A Cross-Cultural Investigation on Consumer Responses to Failures of Domestic and Foreign Products

Abstract

Abstract This research examines how consumer ethnocentrism (CET) and product failure type affect consumers’ attitudes toward domestic and imported product failures. It also explores product failure’s impacts on country-of-origin (COO) image, and cultural difference in product failure tolerance. Two experiments in the U.S. and China were conducted. Hypotheses were tested using both regressions and structural equation modeling analyses. Findings include, first, CET affects attitudes toward product failures; second, failure type has both main and moderating effects; third, COO image fluctuates with failure experience, regardless of failure type and product origin (domestic or imported); and finally, Chinese consumers are more failure tolerant than U.S. consumers. Theoretically, as the first study, this research differentiates two product failure types (competence versus ethical) and confirms that failure type has both main and moderating effects on attitudes. It also extends the scope of CET’s predictive power by empirically confirming that CET can affect attitudes toward products even with failures. Managerially, more effort is needed in handling ethical than competence failures. When a firm’s product fails, other firms from the same country should react proactively. If a product fails in both the U.S. and Chinese markets, more recovery efforts should be invested in the U.S. market.