Reducing the Negative Effect of Consumer Ethnocentrism on Patronage Behaviour at
Foreign Retailers
By
Marta Keane and Dirk Morschett
Executive Summary
When expanding to a foreign market, retailers usually must compete with domestic retail
chains. The literature has paid a great deal of attention to the antecedents of retail
patronage, which has been found to be influenced by particular attributes such as prices,
quality and accessibility. However, from the perspective of foreign retailers, additional factors
may determine consumers’ patronage of a store. Consumer ethnocentrism may be one such
factor. Consumer ethnocentrism captures the beliefs that individual consumers hold
regarding the immorality of purchasing foreign-made products. This belief is the result of a
perception that purchasing foreign-made products negatively impacts the domestic economy
and results in domestic job losses. Only two studies have addressed consumer
ethnocentrism from the perspective of retailing, those by Good and Huddleston (1995) and
Zarkada-Fraser and Fraser (2002) but not with regard to patronage behaviour. This study
investigates whether consumer ethnocentrism has a negative impact on patronage behaviour
at foreign retailers.
The main objective of this paper is to analyse the link between consumer ethnocentrism and
patronage behaviour at foreign retailers. Retailers, as opposed to a single foreign product,
provide complex assortments of products that originate domestically and abroad, and foreign
retailers can relatively integrate themselves into the local market, for example by having local
employees who provide the service in the host country and by sourcing from domestic
suppliers. In this respect, the study also analyses whether and how certain activities of
foreign retailers affect patronage behaviour at foreign retailers and in particular how they
influence the consumer ethnocentrism-patronage behaviour link. The study focuses on three
moderating factors: the domestic assortment, perceived brand localness and local corporate
social responsibility activities. These moderators were chosen because they can help foreign
retailers appeal to the national identity of the local consumers. Moreover, the study
investigates whether local corporate social responsibility has a direct influence on patronage
behaviour at foreign retailers.
To elucidate these issues, we use survey data from 505 American consumers and on two
foreign retailers in the USA – Aldi and IKEA. We find that consumer ethnocentrism directly
influences patronage behaviour at foreign retailers. Although the influence is not very strong,
it is still significant and negative. This result indicates that consumers with high ethnocentric
tendencies are less likely to buy from foreign retailers. However, our study does not find that
our proposed moderating factors reduce the negative effect of consumer ethnocentrism on
patronage behaviour at foreign retailers. It appears that ethnocentric consumers do not
appreciate the efforts exerted by foreign retailers, for example in the form of local corporate
social responsibility. As a result, even when a foreign retailer is well integrated into the
domestic market, it is still rejected by ethnocentric consumers merely due to its foreign roots.
Nevertheless, the strongest effect was exerted by the control variable perceived value, and
both perceived brand localness and local corporate social responsibility were also found to
have a direct and significant positive influence on consumers’ patronage behaviour at foreign
retailers. These findings indicate that foreign retail managers should primarily focus on
providing good value for their products; transmitting an image of a socially responsible
company that cares about the host-country employees, community and suppliers; and on
building a strong retail brand localness. These efforts will help to attract consumers in
general.