An executive summary for
managers and executive
readers can be found at the
end of this article
Pioneering brands
Relevance to international
marketers
218 JOURNAL OF PRODUCT & BRAND MANAGEMENT, VOL. 8 NO. 3, 1999, pp. 218-231 # MCB UNIVERSITY PRESS, 1061-0421
Product entry in international
markets: the effect of country-
of-origin on first-mover
advantage
Hwei-Chung Chen
Associate Professor, Department of International Trade, College of
Management, Tung-Hai University, Taichung, Taiwan
Arun Pereira
Associate Professor, Department of Marketing and the Institute of
International Business, School of Business and Administration,
St Louis University, St Louis, Missouri, USA
Keywords Country of origin, International marketing, Market entry,
Product management
Abstract An experimental design is used to examine the effect of products' country-of-
origin on first-mover advantage. Specifically, focuses on the effects of favorable/
unfavorable country-of-origin on first-mover advantage, as well as its effects with regard
to ``early followers'' and ``late followers''. The results have direct implications for
products entering international markets as a first mover, ``early'' follower, or ``late''
follower. Results indicate that with increasing number of competitors entering an
international market, a product's favorable country image begins to lose its strategic
importance. Consequently, the pursuit of first-mover advantage may be more relevant
than a positive country-of-origin effect. Also, the results suggest that for products from
countries with a less than favorable image, it may be more useful to be a ``follower'' than
a ``first-mover'' because the advantage of being first in a market can be negated by the
unfavorable country-of-origin effect.
Introduction
The term ``first-mover advantage'' refers to pioneering brands that enjoy
long-term market share advantages, along with possible advantages in
distribution, product-line breadth, and quality. ``Country-of-origin'' is a term
that has been defined in the literature in many ways, including the ``made in''
label of a product, which can communicate a stereotyped country image,
ultimately affecting customer purchase decisions. The areas of ``first-mover
advantage'' and ``country-of-origin'' have received substantial research
interest in the past and have independently grown to be significant research
streams (see next section). Research in both areas has provided interesting ±
if sometimes controversial ± findings that have direct implications for
managers, such as the advantages and disadvantages in the order of market
entry (first mover versus late follower) and the significance of ``made-in''
information of products (favorable/unfavorable country-of-origin).
For international marketers the areas of first-mover advantage and country-
of-origin are very relevant, particularly as they relate to each other.
Specifically, as many hitherto closed economies open their markets to
foreign competition, the products entering these markets may be ``first-
movers'' in many instances (i.e. they are the first entrants of their respective
industries in those countries) or late entrants (i.e. they are followers to other
brands in already established industries). In either case, a key characteristic
in these cases is that the entering brands have different countries of origin. A
relevant question in this context is: What is the impact of the brands with
different countries of origin on first-mover advantage? For example, can a
late entrant with a ``favorable'' country-of-origin negate the advantages
accrued by a first mover with an ``unfavorable'' country-of-origin? Such

Problems of studying this
area
Added advantages for first
movers
Stereotyped country image
JOURNAL OF PRODUCT & BRAND MANAGEMENT, VOL. 8 NO. 3, 1999
questions are of obvious relevance to international marketers; this study
takes a first step in answering such questions with regard to the effect of
country-of-origin on first-mover advantage.
The paper is organized as follows: the next section focuses on a brief review
of the literature of first-mover advantage and country-of-origin, followed by
sections on the experimental design, hypotheses, and analysis. The final
sections discuss the results of the study and highlights the managerial
implications that can be drawn from the study.
First-mover advantage (FMA)
The areas of first mover advantage (FMA) and the associated field of order
of market entry have received substantial attention in the past. Research has
shown that the pioneering brand in a market has long-term market share
advantages, along with advantages in distribution, product-line breadth,
quality, etc. (Buzzell and Gale, 1987; Lambkin, 1988; Robinson, 1988;
Robinson and Fornell, 1985; Urban et al., 1986). However, other researchers
have noted the inherent problems of studying this area (e.g., Aaker and Day,
1986; Tellis and Golder, 1996), such as:
. Studies tend to sample only surviving firms in an industry (the pioneers
or first movers that failed are not included in the study);
. Many studies survey managers of current market leaders; these managers
might promote themselves as having been the pioneers when in fact they
were not; and
. The operational definition of a ``first-mover'' or ``pioneer'' has not been
consistent among the different studies.
Recognizing the above mentioned problems in the studies of FMA, Tellis
and Golder (1996) attempt to control for the said problems and reveal that
market pioneering in itself does not guarantee long-term success. Rather,
according to Tellis and Golder (1996), first movers who have the added
advantages of vision, persistence, commitment, innovation, and asset
leverage tend to be market leaders (they also note that these five
characteristics can propel a follower to leadership, if the first mover neglects
them). Thus, the insights offered by Tellis and Golder indicate that the area
of FMA is more complex than what was traditionally believed; it also
indicates that studying the area of FMA is fraught with hurdles. Given these
difficulties, this research uses a fictional market and an experiment design to
confirm the existence of first-mover advantage, and study the effect of
country-of-origin on the first-mover, as well as on ``early'' and ``late''
followers.
Country-of-origin (COO)
The issue of country-of-origin (COO) is increasingly important to
international marketers; therefore, researchers have examined COO from a
variety of perspectives (Cordell, 1992; Witt and Rao, 1992; Chao, 1993;
Kochunny et al., 1993; Tse and Gorn, 1993; Harris et al., 1994; Elliott and
Cameron, 1994; Janda and Rao, 1997). As multinationals compete for
customers in the newly opened market economies, the competition they face
come from different countries of origin. The customers in these markets
typically find that the competing products in a given market are similar in
attributes ± but for their respective countries of origin. As a result, the ``made
in'' label can communicate a stereotyped country image, and ultimately have
a significant impact on purchase decisions.
219
 Categorization theory This stereotyping behavior can be better understood by categorization
theory, drawn from the literature on consumer information processing.
Categorization theory suggests that since the capacity of short-term memory
is limited and external stimuli are many, people will divide stimuli in their
environment into categories to get the most useful (valuable) information for
the least effort and to ensure that the environment is inherently structured
(Coupey and Nakamoto, 1988). Researchers (Crocker et al., 1984; Engel et
al., 1986) have shown that through the categorization process, concepts are
learned by developing and differentiating cognitive categories. Concept
identification is achieved through placing an object into a cognitive category.
In terms of consumers' purchasing foreign products, the COO (the ``made
in'' label) serves as a cue, which will activate certain experience or
information (schema) associated with the relevant country, which in turn will
guide the consumer to put the product in a certain category stored in
memory. The consumer will then make a favorable or unfavorable decision
(product evaluation, purchase intention, etc.) accordingly. Consequently,
when consumers are processing product-related information, the activated
stereotyped country image associated with the product and the situation will
have significant impact on consumers' product evaluation and preference
formation.
Favorable and unfavorable Roth and Romeo (1992) develop the COO effect further by offering a
match framework for managing the COO in international markets. They make a
case for understanding the ``match'' between the ``attributes'' relevant for the
product's purchase and the ``made-in'' country. Among the ``matches'' they
provide are the ``favorable match'' (for example, a high tech product from a
technically advanced country) and the ``unfavorable match'' (for example, a
high tech product from a developing country). We use Roth and Romeo's
(1992) framework to identify a ``favorable match'' and an ``unfavorable
match'' in the experimental study. As explained below, our fictitious product
is ``high tech'', and we use a pretest to identify a country that would be
perceived to be a ``favorable match'' with regard to its COO, and another
country that would be perceived to be ``unfavorable match'' with regard to
its COO.

Experimental procedure
The subjects participating in the experiment were undergraduate students
from a mid-western university in the USA. Given the nature of the product
used in the experiment and its relevance to undergraduates it is expected that
the use of such subjects strengthens the validity of the study.

The product
Fictitious product A fictitious, imaginary ``high-tech'' product in the form of a palm-sized, all
purpose ``personal tutor'' was chosen as the new product for the experiment.
As described below, the product purports to tape instructors' class
presentations, transcribe the presentations into notes and make it possible for
the students to view them on a computer screen, or print them. Early in the
experiment, the subjects are exposed to a fictitious magazine, ``Customer
Reports'' (styled after Consumer Reports); this magazine evaluates new
products, including the ``personal tutor''. The report explains that two
attributes are relevant when purchasing the ``personal tutor'': quantitization
ratio (QR) and intermodulation coefficient (IC). Needless to say, these
attributes are imaginary. Further, the Customer Reports explains that there is
a trade-off between the attributes QR and IC; as such, all of the following

220 JOURNAL OF PRODUCT & BRAND MANAGEMENT, VOL. 8 NO. 3, 1999


Three groups of students
Variables measured
JOURNAL OF PRODUCT & BRAND MANAGEMENT, VOL. 8 NO. 3, 1999
combinations of QR and IC provide an equally good product: high QR, low
IC; low QR, high IC; a ``medium'' level of both QR and IC.
Countries of origin
Given the ``high-tech'' nature of the product, we attempt to identify a
country with a favorable ``match'' and a country with an ``unfavorable''
match (based on Roth and Romeo (1992) framework discussed above).
Results of a pretest indicated that from randomly chosen group of countries,
Japan was perceived as the strongest ``favorable match'' (i.e. favorable as the
country of origin for high tech products) and Mexico was perceived as
``unfavorable match'' (i.e. unfavorable as a country of origin for high tech
products).
Procedure
First, students were assigned into one of three groups: the Japan group, the
Mexico group, and the control group. The Japan group was assigned
experimental materials of the fictional product, ``the personal tutor'' with
Japan as the COO; the Mexico group was assigned experimental materials
with Mexico as the COO; the control group received no information on the
COO of the personal tutor. Experimental materials include a cover of an
imaginary magazine ``Customer Reports'' that focusses on new products and
an inside page that describes the function of the personal tutor, establishes
the relevant attributes and explains that all three attribute combinations (high
QR, low IC; low QR, high IC; and medium levels of both QR and IC)
provide products of identical quality. Also, as described below,
advertisement copies were created for all experimental conditions; the
advertisements are identical in all aspects except with regard to (Japan,
Mexico, or no country information), attribute combinations (low QR, high
IC; high QR, low IC; medium level of both), and order of entry (first mover,
early follower, and late follower).
The variables measured are: overall product evaluation for each brand (as
discussed below), and ratings of the brands on the two attributes, QR and IC.
The experiment was conducted over seven sessions, each session separated
by a week. The procedure was as follows:
(1) In the first session of the experiment, the cover of the ``Customer
Reports'', the cover story, and the advertising for the first mover are
shown to the respondents in all three groups. Thus, subjects are made
aware of the following:
. the new product,
. the relevant attributes needed to evaluate the product (QR and IC),
. the fact that the three combinations of the levels of the attributes
(high QR, low IC; high IC, low QR; medium level of both) provide
for same quality of product,
. the advertisement for Brand A, the first mover (described as ``Now
available for the first time!'') with (Japan, Mexico, or no country)
information (depending upon whether the subjects are part of the
Japan, Mexico, or the control group).
(2) During sessions 2, 3, and 4 the advertising copy of Brand A, the first
mover, is repeatedly and exclusively shown to the respondents of the
respective three groups. The intention is (through repeated exposures) to
establish the first mover in minds of the subjects.
221
 (3) In session 5, advertisements of both Brand A (the first mover, with the
advertising copy, ``Now available for the first time!'') and Brand B (the
early follower, as provided by the advertising copy, ``Now you have a
choice!'') are presented to the subjects of the three groups, along with
their country of origin (Japan, Mexico, or no country) information).
(4) In session 6, no experimental materials are presented to the subjects;
instead, subjects provide measures of: ratings of the product attributes
QR and IC, measured on a 10-point scale, 1 = poor, 10 = excellent) for
both Brand A and Brand B; and overall product evaluations (1 = poor, 10
= excellent) of Brand A and Brand B.
(5) In the seventh session, advertisement for a third brand, Brand C, the late
follower (the advertising copy reads, ``Now you have the latest!''), along
with Brand A (the first mover) and Brand B (the early follower) is
presented to the subjects.
(6) In session 8, no experimental materials are presented to the subjects;
instead, subjects provide measures of ratings of the product attributes
and overall product evaluations of Brand A (the first mover) and Brand
B (the early follower), and Brand C (the late follower).
Independent product It should be noted that the subjects in the three groups are making product
evaluations evaluations independently. That is, the subjects in any given group (e.g.
Japan) only evaluate the product from that specific group (e.g. Japan),
without knowledge of the existence of the other two groups (e.g. the Mexico
group and the control group), or without being exposed to the other two types
of COO manipulations. This approach enables us to separate the COO effect
and the effect of FMA, and yet study them together at the same time. To the
participants in each group, this is a study of FMA. By combining and
comparing results from all three groups, we are able to investigate the COO
effect. In other words, instead of directly asking the subjects to compare, for
example, a first mover from Japan and an early follower from Mexico (in
which case the effect of country-of-origin and order of entry are mixed and
indistinguishable), the assessment of COO effect is an indirect one.

Hypotheses
Two-brand competition: FMA
First-mover advantage Hypotheses 1, 2 and 3 focus on first-mover advantage. In each case, it is
expected that the first mover will enjoy a higher overall product evaluation
than the follower, given that both brands are ``equal'' on relevant product
attributes.
H1. Overall product evaluation score for the first mover (Brand A) will be
higher than that of the follower (Brand B), given that both brands are
``equal'' in product attributes and given no information on country-of-
origin.
H2. When the first mover and the follower are ``equal'' on product attributes
and both have a ``favorable match'' in country-of-origin, overall product
evaluation score for the first mover will be higher than that of the
follower.
H3. When the first mover and the follower are ``equal'' on product attributes
and both have an ``unfavorable match'' in country-of-origin, the overall
product evaluation score for the first mover will be higher than that of
the follower.

222 JOURNAL OF PRODUCT & BRAND MANAGEMENT, VOL. 8 NO. 3, 1999


Smaller perceived
difference
Equivalent products
JOURNAL OF PRODUCT & BRAND MANAGEMENT, VOL. 8 NO. 3, 1999
Two-brand competition: FMA and COO
Hypotheses 4 and 5 attempt to test the effects of ``favorable'' and
``unfavorable'' match in country of origins on first mover advantage.
H4. Under conditions where the first mover has a ``favorable match'' in
country-of-origin and the follower has an ``unfavorable match'' in
country-of-origin, and both brands are ``equal'' on product attributes,
the overall product evaluation score for the first mover will be higher
than that of the follower and the magnitude of the difference in scores
between the first mover and follower will be larger than that of the
difference in the favorable/favorable case (H2).
H5. Under conditions where the first mover has an ``unfavorable match'' in
country-of-origin and the follower has a ``favorable match'' in country-
of-origin, and both brands are ``equal'' on product attributes, the overall
product evaluation score for the first mover will be higher than that of
the follower and the magnitude of the difference in scores between the
first mover and follower will be smaller than that of the difference in the
unfavorable/unfavorable case (H3).
Three-brand competition
Hypothesis 6 proposes that the perceived difference between the first two
brands will become smaller when a third brand enters the market, given that
the third brand is equivalent to the other two in product attributes.
H6. The difference in the overall product evaluation scores between the first
mover and the follower will be reduced after the entrance of a third
brand in the market, given that all three brands are ``equal'' in product
attributes.
Methodology and results
A total of 121 subjects participated in the experiment over seven sessions.
The subjects were randomly assigned to one of three groups: Japan (n = 45),
Mexico (n = 37), and the control (n = 39). As explained earlier, the subjects
were exposed to various experimental stimuli and the measurements
recorded pertain to: overall product evaluations (1 = poor, 10 = excellent),
and ratings on the two product attributes (1 = poor, 10 = excellent).
Regressions, t-tests, and ANOVA are used to test the hypotheses and to
check experimental manipulations.
Manipulation checks
The experiment was set up in such a way that, even though the first mover
(Brand A), follower (Brand B), and late follower (Brand C) each have been
given to possess different combinations of the attributes QR and IC (high
QR-low IC, low QR-high IC, and medium QR-medium IC, respectively), the
subjects were told that they are ``equivalent products''. A logical starting
point in the analysis is to check whether the subjects' perceived attribute
ratings are in agreement with the high-low, low-high, and medium-medium
attribute specifications. In other words, will the subjects transform the high-
medium-low objective specifications into subjective ratings of excellent-
average-poor?
Table I provides the results of a paired T-Test of means of subjects' ratings
of brands A, B, and C on QR and IC. As seen, in general, subjects' ratings of
product attributes tend to agree with the objective attribute specifications. In
other words, even though the intrinsic attributes (QR and IC) are fictitious
and have no informational value for the formation of judgments, such
223
 QR IC T-sig.
Brand A
Japan (n = 45) 8.54 3.51 0.000
Mexico (n = 37) 8.14 4.31 0.000
Control (n = 39) 8.57 3.50 0.000
Brand B
Japan (n = 45) 3.27 7.80 0.000
Mexico (n = 37) 4.37 7.60 0.000
Control (n = 39) 2.71 8.54 0.000
Brand C
Japan (n = 45) 5.29 5.53 0.235
Mexico (n = 37) 5.53 5.43 0.272
Control (n = 39) 5.64 4.68 0.010
Note: Brand A (first mover with high QR and low IC), Brand B (Early follower with
low QR and high IC), Brand C (Late follower with medium QR and IC)
Table I. Paired t-test of mean differences in subjective ratings of quantitization
ration (QR) and intermodulation coefficient (IC)

intrinsic product cues were actively processed and the subjects have assigned
real meanings to the fictitious stimuli.
Manipulation check The next step in the manipulation check was to investigate the relationships
between the subjects' attribute ratings and overall product evaluations; we
would expect a strong relationship between the two. Regression analysis was
performed using subjects' overall product evaluation as the dependent
variable, and ratings on QR and IC as independent variables. Table II reveals
the results of the regression analysis in the case on two-brand competition
(first mover and follower) and Table III reveals the results of three-brand
competition (first mover, follower, and late follower).
Country-of-origin effect The results in the two brand competition (Table II) reveal that the country-
of-origin and order of entry have some influence on the relationships
between individual attribute ratings and overall product evaluation.
Specifically, when the first mover is from a country with a less favorable
image (Mexico), the information of the country-of-origin is discounted and
respondents use the intrinsic product attributes to form product evaluations
(high R square). On the other hand, when a first mover is from a country with
a more favorable image (Japan), the linkage between intrinsic product
attributes and overall product evaluation is weakened (low R Square). In
other words, when respondents were unfamiliar with the product (first-
mover), country-of-origin could influence overall product evaluation. As

R square F sig.
All six groups (N = 242) 0.32 0.000
Japan (N = 45)
First mover 0.13 0.060
Early mover 0.42 0.000
Mexico (N = 37)
First mover 0.65 0.000
Early mover 0.48 0.000
Control (N = 39) 0.006
First mover 0.25 0.030
Early mover 0.18
Table II. Regression analysis-subjective attribute ratings and overall product
evaluation in two-brand competition

224 JOURNAL OF PRODUCT & BRAND MANAGEMENT, VOL. 8 NO. 3, 1999

 R square F. sig
All nine groups (N = 363) 0.24 0.000
Japan (N = 45)
First mover 0.19 0.011
Early follower 0.01 0.746
Late follower 0.44 0.000
Mexico (N = 37)
First mover 0.17 0.04
Early follower 0.28 0.004
Late follower 0.22 0.006
Control (N = 39)
First mover 0.40 0.000
Early follower 0.07 0.263
Late follower 0.31 0.001
Table III. Regression analysis ± subjective attribute ratings and overall product
evaluation in three-brand competition

respondents became better acquainted with the product, the country-of-origin

effect became less obvious. The relationship between intrinsic product
attributes and overall product evaluation is almost identical for the follower
regardless of country (Japan or Mexico).
Late follower When a third brand (the late follower, brand C) enters the market (Table III),
the relationship between individual attribute ratings and overall product
evaluations was weakened. No clear indication can be observed as to how the
order of entry or country-of-origin might have played a role in the formation
of overall product evaluation. One explanation is that in three brand
competition, as the novelty value of the new product decreased and number
of alternatives increased, respondents paid less attention to specific product
attribute cues. As a result, little information can be derived from the
analyses.
Relationship between two The analysis reveals that, overall, there is a significant relationship between
attributes the two product attributes, QR and IC, and overall product evaluation. In
addition, there seem to be indications that order of entry and country-of-
origin affect the formation of overall product evaluation and it sets the stage
for the variety of hypotheses that we have listed.

Hypotheses testing
Two-brand competition: FMA
The first research hypothesis proposes that all else being equal, the first
mover has an advantage over the early follower. Specifically, the overall
product evaluation score for the first mover will be higher than that of the
early follower. This hypothesis is supported, shown in Table IV. As
evidenced by the t-test statistics in cell 9, in the control group, where no

1 Japan A (7.70) 2 Japan A (7.70) 3 Japan A (7.70)

Japan B (6.86) Mexico B (6.59) Control B (6.21)
Sig. = 0.039 Sig. = 0.009 Sig. = 0.001
4 Mexico A (7.21) 5 Mexico (7.21) 6 Mexico A (7.21)
Mexico B (6.86) Mexico B (6.59) Control B (6.21)
Sig. = 0.405 Sig = 0.146 Sig. = 0.025
7 Control A (7.32) 8 Control A (7.32) 9 Control A (7.32)
Japan B (6.86) Mexico B (6.59) Control B (6.21)
Sig. = 0.302 Sig. = 0.107 Sig. = 0.019
Table IV. Country of origin effect on first mover advantage in two-brand
competition (First mover, Brand A versus early follower, Brand B)

JOURNAL OF PRODUCT & BRAND MANAGEMENT, VOL. 8 NO. 3, 1999 225

 country-of-origin information is provided, and the product quality is set to be
equal, brand A, the first mover, has a significantly higher overall product
evaluation score than that of brand B, the early follower.
Effect neutralized The second hypothesis postulates that when both the first mover and the
early follower are from a country with a favorable country-of-origin (in this
case, Japan), the country-of-origin effect is neutralized, and the first mover
will maintain its advantage. This hypothesis is also supported. As shown in
cell 1, the overall product evaluation score of the first mover from Japan is
significantly higher than that of the early follower with an identical country-
of-origin.
The third research hypothesis speculates that when both the first mover and
the early follower are from the country with an unfavorable country-of-origin
(in this case, Mexico), the country-of-origin effect is offset, and the first
mover will maintain its advantage. This hypothesis is not supported. As
shown in Table IV (cell 5), the overall product evaluation score of the first
mover from Mexico is not significantly higher than that of the early follower
with an identical country-of-origin. This result implies that the first-mover
advantage is probably negated by the less favorable country image of
Mexico.
The fourth research hypothesis suggests that when the first mover has a
favorable country-of-origin and the follower has a unfavorable country-of-
origin, the first-mover advantage will be enhanced. This hypothesis is
supported. As shown in Table IV (cell 2), the difference in overall product
evaluation scores between the first mover from Japan and the early follower
from Mexico is more evident.
The fifth research hypothesis suggests that when the first mover has an
unfavorable country-of-origin and the early follower has a favorable country-
of-origin, the first-mover advantage will be weakened. This hypothesis is
supported. As shown in Table IV (cell 4), the difference in overall product
evaluation scores between the first mover from Mexico and the early
follower from Japan is insignificant. However, it should be noted that even
though the difference is statistically insignificant, the first mover from
Mexico does have a higher average product evaluation score. This means
that, to a certain degree, the advantage of being first outweighs the negative
impact carried in a less favorable country image.

Other results in two-brand competition

Capitalize on favorable In addition to the test of the hypotheses, the data analyses also produce some
image other interesting results that have not been hypothesized. First of all, for the
first mover, the one with a favorable ``Made in'' label (i.e. Japan) has the
highest overall product evaluation score (mean = 7.70), followed by the
score of the first mover with an unknown country-of-origin (the control
group, mean = 7.32). The first mover from Mexico has the lowest score
(mean = 7.21). These results imply that, for a first mover, if the country has a
favorable image, it should be used to enhance its competitive position. On
the other hand, if the first mover product carries a less favorable country
image (i.e. Mexico), it is advisable not to mention its country-of-origin.
Second, for the early follower, the one with a favorable ``made in'' label (i.e.
Japan) has the highest overall product evaluation score (mean = 6.86),
followed by the score of the first mover from Mexico (mean = 7.32). The
early follower with an unknown country-of-origin has the lowest score
(mean = 6.21). These results suggest that, for an early follower, a favorable

226 JOURNAL OF PRODUCT & BRAND MANAGEMENT, VOL. 8 NO. 3, 1999

 country image should be used to enhance competitive position. In addition,
even if the early follower product carries a less favorable country image (i.e.
Mexico), it is still advisable to mention its country-of-origin. One
explanation of this finding is that, for a (early) follower, the negative impact
of the ``copy cat'' stereotype will put the (early) follower in a more
disadvantageous position when no country-of-origin is available. In other
words, for a (early) follower, letting the consumer know the less favorable
country image is, possibly, a way of avoiding the consumer associating the
product with the least favorable image.

Three-brand competition
Table V summarizes results in the three-brand competition. Please note that,
although there are three brands in the market, the focus is still on the two
preexisting brands (Brands A and B). Generally speaking, cell-by-cell
comparisons (between Tables IV and V) show that the competitive situation
between brand A and brand B in the three-brand market is not much different
from that in the two-brand competition.
Smaller perceived Hypothesis 6 expects that the perceived difference between the first two
difference brands will become smaller when a third brand enters the market, given that
the third brand is equivalent to the other two in product attributes. Paired-
comparisons are used to detect the changes in overall product evaluation
between the two measurements (of brand A and brand B) taken before and
after the entry of the third brand (brand C). Paired-comparisons of mean
difference are summarized in Table VI. The results give the following two
indications:
(1) The product evaluation scores dropped significantly (at 0.1 level) for
products from Japan. Both the first mover (brand A) and the early
follower (brand B) are perceived less favorably. The findings show,
again, the (positive) country-of-origin effect declines as respondents

Brands Changes Significance

Brand A (Japan) 7.70 to 7.28 0.089
Brand B (Japan) 6.86 to 6.41 0.079
Brand A (Mexico) 7.21 to 6.97 0.225
Brand B (Mexico) 6.59 to 6.33 0.374
Brand A (Control) 7.32 to 6.89 0.146
Brand B (Control) 6.21 to 5.57 0.098
Table VI. T-test of differences in overall evaluation (between first mover, brand
A, and early follower, brand B, before and after the entry of the third brand,
brand C)

1 Japan A (7.28) 2 Japan A (7.28) 3 Japan A (7.28)

Japan B (6.41) Mexico B (6.33) Control B (5.57)
Sig. = 0.149 Sig. = 0.027 Sig. = 0.000
4 Mexico A (6.97) 5 Mexico A (6.97) 6 Mexico A (6.97)
Japan B (6.41) Mexico B (6.33) Control B (5.57)
Sig. = 0.149 Sig = 0.133 Sig. = 0.000
7 Control A (6.89) 8 Control A (6.89) 9 Control A (6.89)
Japan B (6.41) Mexico B (6.33) Control B (5.57)
Sig. = 0.215 Sig. = 0.181 Sig. = 0.000
Table V. Country of origin effect on first-mover advantage in three-brand
competition (first mover, brand A versus early follower, brand B)

JOURNAL OF PRODUCT & BRAND MANAGEMENT, VOL. 8 NO. 3, 1999 227

 become more familiar with the product and/or more brands join the
competition.
(2) Generally speaking, the overall product evaluation scores for both the
first mover (brand A) and the early follower (brand B) dropped. Thus,
the analysis suggests that the ``perceived value'' of an innovation
decreases as respondents' familiarity with the product increases.
Consistency of evaluation Paired-correlations are used to check the consistency of respondents' overall
product evaluation (of brand A and brand B) before and after the entry of the
third brand (brand C). The results are presented in Table VII. The results of
the paired correlation comparisons show that, overall, product evaluations
(of brand A and brand B) in the Mexico group are the most consistent before
and after the entry of brand C. This implies that the entry of a third brand has
the least impact on a product that carries a less favorable country image. In
other words, while there is some indication of the decline of positive
country-of-origin effect (as discussed in the previous paragraphs), the
negative impact of country-of-origin effect remains somewhat unchanged.
The data analysis also indicates that the overall product evaluation in the
control group is the least consistent. Specifically, the result shows that the
second entrant in the control group is measured most carelessly (no
significant correlation between the before and after measurements). In other
words, respondents pay the least attention to an early follower that has no
country-of-origin associated with it.

Conclusion
Competitive advantage The results of the current research indicate that being first in the market does
create competitive advantage, ceteris paribus. Within the methodological
limitations of the research design, there are indications that first-mover
advantage is more durable than the country-of-origin effect. As more
competitors enter the market, a favorable country image may become less
distinctive. Therefore, the pursuit of first-mover advantage should have a
higher priority than capturing the positive country-of-origin effect in an
international marketing context. Also, the results suggest that for companies
or marketers from a country with less than favorable image, it is more
difficult to lead, than to follow. The advantage of being first can be negated
by the undesirable country-of-origin effect. Further, for a first mover, it is
appropriate to promote a favorable country image and to conceal a less-than-
favorable country image. For an early follower, the results of the current
study show that, as long as the country image is not unfavorable, it is
advisable to give away the product's country-of-origin. When COO
information is not available, consumers may associate the image of ``copy
cat'' with an early follower, and when that happens, an ``unfavorable''
country may be assigned to ``fill in'' the missing information. Consequently,

Brands Before/after correlation Significance

Brand A (Japan) 0.545 0.000
Brand B (Japan) 0.653 0.000
Brand A (Mexico) 0.679 0.000
Brand B (Mexico) 0.628 0.000
Brand A (Control) 0.431 0.006
Brand B (Control) 0.087 0.598
Table VII. Correlation of overall product evaluation (between first mover, brand
A and early follower brand B before and after the entry of the third brand,
Brand C)

228 JOURNAL OF PRODUCT & BRAND MANAGEMENT, VOL. 8 NO. 3, 1999

 for a follower, withholding information may prove to be more harmful than
beneficial.

References
Aaker, D.A. and Day, G.S. (1986), ``The perils of high-growth markets'', Strategic
Management Journal, Vol. 7, pp. 409-21.
Buzzell, R.D. and Gale, B.T. (1987), The PIMS Principles Linking Strategy to Performance,
The Free Press, New York, NY.
Chao, P. (1983), ``Partitioning country of origin effects: consumer evaluations of a hybrid
product'', Journal of International Business Studies, Vol. 24 No. 2, pp. 291-306.
Cordell, V. (1992), ``The effects of consumer preference for foreign sourced products'',
Journal of International Business Studies, Vol. 23 No. 2, pp. 251-69.
Coupey, E. and Nakamoto, K. (1988), ``Learning context and the development of product
category perceptions'', Advances in Consumer Research, Vol. 15, pp. 77-82.
Crocker, J., Fiske, S.T. and Taylor, S.E. (1984), ``Semantic bases of belief change,'' in Eiser,
R. (Ed.), Attitudinal Judgment, Springer-Verlag, New York, NY.
Elliott, G. and Cameron, R.C. (1994), ``Consumer perception of product quality and the
country-of-origin effect'', Journal of International Marketing, Vol. 2 No. 2, pp. 49-62.
Engel, J.F., Blackwell, R.D. and Miniard, P.W. (1986), Consumer Behavior, 5th ed., The
Dryden Press, Chicago, IL.
Harris, R., Garner-Earl, B., Sprick, S. and Carroll, C. (1994), ``The effects of foreign product
names and country-of-origin attributions on advertisement evaluations'', Psychology and
Marketing, Vol. 11 No. 2, pp. 129-44.
Kochunny, C.M., Babakus, E. and Marks, W. (1993), ``Schematic representation of country
image: its effects on product evaluations'', Journal of International Consumer Marketing,
Vol. 5 No. 1, pp. 5-25.
Lambkin, M. (1988), ``Order of entry and performance in new markets'', Strategic
Management Journal, Vol. 9, pp. 127-40.
Robinson, W. (1988), ``Sources of market pioneer advantages: the case of industrial goods
industries'', Journal of Marketing Research, Vol. 25, pp. 87-94.
Robinson, W.T. and Fornell, C. (1985), ``Sources of market pioneer advantages in consumer
goods industries'', Journal of Marketing Research, Vol. 22, pp. 305-17.
Roth, M.S. and Romeo, J.B. (1992), ``Matching product category and country image
perceptions: a framework for managing country-of-origin effects'', Journal of Interna-
tional Business Studies, Third Quarter, pp. 477-97.
Swinder, J. and Rao, C.P. (1997), ``The effect of country-of-origin stereotypes and personal
beliefs on product evaluation'', Psychology and Marketing, Vol. 14 No. 7, pp. 689-702.
Tellis, G.J. and Golder, P.N. (1996) ``First to market, first to fail? Real causes of market
leadership'', Sloan Management Review, Winter, pp. 65-75.
Tse, D. and Gorn, G. (1993), ``An experiment on the salience of country-of-origin in the era of
global brands'', Journal of International Marketing, Vol. 1, pp. 57-76.
Urban, G.L, Carter, T., Gaskin, S. and Mucha, Z. (1986), ``Market share rewards to pioneering
brands: an empirical analysis and strategic implications'', Management Science, Vol. 32,
pp. 645-59.
Witt, J. and Rao, C.P. (1992), ``The impact of global sourcing on consumers: country-of-origin
effects on perceived risk'', Journal of Global Marketing, Vol. 6 No. 3, pp. 105-28.
&

JOURNAL OF PRODUCT & BRAND MANAGEMENT, VOL. 8 NO. 3, 1999 229