand equity dimensions and brand equity
The marketing literature contains empirical research on the
linkages between each of the dimensions of brand equity
(brand awareness, brand loyalty, perceived quality, brand
associations) and brand equity. The value of a brand or brand
equity is largely created by brand loyalty. Aaker (1996) has
contemplated that to a greater extent, the equity of a brand
depends on the number of people who purchase it regularly.
The regular buyers have considerable value because they
represent a revenue stream for the firm. Thus, the concept of
brand loyalty is a vital component of brand equity. It has been
found to have a positive and direct role in affecting brand
equity (Atilgan et al., 2005). If customers are loyal to a brand
even in the face of competitor’s brands with superior features,
it means that the brand has a substantial value to the
customers.
The equity of a brand is partly measured in terms of the
awareness it evokes. The role of brand awareness in brand
equity depends on the level of awareness that is achieved. The
higher the level of awareness the more dominant is the brand,
which will increase the probability of the brand being
considered in many purchase situations. Therefore, raising
the level of awareness increases the likelihood that the brand
will be in the consideration set (Nedungadi, 1990) which will
influence consumers’ decision making. Past researches have
shown that brand awareness is a dominant choice tactic
among consumers (e.g. Cobb-Walgren et al., 1995; D’Souza
and Rao, 1995; Reynolds and Olson, 1995). If the awareness
of brands is high among consumers, it means the brand is
 Does image of country-of-origin matter to brand equity?
Norjaya Mohd Yasin, Mohd Nasser Noor and Osman Mohamad
familiar and reputable. Studies show that consumers who
recognize a brand name are more likely to buy that brand
because familiar products are normally preferred to those that
are less familiar (Hoyer, 1990; Macdonald and Sharp, 2000).
Purchase decisions that are in favor of the brand helps in
building brand equity.
Consumers’ perceived quality of a brand is due to their
perception process involved in the decision-making process.
High perceived quality occurs when consumers recognize the
differentiation and superiority of the brand relative to
competitors’ brands. This will influence their purchase
decisions and would drive them to choose the brand rather
than competitors’ brands. This implies that high perceived
quality would influence consumer’s choice, which will
consequently lead to an increase in brand equity. To the
marketer, high perceived quality could support a premium
price, which in turn can create a greater profit margin for the
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firm that can be reinvested in brand equity (Yoo et al., 2000).
Aaker (1991) also suggest that perceived quality is an
association that is usually central to brand equity.
Brand equity is largely supported by the associations that
consumers make with a brand, which contributes, to a specific
brand image. Brand associations are complicated and
connected to one another, and consist of multiple ideas,
episodes, instances, and facts that establish a solid network of
brand knowledge (Yoo et al., 2000). It is formed as a result of
the consumer’s brand belief, which can be created by the
marketer, formed by the consumer himself through direct
experience with the product, and/or formed by the consumer
through inferences based on existing associations (Aaker,
1991). Consumers’ favorable brand beliefs will influence their
purchase intentions and choice of the brand. These behavioral
responses have implications on brand equity. In the context of
products such as electrical appliances, brand associations
would represent the functional and experiential attributes
offered by the specific brand. The intangible qualities that
consumers associate the brand with, such as innovativeness,
distinctiveness, dynamism and prestige are also considered as
brand associations. The combination of tangible and
intangible attributes creates a brand identity, that is “a
unique set of brand associations that the brand strategist
aspires to create or maintain,” which drives brand associations
(Aaker, 1996). Therefore, the identity of the specific brand
may impact brand associations and ultimately brand equity.
Brand’s country-of-origin image and brand equity
Information-processing theory posits that consumers use
product cues to form beliefs and evaluations about a product,
which in turn influence their purchase behaviors. Generally,
the country-of-origin is considered as an extrinsic product cue
(Bilkey and Nes, 1982; Cordell, 1992; Erickson et al., 1984;
Han and Terpstra, 1988; Hong and Wyer, 1989, 1990;
Thorelli et al., 1989). Consumers are known to develop
stereotypical beliefs about products from particular countries
and the attributes of those products. Therefore the country-
of-origin image has the power to arouse importers’ and
consumers’ belief about product attributes, and to influence
evaluations of products and brands (Srikatanyoo and Gnoth,
2002). The country of origin denotes the home country for a
company or the country that consumers infer from brand
name (Han and Terpstra, 1988). One of the first
conceptualizations of the country-of-origin phenomenon was
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Journal of Product & Brand Management
Volume 16 · Number 1 · 2007 · 38 –48
that of Nagashima (1970). He defined the image that
consumers associate with a given country-of-origin as:
. . . the picture, the reputation, the stereotype that businessmen and
consumers attach to products of a specific country. This image is created by
variables such as representative products, national characteristics, economic
and political background, history, and traditions (Nagashima, 1970).
Some other researchers view country image as consumers’
general perceptions about the quality of products made in a
particular country (Han and Terpstra, 1988; Parameswaran
and Yaprak, 1987) while some others view it as the “defined
beliefs about a country’s industrialization and national quality
standard” (Srikatanyoo and Gnoth, 2002).
In the existing literature, there is a proliferation of studies to
document country-of-origin perspectives. From these studies,
marketers and consumer behavior researchers generally
accept that a product’s or brand’s country-of-origin is an
important influencing factor in consumer decision-making
(Khachaturian and Morganosky, 1990; Knight, 1999; Piron,
2000). Most of the previous studies suggest that country-of-
origin information which is indicated by the “Made in . . . ”
label serves several purposes in consumer decision-making. It
act as a salient attribute in consumer product evaluation
(Johansson, 1989), stimulates consumer’s interest in the
product (Hong and Wyer, 1989), affect behavioral intentions
through social norms (Fishbein and Ajzen, 1975) and
influences buyer behavior through affective processes as in
the case of consumer’s patriotic feelings about their own
country (Han and Terpstra, 1988). The overall evaluation of
products is influenced by country stereotyping, that is, the
image that consumers have about a certain country will
influence their perceptions of products from that country
(Bilkey and Nes, 1982). Since consumers’ perception of a
particular country-of-origin influence their evaluation of
products from that country, this will influence their
preference, purchase intention and choice of a particular
brand. Obviously, this has implications on the brand’s equity.
Method
Data collection
The data for this study were gathered through mail
questionnaires that were distributed to a cross section of
organizations located in the Klang Valley, in the state of
Selangor, Malaysia, which include public and private sectors.
The questionnaires were to be responded by the employees of
the organizations irrespective of their positions. The
respondents were real consumers who reported their
consumption experience with one of the three different
product categories: television, refrigerator and
air-conditioner. The reason for choosing the household
appliances is that major electrical appliances are generally
expensive items that have a certain amount of risk associated
with them. Therefore, it is reasonable to expect that
consumers must have acquired some brand knowledge and
develop choice criteria before making a purchase decision.
Besides, consumers are familiar with these product categories
and the brands that they are using are relevant to the research
subjects resulting in high knowledge and experience.
Relevance with the product categories and brands of their
choice enables the respondents to provide more reliable and
valid responses to the questionnaire. Respondents were
assigned to one product and were asked which brands they
used. Thus they answer questions pertaining to the brand that
 Does image of country-of-origin matter to brand equity? Journal of Product & Brand Management
Norjaya Mohd Yasin, Mohd Nasser Noor and Osman Mohamad Volume 16 · Number 1 · 2007 · 38 –48

they mentioned. To obtain reliable answers, the sample unit Table I Description of respondents
was composed of those individuals that were active decision
makers of the brand that they used. Item Description Frequency Percentage
The sample size for this study was determined using the Gender Male 222 44.3
table for determining the sample size from a given population Female 279 55.7
with the desired accuracy as suggested by Reeves (1992). The
samples in this study are restricted to adults of age 18 and Ethnicity Malay 344 68.7
above and employed. Two-stage probability cluster sampling Chinese 77 15.4
was employed, where groups of heterogeneous members of Indian 61 12.2
the population were identified. To choose the sample for this Others 19 3.8
study, probability random sampling was used. Since the
Education SPM/MCE 158 31.5
respondents were captured at their workplaces, the
STP/HSC 44 8.8
organizations were randomly chosen from the telephone
Diploma 116 23.2
directory of business clients for the state of Selangor and
Bachelor’s degree 143 28.5
Federal Territory issued by Telekom Malaysia. The study
sample was then drawn from the selected organizations based Masters/PhD 33 6.6
on the listing of employees of the organization concerned. Others 7 1.4
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The data collection instrument is a structured questionnaire Job Professional 19 3.8

which contains three parts: Part I consists of statement items position Top management 12 2.4
to measure variable country-of-origin image. Part II consists Middle management 240 47.9
of items measuring dimensions of brand equity: brand loyalty, Lower management 68 13.6
brand awareness, perceived quality and brand associations Administrative and technical 152 30.3
and dependent variable brand equity, and Part III includes support
some questions on demographic and socio-economic
Others 10 2.0
characteristics of the subjects. There are three versions of
questionnaires which differ in only the product category being Household 1,000 and below 26 5.2
tested – television, refrigerator and air-conditioner. A income 1,001 to 3,000 178 35.5
respondent completes one questionnaire only. (RM) 3,001 to 5,000 154 30.7
5,001 to 7,000 79 15.8
Profile of respondents 7,001 to 9,000 31 6.2
9,001 to 11,000 18 3.6
The profile of respondents is shown in Table I. As mentioned 11,001 and above 15 3.0
earlier, the total respondents for this study are 501. The study
sample comprises respondents who vary on such Marital Never married 136 27.1
characteristics as gender, age, marital status, education level, status Married 365 72.9
job position, household income ethnicity and living area. Such Age 18 to 22 years 27 5.4
a difference is a natural reflection of the true consumer 23 to 27 years 101 20.2
population of Malaysia as shown in the “Population and 28 to 32 years 104 20.8
Housing Census of Malaysia, 2000” issued by the
33 to 37 years 89 17.8
Department of Statistics. Moreover, the samples were
38 to 42 years 86 17.2
selected through cluster sampling method, a kind of
43 and above 94 18.8
probability sampling, where the whole elements in
representative organizations were randomly selected.
The respondents comprise of working male and female
adults. In terms of gender, the sample indicates a somewhat originating country of the brand that they are now using. This
balance between the males and females. Majority of them variable is measured using seven items developed for this study.
(53.85) are above the age of 32 and married (72.9 percent)
With respect to ethnic groups, majority are Malays, followed by Brand equity dimensions
Chinese and Indians. A total of 3.8 percent belong to other Brand equity dimensions consist of four dimensions as
races which include Eurasian, Singhalese, the “bumiputras” of suggested by Aaker (1991) that is, brand loyalty, brand
Malaysia such as Kadazan, Bajau, Bidayuh and Melanau. The awareness, perceived quality, and brand associations. To
breakdown of the study sample in terms of ethnic groups could measure brand loyalty, two items were adopted from Yoo et al.
be considered representative of the population of Malaysia (2000), two items from Chaudhuri (1995) and three items
since most of the ethnic groups are represented in the sample. were developed for this study based on the conceptualization
of brand loyalty as proposed by Aaker (1991). The brand
awareness can be measured in two ways; brand recognition
Measures
and brand recall. However, in this study, the scale was
Country-of-origin image designed to measure simple brand awareness, in particular,
This study utilizes multiple measures for each construct in the brand recognition, rather than brand recall. Four items were
conceptual model in Figure 1. The country-of-origin scale adopted from Yoo et al. (2000), which were based on previous
measures the consumer’s perception of the image of the research by Alba and Hutchinson (1987) and Nedungadi
country where the brand originates. To measure this construct (1990). Three more items to measure brand awareness were
the consumers are assumed that they have an idea of the developed for this study. The perceived quality of brand scale

41
 Does image of country-of-origin matter to brand equity?
Norjaya Mohd Yasin, Mohd Nasser Noor and Osman Mohamad
measures consumers’ subjective judgment about a brand’s
functionality and reliability. Three items were borrowed from
Yoo et al. (2000), which were based on the works of Dodds
et al. (1991) and one item was developed for this study.
Favorable associations are measured in terms of “consumers’
belief that the brand has attributes and benefits that satisfy
their needs and wants such that overall brand attitude is
formed” (Keller, 1993). Seven items were developed to
measure favorable associations. Two items to measure
strength of association were adopted from Yoo et al. (2000).
Brand equity
Yoo et al. (2000) have developed the Overall Brand Equity
Scale and four items from this scale were adopted to measure
the consumer-based brand equity. Three more items were
developed for this study. This consumer-based method for
measuring brand equity facilitates the definition of brand
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equity from the consumer perspective by comparing the
brand that the consumer is now using with the other brands in
the same product category.
Results
Exploratory factor analysis
Exploratory factor analysis was conducted separately on each
of the three constructs, country-of-origin image (seven items),
dimensions of brand equity (26 items) and the brand equity
(seven items). The items for each variable were grouped
separately and principal component factor analysis was
carried out on each of this grouping. The KMO index for
all the variables are found to be greater than 0.80, which
indicates the presence of sufficient intercorrelations in the
data matrix and appropriateness of factor analysis. The
communalities or the estimates of the shared variance among
seven items for country-of-origin reputation, 18 items for
brand equity dimensions, and seven items for brand equity are
shown to be greater than 0.5 (see Table II).
The factor analyses for the variables country-of-origin
image produced only one factor with an Eigen value of 4.9
and contributed 70.02 percent to item variance. No items
were deleted during the process. The factor analysis for the
variable dimensions of brand equity produced four factors
with Eigen values greater than 1 contributing 70.01 percent to
item variance. Eight items were deleted during the process
due to the existence of cross-loadings with values greater than
0.35. This is consistent with the works of past researchers
such as Igbaria et al. (1995). The factors are labeled as brand
distinctiveness, brand loyalty, brand awareness/associations,
and brand attitude/perception respectively. Since the
reliability coefficient for brand attitude/perception is below
the acceptable level as suggested by Nunnally (1978), the
variable is dropped from further analysis. The factor analysis
for the brand equity construct produced only one factor with
an Eigen value more than 1. This factor contributed 77.44
percent to total variance explained. Based on the results of the
factor analyses the hypotheses were stated as follows:
H1. (a) Brand distinctiveness (b) Brand loyalty (c) Brand
awareness/associations will have a positive relationship
with brand equity.
H2. Brand’s country-of-origin image will have a positive
relationship with (a) brand distinctiveness (b) brand
loyalty, and (c) brand awareness/associations.
H3. Brand country-of-origin image will have a positive
42
Journal of Product & Brand Management
Volume 16 · Number 1 · 2007 · 38 –48
relationship with brand equity through the mediating
effects of (a) brand distinctiveness (b) brand loyalty,
and (c) brand awareness/associations.
Hypothesis testing
The regression analysis was employed to test the relationships
posited in the model. Based on the conceptual model, the
brand equity dimensions, which are treated as intervening
variables in the model, are posited to influence brand equity.
The dependent variable brand equity was regressed on all these
variables – brand distinctiveness, brand loyalty and brand
awareness/associations. The results are shown in Table III.
The model is significant at pð0:01 indicating 99 percent
confidence in explaining the dependent variable. All the three
variables – brand distinctiveness, brand loyalty and brand
awareness/associations are found to have a significant and
positive influence on brand equity at a significant level of
0.000. The R square of 0.713 indicates that 71.3 percent of
the variance in brand equity was explained by the variations in
brand distinctiveness, brand loyalty and brand awareness/
associations. The standardized beta weights are in the
hypothesized direction. These findings substantively support
H1(a), H1(b) and H1(c). Looking at the beta coefficients of
the dimensions of brand equity on brand equity, brand loyalty
has the highest contribution towards brand equity, followed
by brand distinctiveness and brand awareness/associations.
In testing the relationship between country-of-origin image
and each of the dimensions of brand equity, results of the
regression is shown on Table IV.
The significant F value for the three regressions is , 0.01,
which indicates that the three regression models have 99
percent confidence in the ability to explain the dependent
variables. From Table IV it is evident country-of-origin image,
has a positive and significant influence on brand
distinctiveness, brand loyalty and brand awareness at a
significant level of p , 0:01. Therefore, H2(a), H2(b), and
H2(c) are supported. Based on the R2 values, country-of-
origin image contributed 54.2 percent of the total variance in
brand distinctiveness, 19.6 percent in brand loyalty, and 29.9
percent in brand awareness/associations.
In testing the mediating effects of the dimensions of brand
equity in the country-of-origin image image – brand equity
linkage, Baron and Kenny (1986) is consulted. They suggest
that three requirements must be fulfilled:
1 significant relationship between the independent and
mediating variable;
2 significant relationship between the independent and
dependent variable; and
3 significant relationship between the independent and
dependent variable in the presence of the mediator.
To demonstrate mediation, Baron and Kenny (1986) further
suggest that the effect of the independent variable on the
dependent variable is reduced or even disappears in the case
of full mediation.
The first requirement is fulfilled by the results shown in
Table IV. To fulfill the second requirement of the test of
mediation, the relationship between country-of-origin image
and brand equity is analyzed and the regression result proves
to be significant and positive as shown in Table V.
 Does image of country-of-origin matter to brand equity? Journal of Product & Brand Management
Norjaya Mohd Yasin, Mohd Nasser Noor and Osman Mohamad Volume 16 · Number 1 · 2007 · 38 –48

Table II Exploratory factor analysis and scale reliability

Items Loading TVE MSA Signif. Reliability
Country-of-origin image
The country from which brand X originates is a country that is innovative in manufacturing 0.89
The country from which brand X originates is a country that has high level of technological advance 0.88
The country from which brand X originates is a country that is good in designing 0.87
The country from which brand X originates is a country that is creative in its workmanship 0.87
The country from which brand X originates is a country that has high quality in its workmanship 0.86
The country from which brand X originates is a country that is prestigious 0.79
X originates from a country that has an image of advanced country 0.68 70.02 0.90 0.00 0.93
Brand distinctiveness
I associate X with dynamism 0.83
I associate X with high technology 0.83
I associate X with innovativeness 0.82
I associate X with sophistication 0.81
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I associate X with distinctiveness 0.81

I associate X with excellence 0.76
I associate X with prestige 0.75 0.95
Brand loyalty
If I am going to buy other electrical goods other than air-conditioner/refrigerator/television (either
one), I will choose brand X 0.78
Compared to other brands that have similar features, I am willing to pay a premium (higher) price for X 0.77
I will not buy other brands if X is available at the store 0.76
I will think twice to buy another brand if it is almost the same with X 0.69
I make my purchase selection of air-conditioner (or refrigerator or television) according to my favorite
brand name, regardless of price 0.69 0.86
Brand awareness/associations
I know how the symbol of brand X looks like 0.78
I have no difficulties in imagining X in my mind 0.76
I can quickly recall the symbol or logo of X 0.75
I have an opinion about this brand 0.58 70.01 0.94 0.00 0.82
Brand equity
Even if another brand has same features as X, I would prefer to buy X 0.92
If I have to choose among brands of air-conditioner/refrigerator/television, X is definitely my choice 0.90
If I have to buy an/a air-conditioner/refrigerator/television I plan to buy X even though there other
brands as good as X 0.89
Even if another brand has the same price as X, I would still buy X 0.89
If there is another brand as good as X, I prefer to buy X 0.88
If another brand is not different from X in any way, it seems smarter to purchase X 0.87
It makes sense to buy X instead of any other brands, even if they are the same 0.80 77.44 0.93 0.00 0.95
Notes: TVE ¼ Total variance explained; MSA ¼ Measure of sampling adequacy

Table III The effect of dimensions of brand equity on brand equity and brand awareness/associations on the country-of-origin
image – brand equity linkage. The results are shown in
Independent variables Standardized beta T Sig. ( p-value) Table VI. Model 1 shows the relationship between country-of-
Brand distinctiveness 0.234 6.728 0.000 origin image and brand equity. Model 2 is the mediated
Brand loyalty 0.525 16.638 0.000 regression that shows the relationship between country-of-
Brand awareness/associations 0.212 6.260 0.000 origin image and brand equity with the inclusion of the
mediating variable (either brand distinctiveness, brand loyalty
Notes: R2 ¼ 0:713, Sig. F ¼ 0:000
or brand awareness/associations). For mediating effect to
exist, the beta coefficients in Model 2 should be less than in
Model 1
Mediating effects of brand distinctiveness, brand loyalty From the results shown above, country-of-origin image is
and brand awareness/association found to be significant in the regressions mediated by brand
Three regression analyses were conducted separately to test loyalty and brand awareness/associations, with a decrease in
the mediating effects of brand distinctiveness, brand loyalty the beta coefficients. This indicates that brand loyalty and

43
 Does image of country-of-origin matter to brand equity?
Norjaya Mohd Yasin, Mohd Nasser Noor and Osman Mohamad
Table IV The effect of country-of-origin image on brand distinctiveness, brand loyalty and brand awareness/associations
Dependent variable Standardized beta
Brand distinctiveness 0.736
Brand loyalty 0.443
Brand awareness/associations 0.547
Table V The effect of country-of-origin image on brand equity
Independent variables Standardized beta T Sig. ( p-value)
Country-of-origin image 0.523 13.626 0.000
2
Notes: R ¼ 0:274, Sig. F ¼ 0:000
brand awareness/associations have partial mediating effects on
Downloaded by UNIVERSITAS TRISAKTI, User Usakti At 18:43 11 February 2016 (PT)
the linkages between country-of-origin image and brand
equity. In the regression mediated by brand distinctiveness,
country-of-origin image is insignificant which indicates that
brand distinctiveness fully mediates the relationship between
country-of-origin image and brand equity.
Discussion
This study examines the effects of country-of-origin image on
the development of brand equity of household electrical
appliances particularly television, refrigerator and air-
conditioner. It is found that the brand equity of electrical
appliances is made up of three dimensions, namely brand
distinctiveness, brand loyalty and brand awareness/
associations. These three dimensions have a significant
impact on brand equity as hypothesized. This indicates that
the three dimensions of brand equity actually form the brand
assets in which the evaluation of the brand’s added value or
equity is based upon. The formation of brand equity,
therefore, is rooted in these dimensions. In other words, the
extent of awareness and consumer loyalty as well as the
distinctiveness of the brands of household electrical
appliances indicates the existence of brand equity. Since the
relationships of the three dimensions of brand equity to brand
equity are positive, we can say that, the more distinctive the
brand is, the higher the brand equity. Similarly, a high degree
of brand loyalty and brand awareness leads to a high level of
brand equity. In terms of the effect size, brand loyalty seems
to contribute the most (beta ¼ 0:525) to the formation of
brand equity. This is in line with the works of Yoo et al. (2000)
that found brand loyalty as the key construct in explaining
brand equity.
The effects of country-of-origin image on each of the
dimensions of brand equity are also analyzed. First, country-
Table VI Relationship between country-of-origin image and brand equity mediated by dimensions of brand equity
Independent variable Mediating variable (dimensions of brand equity)
Country-of-origin image Brand distinctiveness
Country-of-origin image Brand loyalty
Country-of-origin image Brand awareness/associations
Note: * p , 0:001
44
Journal of Product & Brand Management
Volume 16 · Number 1 · 2007 · 38 –48
t-value Significance R2 Sign. F
24.091 0.000 0.542 0.000
11.014 0.000 0.196 0.000
14.550 0.000 0.299 0.000
of-origin image is found to influence brand distinctiveness
positively and significantly. Country-of-origin image plays an
important role in consumer purchase decision, particularly for
electrical goods. Consumers develop their interest and
preference for a brand on the basis of their perception of
the country-of-origin and the available information pertaining
to the brand. As such, favorable information about the
country helps creates positive attitude toward the brand,
which leads to favorable image of the brand. Jacoby et al.
(1971) suggested that brand image has a strong effect upon
quality perception. Since brand distinctiveness in this study
refers to favorable and positive aspects that are associated to
the brand, such as quality, this suggests that favorable country
image leads to favorable brand image, which in turn
influences brand distinctiveness. This explains the positive
and significant relationship between country image and brand
distinctiveness.
The test of relationship between country image and brand
loyalty supports the hypothesis that there is a positive
relationship. This implies that good image of the country-of-
origin leads to a high degree of customer loyalty. A plausible
explanation for this expected relationship is that Malaysian
consumers perceive countries with good image as
technologically advanced countries and brands that originate
from these countries are reliable and high quality. Although
consumers are faced with many alternative brands in the
market, which they perceive as equally good in terms of
product attributes and functionality, information about the
country is an added advantage. Consumers’ perception
towards country-of-origin is often transferred to the brands
originate from that country due to carry-over effect. These
consumers feel that brands from countries with good image
are more reliable than brands produced by countries with less
favorable image. As a result, these brands are preferred and
often chosen during purchase decision-making. If repeat
purchases occurs, eventually consumers may develop loyalty
towards these brands. This explains why country image is
related to brand loyalty.
Country image is also found to have a significant effect on
brand awareness/associations. A possible explanation for this
relationship is that in the purchase of electrical goods,
consumers often associate the quality of a brand with the
image of the origin country. Since consumers today are mostly
Model 1 (IV and DV) Model 2 (IV and DV with MV)
Std. beta Std. beta
0.523 * 0.056
0.523 * 0.181 *
0.523 * 0.180 *
 Does image of country-of-origin matter to brand equity?
Norjaya Mohd Yasin, Mohd Nasser Noor and Osman Mohamad
well educated, as indicated by the education level of the study
sample (98.6 percent), it can be expected that they are well
informed about the original country of their selected brands.
Countries with good image are often familiar to the
consumers and often perceived as producers of quality
brands. As such relationship exists between country image
and brand awareness/associations.
As mentioned earlier, the focus of this study is to examine
the relationship between country-of-origin image and brand
equity, which is mediated by the brand equity dimensions.
From the previous section, it is found that relationships exist
between country-of-origin image and the dimensions of brand
equity. This study also found that country-of-origin image has
a positive and significant impact on brand equity. However,
the results suggest that country-of-origin image has both
direct and indirect relationship with brand equity. Indirect
relationship here indicates that country-of-origin image is
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related to brand equity through the mediators. In the country-
of-origin image – brand equity linkage, brand distinctiveness
fully mediates the relationship while brand loyalty and brand
awareness/associations act as partial mediators. Figure 2
illustrates these relationships.
Conclusion and implications
The image of a country that consumers perceive is one of the
factors that consumers consider in making their purchase
decision particularly in the purchase of consumer durables
such as household electrical appliances. As such, country-of-
origin image would have an impact on the equity of such
goods. This study investigates the relationships between
country-of-origin image and brand equity of electrical
appliances, which includes televisions, refrigerators and
air-conditioners. Viewing the results of the study, the
findings suggest two things. First, country-of-origin image
has a significant impact on brand equity dimensions and
brand equity. Secondly, the brand equity dimensions namely
brand distinctiveness, brand loyalty and brand awareness/
associations have significant influence on the formation of
brand equity of electrical appliances. Among these three
dimensions brand loyalty has the greatest contribution to the
development of brand equity. This implies that producers of
household electrical appliances should put greater emphasis
Figure 2 Mediating effects of dimensions of brand equity on brand’s country-of-origin image – brand equity relationship
45
Journal of Product & Brand Management
Volume 16 · Number 1 · 2007 · 38 –48
in creating brand loyalty for their products. To ensure loyal
customers, producers and retailers need to build long-term
relationship with their customers, offer and maintain high
quality products, and provide good services, including
delivery and installation as well as after sales services such
as maintenance and repair.
Apart from that, producers of household electrical
appliances should always try to enhance and promote the
good image of their brand’s original country in order to
enhance the overall image of the brand in all their marketing
practices particularly advertising and personal selling. Brands
from well-established or good image countries generally are
easier to sell than brands from countries with unfavorable
image. Producers of brands from countries with favorable
image can also capitalize the good image in their brand-
naming strategy. Besides, marketers who want to benefit from
favorable country image should highlight the brands of
superior quality that originate from the same country. This
emphasis may help consumers to generalize product
information over the country’s brands. For example, Sharp
could emphasize that its television sets are “as good as
Sony’s.” Although different manufacturers produce these two
brands, the brand originates from the same country, that is,
Japan.
Suggestions for future research
The antecedents of brand equity of the non-marketing mix
nature in this study only consider one variables i.e. brand’s
country-of-origin image. Many other factors exist as
suggested by the literature, such as order of entry (Simon
and Sullivan, 1993), brand alliance (Shocker et al., 1994) that
contributes to brand equity. Future research should attempt
to examine the influence of such factors on brand equity. In
addition, the conceptual framework of the present study does
not take into considerations factors that moderate the
influence of antecedent of brand equity on brand equity.
Thus, future research should expand the present model by
incorporating moderating factors such as culture and
consumer demographics, which may have significant
influence on consumers’ perception.
Since this study investigates brand equity of durable goods
of three product categories namely television, refrigerator and
 Does image of country-of-origin matter to brand equity?
Norjaya Mohd Yasin, Mohd Nasser Noor and Osman Mohamad
air-conditioner, replication of the study with different product
categories in different industries would be beneficial in
understanding the extent of the model’s usefulness. The
brand equity concept can also be applied to services as well as
other durables such as automobiles. Whether the theories of
the present study hold for these products should be examined.
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About the authors
Norjaya Mohd Yasin is currently a Lecturer of Marketing at
the School of Business Management, Universiti Kebangsaan
Malaysia, Bangi, Selangor, Malaysia. Norjaya Mohd Yasin is
the corresponding author and can be contacted at:
norjaya@pkrisc.cc.ukm.my or norjaya@hotmail.com
Mohd Nasser Noor is currently a Lecturer of Marketing at
the School of Management, Universiti Sains Malaysia,
Penang, Malaysia.
Osman Mohamad is currently the Deputy Dean of
Graduate School as well as a Lecturer of Marketing at the
School of Management, Universiti Sains Malaysia, Penang,
Malaysia.
Executive summary and implications for
managers and executives
This summary has been provided to allow managers a rapid
appreciation of the content of the article. Those with a particular
interest in the topic covered may then read the article in toto to take
advantage of the more comprehensive description of the research
undertaken and its results to get the full benefit of the material
present.
Country-of-origin matters: build brand loyalty, but be
aware of your roots
The case for brand building is an overwhelming one. Readers
of this journal may be a self-selecting sample, but finding
consensus among them on the benefits of investing in the
brand would not be the hardest task ever set. In building
brands a number of variables are at play and need to be
considered.
47
Journal of Product & Brand Management
Volume 16 · Number 1 · 2007 · 38 –48
Among them, the impact of country-of-origin should not be
ignored. As consumers we have mental images of “cars”, but
when we have to express our impressions of “German cars”
they become more specific, and many would cite quality as a
feature. Similarly being offered “pizza” may be a ho-hum
scenario, but when “Italian pizza” is put forward an altogether
tastier proposition is on the table to be greedily considered.
However much we wish to break away from national
stereotypes it seems we are products of our origins, and must
learn to celebrate our roots. With genealogy emerging as a
new global obsession, it should not surprise us that brand
origins are considered as important as good breeding.
Brand equity considerations
Building brand equity is what gets brand managers out of bed
in the morning, and keeps them awake at night. It is what
represents the product in the minds of consumers. It may be a
fantasy, but it is more than a virtual reality. Understanding
customers’ preferences, intentions to purchase and brand
choices provides the basis for success, and positive responses
to market research in this area are indicative of medium- to
long-term market health.
Brand awareness, brand loyalty, perceived quality and
brand associations are the dimensions of brand equity. Often
brand equity is primarily related to brand loyalty and having
regular customers, and loyalty is particularly powerful when
customers stay with a brand even when competitor products
have superior product features. Raising brand awareness
increases the chance of the brand being considered for
purchase by customers and potential customers. Their
propensity to purchase will also be affected by perceptions
of quality, the differentiators that separate one from the other.
And the intangible, often complex, qualities of brand
associations are key, contributing to a specific brand image.
When it comes to linking brand equity with the country-of-
origin people look for cues and clues, and often take national
stereotypes into consideration however unfashionable it would
be to publicly admit it. Such stereotypes can greatly influence
how products are assessed. These can relate to images and
impressions of how industrialized a country is and how high
are its quality standards. This then feeds into their brand
preference, intention to purchase, and brand choice. In short,
it cannot be ignored.
A relationship you can rely on
Research into customer attitudes in this area was via
questionnaire to a sample population based in the Klang
Valley within the Selangor state in Malaysia. It focused on the
brand equity of household electrical appliances (particularly
televisions, refrigerators and air-conditioner units) and its
relationship with the country-of-origin of the products.
The survey confirmed that the creation of brand equity is
squarely reliant on the three dimensions of brand
distinctiveness, loyalty and awareness/associations. And the
more distinctive is the brand then the higher is the brand
equity. Of the dimensions identified, brand loyalty contributes
the most.
When it comes to country-of-origin, the following findings
were reported:
.
it influences brand identity positively and distinctively;
.
for electrical goods it plays an important role in
purchasing decisions by consumers;
 Does image of country-of-origin matter to brand equity?
Norjaya Mohd Yasin, Mohd Nasser Noor and Osman Mohamad
.
customer interest and brand preferences are based on
country-of-origin and other available information; and
. there is a positive relationship between country image and
brand distinctiveness.
Where customers have a good impression of a country this
can lead to higher levels of customer loyalty. In Malaysia
goods from technologically advanced countries are
considered to be both reliable and of high quality. Country
image also has a big contribution to make to brand
perceptions.
In brief, the survey sought to probe the relationship
between the image of the country-of-origin and brand equity,
mediated by the brand dimensions identified. The result – the
relationship is a strong one. In an uncertain world, where
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Journal of Product & Brand Management
Volume 16 · Number 1 · 2007 · 38 –48
relationships are constantly under pressure, here is one that
can be relied upon. Even if marketers wish to, it is not
something that can be ignored. It is not something that can be
controlled, but it is something that can be harnessed. At the
very least it is an alarm call to wake up. At best it is a lever for
the market savvy.
No one chooses where they come from, but they do have
the capability to make the most of accidents of birth. It may
not be fair, it may seem outmoded by the rapid technology
transfer of the global market place, but whatever our
customers are thinking concerns us, every waking hour.
(A précis of the article “Does image of country-of-origin matter to
brand equity?”. Supplied by Marketing Consultants for Emerald.)
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