Importance of Norway’s Nation Equity for Exports of Services

7 July 2017 09:11

In a recent survey conducted among Singaporean and American young consumers, Norway was found to have a “neutral equity”, a level of equity that has no effect on enhancing the attractiveness of Norwegian services.

Alexander Jakubanecs

Importance of Norway’s Nation Equity for Exports of Services

Nation equity still plays a central role in product evaluations even in today’s international environment. But studies show that Norway lacks clear associations of its production and service competences as perceived by its major international partners, writes Alexander Jakubanecs.

Text: Alexander Jakubanecs

Development of successful innovative service businesses and increased exports of services has been identified as a top priority for the Norwegian business community and the society at large (Andreassen, 2016). Prior research demonstrates that such initiatives as exports are strongly dependent on the goodwill the country enjoys internationally e.g. (Maheswaran & Chen, 2009) – it’s nation equity. Nation equity may be positive or negative and have origins in culture, politics, economy, and other macro factors. While most research on nation equity focused on products, its impact on export performance may be significant also for service providers (Javalgi, Cutler, & Winans, 2001). Based on prior research, apart from technological progress, future value creation will depend on how Norway will manage its nation equity on the international arena (Chen, Mathur, & Maheswaran, 2014). Similar to equity of brands and enterprises, equity of nations plays a central role in the demand for a country’s products, services, succss of its political, diplomatic and economic initiatives and the protection of the country’s reputation in times of crises.

Despite increasing globalization when production of goods and services is dispersed across multiple countries, nation equity continues to play a central role in product evaluations in today’s international environment. For instance, Hermès scored 23% higher with college students who correctly identified it as a French brand rather than as a U.K. brand. Similarly, Lexus got 13% higher ratings from students who knew it was a Japanese brand than it did from those who thought it was a U.S. brand (Anderson Analytics study 2007).

Extant research on homogenous services such as online games and phone unlocking services found that retailers from the U.S. (and to some extent Canada) were able to charge significantly higher price premiums for these services relative to retailers from Australia and the U.K. (Hu & Wang, 2010). Moreover, customers expected poorer service from offshore call centers of less-known service providers, when the call center was located in a dissimilar to the U.S. country of origin (Roggeveen, Bharadwaj, & Hoyer, 2007). As many Norwegian service providers are relatively less known in international markets, we may expect a significant effect of nation equity on service evaluations and purchase intentions.

Norway is a world leader in the ship-building industry, off-shore oil industry, mobile telecom industry and a number of other high-tech sectors. Yet, internationally Norway is mostly known for its natural scenery and export of seafood products. Multiple studies have shown that Norway lacks clear associations of its production and service competences as perceived by its major international partners. In a recent survey conducted among Singaporean and American young consumers, Norway was found to have a “neutral equity”, a level of equity that has no effect on enhancing the attractiveness of Norwegian services. Further, among U.S. participants Norway scored significantly lower on perceived innovativeness (3.41 on a 5-point scale) relative to Sweden (4.16) and Germany (4.27). Norway also scored lower in perceived competence (3.41) relative to Sweden (3.95), the U.K. (3.95) and Germany (4.11).
Services are increasingly available across borders. While such free access may be beneficial for commodity services, it may not necessarily be the case for value-added services. Despite greater accessibility, consumers may still be more willing to pay more and to buy or use services from countries with strong nation equity (e.g. U.S. online stores or social media services etc.) than those with weak (Hu & Wang, 2010).

Effects of Norway’s nation equity on exports of services may go beyond the perceptions of Norway as a competent and innovative country for services. For example, political conflicts may trigger customer responses that still may affect service businesses. Norway’s military involvement in the Middle East, though not related to the actions of the Norwegian service providers, may affect their business because of the negative associations to the country of origin. Therefore, strengthening Norway’s nation equity is important in order to protect exports of services against incidental events beyond the purview of service providers.

To sum up, future research should focus on the wide range of effects that nation equity may have on customer responses to service strategies. Extant studies show that Norway has few negative associations in international markets, which provides a favorable foundation for the development of the country’s goodwill. Building on this foundation, future studies should develop effective policies and strategies to convert Norway’s “neutral” equity to a favorable equity. This would leverage the Norwegian service export industry and allow service providers to benefit from free trade in services.

References

  • Andreassen, T. W. (2016). Bygg Norge på Tjenester, Finansavisen, October 7th.
  • Chen, C. Y., Mathur, P., & Maheswaran, D. (2014). The Effects of Country-Related Affect on Product Evaluations. Journal of Consumer Research, 41(4), 1033-1046.
  • Hu, Y., & Wang, X. (2010). Country-of-Origin Premiums for Retailers in International Trades: Evidence from eBay's International Markets. Journal of Retailing, 86(2), 200-207.
  • Javalgi, R. G., Cutler, B. D., & Winans, W. A. (2001). At your service! Does country of origin research apply to services?. Journal of Services Marketing, 15(6/7), 565.
  • Maheswaran, D., & Chen, C. Y. (2009). Nation Equity: Country-of Origin Effects and Globalization. In M. Kotabe & K. Helsen (Eds.), Handbook of International Marketing (pp. 91-113): Sage.
  • Roggeveen, A. L., Bharadwaj, N., & Hoyer, W. D. (2007). How call center location impacts expectations of service from reputable versus lesser known firms. Journal of Retailing, 83(4), 403-410.