CONSUMER ETHNOCENTRISM IN SOUTH ASIA

Soumava Bandyopadhyay, Lamar University Munir Muhammad, Lamar University ABSTRACT An empirical test to measure consumer ethnocentrism in two markets in South Asia, India and Bangladesh, is reported. The well-known measure of ethnocentrism, the CETSCALE (Shimp and Sharma 1987), is applied, its psychometric properties are examined, and the effects of demographics on ethnocentrism are explored, in the Indian and Bangladeshi contexts. INTRODUCTION Consumer ethnocentrism is defined (Shimp and Sharma 1987, p. 280) as "the beliefs held by consumers about the appropriateness, indeed morality, of purchasing foreign-made products." Consumers who are ethnocentric believe that purchasing imported products is unpatriotic, causes loss of jobs, and hurts the domestic economy. Consumers who are non-ethnocentric judge foreign products on their merits without consideration of where these products are made. The study of consumer ethnocentrism would be appropriate in a market where fierce competition exists between domestic and foreign-made products. The emerging markets India and Bangladesh in South Asia fit that description today. With 936 million and 128 million people, respectively (The World Almanac 1998), India and Bangladesh lead the South Asian region in population. Even with low per capita GDPs (purchasing power equivalent) of $1,300 and $1,100, respectively (The World Almanac 1998), India and Bangladesh both have sizable middle class populations with considerable buying power. The estimated size of the middle-class consumer market with a sustainable demand for imported merchandise is about 150 million people in India (Kulkarni 1993), and about 25 million people in Bangladesh. The current competition between domestic and imported consumer goods in India and Bangladesh has evolved in contrasting ways. Both India and Bangladesh (then the eastern part of Pakistan) emerged independent from British Colonial India in 1947. After independence, the Indian economy followed socialistic economic policies and emphasized self-reliance in the manufacturing sector, particularly for consumer goods (Banks and Natarajan 1995). This resulted in severe tariffs and other restrictions on the import of consumer products, and the subsequent growth of many domestic Indian consumer goods manufacturers. Beginning in the early 1980s, the Indian government has taken a series of steps to liberalize the economy and ease restrictions on imported goods (Banks and Natarajan 1995). As a result, the Indian market today is flooded with imported products from many countries, which compete with numerous traditional Indian makes. With competition between foreign and domestic manufacturers of consumer durables and nondurables intensifying, many Indian businesses as well as political

campaigns are now appealing to Indian consumers to support local manufacturers so that Indian jobs are preserved and the economy remains healthy (Kulkarni 1993). Pakistan, unlike India, chose to follow an import-oriented economy after independence. East Pakistan, after seceding from its parent country and assuming the new name 'Bangladesh' in 1971, followed the same policy for several years. This resulted in serious foreign trade deficits for Bangladesh, which stood at $1.4 billion, or 67% of the country's exports, in 1996 (The World Almanac 1998). To correct this situation, public policy in Bangladesh has been moving toward promoting growth of domestic industries for the past several years (Clerk 1997). The consumers of Bangladesh are now being encouraged more than ever to purchase domestically made products. Against the backdrop described above, a measurement of consumer ethnocentrism among the middle-class in India and Bangladesh should provide an idea of the extent to which consumers in these two countries are likely to favor domestically-made products over their foreign competitors. This paper describes such a measurement, where the wellknown scale for consumer ethnocentrism developed by Shimp and Sharma (1987), the CETSCALE, is applied in the Indian and Bangladeshi environments. The relationship of ethnocentrism with various demographic factors in the two countries is explored. A comparison is also made between the levels of ethnocentrism in the two neighboring countries. BACKGROUND LITERATURE REVIEW The sociological definition of ethnocentrism was offered by Sumner (1906, p. 13) as: "the view of things in which one's own group is the center of everything, and all others are scaled and related with reference to it ... Each group nourishes its own pride and vanity, boasts itself superior, exalts in its own divinities and looks with contempt on outsiders." In a marketing and consumer behavior sense, ethnocentrism refers to consumers' preference for domestic products and prejudice against imports. Consumer ethnocentrism results first from the love and concern for one's own country and the fear of losing control of one's economic interests from the harmful effects of imports (Sharma, Shimp, and Shin 1995). Consumers who are highly ethnocentric are unwilling to purchase foreign products and tend to look at the issue of buying foreign goods as a moral rather than just an economic problem. The most well-known scale that measures consumers' ethnocentric tendencies is the CETSCALE, developed by Shimp and Sharma (1987). The 17-item scale was rigorously formulated, refined, and validated in the United States. Although originally developed as a measure of American consumers' ethnocentric tendencies, the CETSCALE was subsequently applied and its psychometric properties validated internationally, in Japan, France, and Germany (Netemeyer, Durvasula, and Lichtenstein 1991), Korea (Sharma, Shimp, and Shin 1995), Russia (Durvasula, Craig, and Netemeyer 1997), and China (Klein, Ettenson, and Morris 1998). Our application of the CETSCALE in India and Bangladesh adds to the measure's cross-cultural relevance.

Empirical studies in many countries, such as the United States (Shimp and Sharma 1987), Canada (Hung 1989), France (Baumgartner and Jolibert 1977), the United Kingdom (Bannister and Saunders 1978), and Korea (Sharma, Shimp, and Shin 1995) have illustrated that consumers with ethnocentric tendencies have a proclivity to evaluate domestic products favorably, often unreasonably so, compared to imported products. This indicates a definite positive association between ethnocentrism and evaluation of domestically-made products, and a negative association between ethnocentrism and evaluation of imported products. Study of ethnocentric tendencies among consumers in a country, therefore, has clear implications for marketers. If the level of consumer ethnocentrism in a market is high, foreign manufacturers looking forward to expand in that market as well as domestic marketers distributing imported products will face a tough challenge. RESEARCH DESIGN The sampling frame for the study comprised students enrolled in graduate programs in business administration and engineering at three premier institutions in India and two premier institutions in Bangladesh. Surveying these students was deemed appropriate as business and engineering graduates are considered to be the elite among professionals in this part of the world. They usually command the highest salaries among all professional occupations (Cox 1996; Saywell 1997). They are the cream of the emerging middle-class, are more likely to afford expensive foreign products, and hence the target market for most foreign manufacturers expanding into these two markets. The survey could be conveniently administered in English without encountering any problems as English is the medium of instruction for higher education and the language most commonly used in business transactions in both India and Bangladesh. The subjects in the sample were given a self-administered questionnaire that included Shimp and Sharma's (1987) 17-item CETSCALE (with references to the United States in the original scale replaced with reference to India or Bangladesh, as appropriate). The individual scale items are listed in Table 1. The respondents were asked to indicate their extent of agreement with various statements describing ethnocentric proclivities on a 7point Likert scale (1 = strongly disagree, 7 = strongly agree). The survey was distributed among 150 graduate students in three premier institutions of business administration and engineering in India and among 150 graduate students in two similar institutions in Bangladesh. A total of 81 usable responses were received from India, representing a response rate of 54 percent. The number of usable responses obtained from Bangladesh was somewhat lower at 52, which corresponded to a response rate of 34.7 percent. The samples, though small in size, compared reasonably with the sample sizes of 73, 70, and 76 obtained for testing the CETSCALE in Germany, France, and Japan, respectively (Netemeyer, Durvasula, and Lichtenstein 1991). Given the pioneering and exploratory nature of the study, we considered the sample sizes adequate for getting some initial glimpses into the nature of consumer ethnocentrism in India and Bangladesh.

RESULTS Respondent Characteristics The average age of respondents was 25.3 years and 27.2 years in India and Bangladesh, respectively. In both countries, the respondents were predominantly male. Sixty-eight of the 81 respondents (84%) in India and 45 of the 52 respondents (86.5%) in Bangladesh were male. This was not surprising, as males typically outnumber females in higher education leading to professional degrees almost everywhere, more so in developing countries. Sixty-six respondents in India (81.5%) had completed their Bachelor's degrees and were working toward their Master's degrees. The remaining 15 respondents (18.5%) had completed their Master's degrees. In Bangladesh, the proportion of respondents with completed Master's degrees was higher at 57.7% (30 in all). The rest (22, or 42.3%) of the Bangladeshi respondents were enrolled in Master's degree programs after completing their Bachelor's degrees. Ethnocentrism The 17-item consumer ethnocentrism measure (CETSCALE) exhibited a high degree of internal consistency in both countries, as evident from Cronbach's alpha reliability scores of .9533 in India, and .9043 in Bangladesh, respectively. All individual scale items had reasonably high item-to-total correlations (.615 and over in India, and .383 and over in Bangladesh). A principal components analysis of the 17 items resulted in the emergence of a single factor in both countries. In India, the emergent factor had an eigenvalue of 9.852 and explained 57.9% of the variation in the measure. In Bangladesh, the eigenvalue of the single factor was 6.872 and the factor accounted for 40.42% of the variation. The relatively lower (but acceptable) scores in Banaladesh could be attributed to the comparatively smaller sample size in that country (52 versus 81 in India). The reliability and unidimensionality of the CETSCALE were thus demonstrated in the Indian and Bangladeshi environments. The item-to-total correlations and the factor loadings for the 17 items are shown in Table 1. The overall mean score of ethnocentrism was obtained as the average of the scores on the 17 component items. The mean ethnocentrism score in India was found to be 2.98 (with a standard deviation of 1.36), whereas that in Bangladesh was found to be greater at 4.38 (with a standard deviation of 1.25). A t-test on the two means showed that consumer ethnocentrism was significantly higher in Bangladesh than in India (t = 6.09, p < .001). Ethnocentrism and Demographics Researchers have previously examined the effect of demographic variables such as age, gender, education, income level, and foreign travel on consumer ethnocentrism (Sharma, Shimp, and Shin 1995; Wall, Liefield, and Heslop 1989). Older people are more likely to exhibit higher levels of ethnocentrism, as they tend to be more conservative (Bannister and Saunders 1978; Han 1988). Studies in the United States (Howard 1989) and Canada (Wall and Heslop 1986) have shown that women rate domestic products more favorably

than men. More educated people are less likely to have ethnic prejudices (Watson and Johnson 1972), tend to be less conservative (Ray 1983), and are more likely to have positive attitudes toward imported products (Wall and Heslop 1986; Wang 1978). People who travel abroad tend to exhibit lower levels of ethnocentrism (Wall, Liefield, and Heslop 1989) as foreign travel is likely to result in more cultural exchanges and broadening of minds. Also, high-income consumers are generally found to react more favorably toward foreign products (Wall and Heslop 1986; Wang 1978). In our study, the respondents were not asked about their incomes because, being students at premier institutions, they were looking forward to earning good salaries upon graduation rather than currently having a high level of income. Based on the preceding discussion, the following hypotheses relating Indian and Bangladeshi consumers' ethnocentrism and demographic factors were tested: H1: Consumer ethnocentrism in India and Bangladesh is positively related to age. H2: Women consumers in India and Bangladesh exhibit a higher degree of ethnocentrism than men. H3: Consumer ethnocentrism in India and Bangladesh is negatively related to the level of education. H4: Consumers who have traveled abroad exhibit a lower level of ethnocentrism than consumers who have not in India and Bangladesh. Hypothesis H1 was tested by correlating the ethnocentrism scores with the respondents' ages. The Pearson correlation coefficient between ethnocentrism and age was found to be -.031 in India, and -.067 in Bangladesh, both correlations being statistically nonsignificant. Hypothesis 1 was, therefore, not supported. Hypotheses H2, H3, and H4 were tested by means of t-tests. The results are shown in Table 2. For H2, the mean scores for ethnocentrism were compared between men and women. Table 3 shows that women did score higher than men on ethnocentrism (mean score 3.67 for women versus 2.85 for men, t = 2.04, p < .05) in India. There was no significant difference found, however, between men and women in Bangladesh (mean score 4.47 for women versus 4.36 for men, t = .18, p = .86). Therefore, H2 was supported in India, but not in Bangladesh. For testing H3, the mean scores for ethnocentrism were compared between respondents who had completed bachelor's degrees and those who had completed master's degrees. In India, the mean ethnocentrism score for people with master's degrees (2.36) was significantly less (t = 2.81, p < .05) than that for respondents with bachelor's degrees. Thus, the degree of relationslism was negatively related to the level of educational achievement in India. There was no statistical difference found in the ethnocentrism scores for people with or without master's degrees in Bangladesh (t = .78, p = .44). Therefore, support for H3 was available in India, but not in Bangladesh.

Hypothesis H4 was tested by comparing the mean ethnocentrism score of respondents who indicated that they had traveled abroad and those who indicated that they had not. As shown in Table 3, foreign travel did not relate to any significant difference in ethnocentrism (t = 1.65, p = 10) at the p < .05 level or better among Indian respondents. In Bangladesh, however, people who had traveled abroad exhibited a level of ethnocentrism (4.07) that was significantly lower (t = 2.86, p < .05) than that (5.02) of people who had no experience of foreign travel. Therefore, H4 was supported only in Bangladesh. DISCUSSION The significantly higher level of ethnocentrism in Bangladeshi consumers (compared to their Indian counterparts) might be attributed to the history of availability of imported consumer products in the two countries. After having little access to foreign-made consumer products for several decades of state policy promoting self-reliance, increasingly affluent Indian consumers today are rushing to buy imported products from a liberalized domestic market (Jain, Raval, and Mehra 1997; Chandrasekaran and Ryans 1996). In a recent survey, 37 of the top 62 brands in India were found to be foreignowned (Kohli 1996). This likely explains the low ethnocentrism score (2.98) in the Indian sample. In contrast to India, Bangladesh did not seek to develop its own manufacturing industries for a long time, and consumers there almost always turned to imported goods to fulfill their needs. Increasing unemployment and balance of trade deficits are now forcing public policy makers in Bangladesh to focus more on developing domestic industries and moving away from the primarily agrarian nature of the economy. The relatively high ethnocentrism (4.38) in the Bangladeshi sample is probably a reflection of the increasing "buy domestic" sentiment being promoted among consumers in that country. No significant correlation was found between ethnocentrism and age in either sample. A possible reason may be the fact that the ranges of respondents' ages were too narrow in both samples (21-35 in India, and 22-37 in Bangladesh) for age-related differences in ethnocentrism to be pronounced. Incidentally, the expected relationship between age and ethnocentrism was not supported in a previous study in Korea (Sharma, Shimp and Shin 1995) either. Ethnocentrism was found to vary with gender and educational level in India, but not in Bangladesh. Perhaps the relatively high degree of ethnocentrism found in Bangladesh was a popular, contemporary feeling among consumers there that eclipsed the effect of demographic differences. The only factor that made a difference in Bangladesh was foreign travel. Bangladeshis who had traveled abroad (and therefore, were expected to have a greater exposure to and appreciation for foreign countries and cultures) seemed to rise above the popular feelings somewhat, and exhibited a significantly lower level of ethnocentrism that people who had not. In India, ethnocentrism was not significantly reduced with foreign travel (even though one could argue in favor of a very weak statistical difference in the t-test, with p = .10), which likely meant that ethnocentrism

among Indian consumers was too low to begin with to be further influenced by the experience of foreign travel. CONCLUSION This study provides some initial glimpses into the nature of consumer ethnocentrism in the two populous South Asian markets of India and Bangladesh. Though the study may be considered to provide some useful directions in analyzing consumer ethnocentrism in the two countries, its limitations must also be acknowledged. The study is exploratory in nature, with small sample sizes. Some of the sub-samples used in testing the hypotheses were indeed very small (for example, there were only 7 females in the Bangladeshi sample); so the results must be interpreted with caution. Future studies must be more rigorous in this regard. Other factors that might possibly influence ethnocentrism, such as income, employment, perceived threat from foreign competition (Shimp and Sharma 1987), etc., should be explored in future studies. International marketers will look more toward the emerging South Asian market in the future. An investigation of consumer ethnocentrism and its possible causes will definitely help them build sound marketing strategies. REFERENCES Banks, P. and G. Natarajan (1995), "India: The New Asian Tiger?" Business Horizons, 38 (May-June), 47-50. Bannister, J.P. and J.A. Saunders (1978), "U.K. Consumers' Attitudes Towards Imports: The Measurement of National Stereotype Image," European Journal of Marketing, 12, 562-570. Baumgartner, G. and A. Jolibert (1977), "The Perception of Foreign Products in France," in Advances in Consumer Research, vol. 5, H.K. Hunt ed. Ann-Arbor, MI, 603-605. Chandrasekaran, Aruna and John K. Ryans, Jr. (1996), "U.S. Foreign Direct Investment in India: Emerging Trends in MNC Entry Strategies," International Executive, 38 (5), 599-612. Clerk, Julia (1997), "Liberating the Economy for Free Trade," International Herald Tribune, March 26, 17. Cox, K. (1996), "Corporate India Introduces the Ol' Compensation Ploy," World Business, 2 (6), 7. Durvasula, S., A.J. Craig, and R.G. Netemeyer (1997), "A Cross-Cultural Comparison of Consumer Ethnocentrism in the United States and Russia," Journal of International Consumer Marketing, 9 (4), 73-93.

Han, C.M. (1988), "The Role of Consumer Patriotism in the Choice of Domestic Versus Foreign Products," Journal of Advertising Research, June/July, 25-32. Howard, D.G. (1989), "Understanding How American Consumers Formulate Their Attitudes About Foreign Products," Journal of International Consumer Marketing, 2 (2), 7-24. Hung, C.L. (1989), "A Country-of-Origin Product Image Study: The Canadian Perception and Nationality Biases," Journal of International Consumer Marketing, 1 (3), 5-26. Jain, M., S. Raval, and D. Mehra (1997), "New Tastes and Toys," India Today, 22 (November 10), 34-40. Klein, J.G., R. Ettenson, and M.D. Morris (1998), "The Animosity Model of Foreign Product Purchase: An Empirical Test in the People's Republic of China," Journal of Marketing, 62 (1), 89-100. Kohli, Jitender (1996), The Business Guide to India. Singapore: Reed Academic Publishing, Asia. Kulkarni, V.G. (1993), "Marketing: The Middle-Class Bulge," Far Eastern Economic Review, 156 (2), 44-46. Netemeyer, R.G., S. Durvasula, and D.R. Lichtenstein (1991), "A Cross-National Assessment of the Reliability and Validity of the CETSCALE," Journal of Marketing Research, 28 (3), 320-327. Ray, J.J. (1983), "A Scale to Measure Conservatism of American Public Opinion," Journal of Social Psychology, 119, 293-294. Saywell, T. (1997), "Good Hunting Ground," Far Eastern Economic Review, 160 (35), 57. Sharma, S., T.A. Shimp, and J. Shin (1995), "Consumer Ethnocentrism: A Test of Antecedents and Moderators," Journal of the Academy of Marketing Science, 23 (1), 2637. Shimp, T.A. and S. Sharma (1987), "Consumer Ethnocentrism: Construction and Validation of the CETSCALE," Journal of Marketing Research, 24 (August), 280-289. Sumner, W.G. (1906), Folkways: The Sociological Importance of Usages, Manners, Customs, Mores, and Morals. New York: Ginn & Co. Wall, M. and L.A. Heslop (1986), "Consumer Attitudes Toward Canadian-Made Versus Imported Products," Journal of the Academy of Marketing Science, 14 (Summer), 27-36.

_____, J.P. Liefield, and L.A. Heslop (1989), "Impact of Country-of-Origin Cues and Patriotic Appeals on Consumer Judgments: Covariance Analysis," in Marketing, vol. 10, Alain d'Astous ed. Montreal: Administrative Sciences Association of Canada, 306-315. Wang, C. (1978), The Effect of Foreign Economic, Political, and Cultural Environments on Consumers' Willingness to Buy Foreign Products. Dissertation, Texas A & M University. Watson, G. and D. Johnson (1972), Social Psychology: Issues and Insights. New York: J.B. Lippincott. The World Almanac (1998), Mahwah, New Jersey: Funk and Wagnalls Corporation. TABLE 1 Reliability and Unidimensionality of the CETSCALE in India and Bangladesh INDIA Item * 1.__ people should always buy __ made products instead of imports. 2. Only those products that are unavailable in __ should be imported. 3. Buy __ made products. Keep __ working. 4. __ products first, last, and foremost. 5. Purchasing foreign-made products is un-__. 6. It is not right to purchase foreign products. 7. A real __ should always buy __ made products. 8. We should purchase products made in __ instead of letting other countries get rich off us. Item-tototal Correlations .615 Factor Loadings BANGLADESH Item-tototal Correlations .549 Factor Loadings

.656

.616

.717

.751

.391

.454

.767 .782 .660 .772 .799

.795 .812 .705 .804 .833

.468 .654 .450 .644 .756

.524 .705 .527 .711 .803

.760

.795

.612

.677

Table 1 Cont. 9. It is always best to purchase __ products. 10. There should be very little trading or purchasing of goods from other countries unless out of necessity. 11. __ should not buy foreign products because this hurts __ businesses and causes unemployment. 12. Curbs should be put on all imports. 13. It may cost me in the long run, but I prefer to support __ products. 14. Foreigners should not be allowed to put their products in markets. 15. Foreign products should be taxed heavily to reduce their entry into __. 16. We should buy from foreign countries only those products that we cannot obtain in our own country. 17. __ consumers who purchase products made in other countries put their fellow ___s out of work. Cronbach's Alpha measure of scale reliability Eigenvalue of single emergent factor Variance explained .652 .737 .690 .770 .656 .490 .714 .540

.676 .701 .779 .743 .642 .736 .770 .9533

.712 .745 .809 .780 .684 .770 .803

.607 .555 .325 .655 .703 .383 .708 .9043

.672 .620 .380 .710 .760 .441 .755

9.852 57.91%

6.872 40.42%

* Fill in '___' with 'India/Indian' or 'Bangladesh/Bangladeshi' as appropriate

TABLE 2 Tests of Hypotheses H2: Ethnocentrism and Gender Women INDIA: N 13 Ethnocentrism 3.67 Standard Deviation 1.33 N 7 Ethnocentrism 4.47 Standard Deviation 1.49 Men 68 2.85 1.32 45 4.36 1.23 t-value p-value 2.04 p < .05

BANGLADESH:

.18

p = .86

H3: Ethnocentrism and Educational Level Bachelors Masters Degree Degree INDIA: N 66 Ethnocentrism 3.13 Standard Deviation 1.42 N 22 Ethnocentrism 4.22 Standard Deviation 1.10 15 2.36 .82 30 4.49 1.36 t-value p-value

2.81

p < .05

BANGLADESH:

.78

p = .44

H4: Ethnocentrism and Foreign Travel Traveled Abroad INDIA: N 35 Ethnocentrism 2.72 Standard Deviation 1.03 N 35 Ethnocentrism 4.07 Standard Deviation 1.23 Did Not t-value p-value Travel 46 3.19 1.54 17 5.02 1.07 1.65 p = .10

BANGLADESH:

2.86

p < .05