TY - JOUR
T1 - Basking in reflected glory
T2 - Reverse status transfer from foreign to home markets
AU - Chae, Heewon
AU - Song, Jaeyong
AU - Lange, Donald
N1 - Funding Information:
We are grateful for the careful and development feedback during the review process by Associate Editor Glenn Hoetker and by our anonymous referees. We have benefited from the advice and comments of Minyuan Zhao, Ned Smith, Jim Westphal, Gautam Ahuja, Brian Wu, Jon Bundy, Markus Baer, Haiyang Lee, and Zhen Zhang. We would also like to thank Michael Jensen for financial support in purchasing a part of the dataset, Najung Lim for supplementary data collection, and seminar participants at the Ross School of Business, University of Michigan, for valuable feedback and comments.
Publisher Copyright:
© 2020 Strategic Management Society
PY - 2021/4
Y1 - 2021/4
N2 - Research summary: In this study, we investigate reverse status transfer from foreign to home country markets. We argue that a positive product status accrued in a leading foreign country, or outside status, increases domestic market performance by providing home country audiences with a means of self-enhancement. We predict that the impact of outside status will be stronger when the foreign and home countries have similar economic conditions, and when the products are high priced, luxury goods—as social approval and prestige-seeking are important factors in purchase decisions for these products. We test our hypotheses using a sample of firms and vehicles in the automotive industry. Results from two-stage multi-level analysis support our arguments. Our results have several implications for research related to status transfer and international business. Managerial summary: We look at how consumers in the home country of an automaker (Germany, Japan, and Korea) increase purchases of a car model that wins the J.D. Power APEAL award in the United States. Rather than telling those consumers anything new about the car's quality, the award bestows status on the vehicle from the leading outside market. (We call that reverse status transfer, as it flips the idea that domestic status helps firms competing in foreign markets.) Domestic consumers can share in some of that status by purchasing the vehicle, and they are especially likely to do so when it is a high priced or luxury model, as those aspects amplify the status effects, as does economic similarity between the United States and the home country.
AB - Research summary: In this study, we investigate reverse status transfer from foreign to home country markets. We argue that a positive product status accrued in a leading foreign country, or outside status, increases domestic market performance by providing home country audiences with a means of self-enhancement. We predict that the impact of outside status will be stronger when the foreign and home countries have similar economic conditions, and when the products are high priced, luxury goods—as social approval and prestige-seeking are important factors in purchase decisions for these products. We test our hypotheses using a sample of firms and vehicles in the automotive industry. Results from two-stage multi-level analysis support our arguments. Our results have several implications for research related to status transfer and international business. Managerial summary: We look at how consumers in the home country of an automaker (Germany, Japan, and Korea) increase purchases of a car model that wins the J.D. Power APEAL award in the United States. Rather than telling those consumers anything new about the car's quality, the award bestows status on the vehicle from the leading outside market. (We call that reverse status transfer, as it flips the idea that domestic status helps firms competing in foreign markets.) Domestic consumers can share in some of that status by purchasing the vehicle, and they are especially likely to do so when it is a high priced or luxury model, as those aspects amplify the status effects, as does economic similarity between the United States and the home country.
KW - automotive industry
KW - basking in reflected glory
KW - international business
KW - social identity theory
KW - status transfer
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U2 - 10.1002/smj.3238
DO - 10.1002/smj.3238
M3 - Article
AN - SCOPUS:85091388558
SN - 0143-2095
VL - 42
SP - 802
EP - 832
JO - Strategic Management Journal
JF - Strategic Management Journal
IS - 4
ER -