Though the increasing trend towards globalisation presents enormous opportunities for international market expansion, it has been acknowledged that the success of an internationalisation strategy depends, among various other factors, upon having a good understanding of the attitudes that consumers from different countries have towards foreign products or services. However, there is as yet no clear understanding about the internationalisation patterns of digital services. This is especially relevant given the fact that the success of digital services most often depends on the quantity sold rather than on the margin obtained, and hence firms commercialising digital services seek to expand their offer to foreign markets. In that regard one of our recent articles published in International Business Review aims to shed light on this gap by building upon key international business and marketing theory: the country-of-origin (CoO) effect.
TV broadcasting industry is the context of this research. The internationalisation of digital services presents an additional revenue stream as well as greater levels of flexibility in the context of increasingly uncertain markets. We hypothesise that CoO effect is as important as the brand of the digital cultural service provider in influencing consumers’ purchasing decisions. This hypothesis is underpinned by the fact that digital cultural services are offered in diverse forms, making it difficult for consumers to be able to evaluate the real quality of the specific cultural content. For instance, movies produced in Hollywood may exert more influence on consumers’ perceptions and purchasing decisions than the actual quality of the movie.
In this study, CoO and branding aspects are investigated in the context of the internationalisation process of a British multinational that is intending to commercialise their digital services across the globe. To this end, we analyse how the CoO effect of British digital cultural services, in this case dubbed ‘Britishness,’ and the strength of the company’s own brand in influencing consumers’ purchasing decision in fourteen potential target markets, covering a wide international spectrum. The analysis is based on an extensive and unique survey of 10,000 consumers, undertaken in 2013. Absolute sample sizes cover between 500 and 1,500 consumers per target market, depending mainly on country size. Due to missing data, the final sample utilised contains 5,200 data points.
The central construct of ‘Britishness’ uses factor analysis through the inclusion of 8 highly correlated Likert scale items. The other relevant variable of the study is relative brand recognition, which compares the valuation of the British brand to two other renowned competing international brands. Results are based on logistic regressions and indicate that while country of origin and company brand are positively associated to purchasing intentions, the CoO effect appears to be more relevant. In addition, the evidence shows the existence of a positive mutually interactive effect between both metrics. This paper has implications for both policy and practice.
The positive effect of the CoO in engaging foreign consumers is particularly relevant for policy makers. Results seem to demonstrate that a continuous and significant public and private investment in British cultural industry organisations will enhance their international competitiveness. This seems to be in line with Michael Porter’s view that success in international foreign markets is underpinned by the competitiveness of a firm’s home base country.
In addition to the analyses shown in the paper we also have conducted an international market selection exercise through cluster analysis. This provides guidance for practitioners at the time of selecting priority markets and strategy for commercialising the digital service in foreign markets. Results show that the internationalisation of digital services is contingent on the country in which they are commercialised. Managers should take into account this fact when designing their international strategies. Our results suggest that while in Latin American market penetration may be facilitated by promotional campaigns emphasising the country brand (‘Britishness’), in Europe), a stronger emphasis on the company’s brand may be more appropriate.