The purpose of this paper is to examine the relationship between bilateral country reputation and export volume to the country in which that reputation is held.
The unique bilateral data set consists of 861 country pairs. Country reputation measures are from a global survey, in which respondents in 20 countries rate the reputation for products and people of 50 other countries. This data set is then analyzed against actual export data for each country-pair using the well-established structural gravity model of international trade.
The authors find that each improvement in a world ranking of a country’s reputation for products (in a target country) is associated with a 2 percent increase in exports to that particular country; the effect is equivalent to the importing country decreasing a tariff by as much as 2.9 percent. Furthermore, the authors find that different aspects of country reputation – for its products and its people – attenuate distinct forms of uncertainty, and thereby stimulate export volume in distinct ways.
This study shows that the relationship between country reputation and export volume is a substantive and empirically valid topic of study. For public policy makers looking to stimulate exports to a specific country, improving their respective country’s reputation in that country appears to be a viable alternative to other levers (e.g. trade negotiations, free trade agreements). For business leaders at international companies, the findings suggest that companies may consider country reputation as a factor when choosing to which countries they wish to expand.
The notion that country reputation can contribute to aggregate export volume has intuitive appeal. Yet, aside from research on country-of-origin effects which has concentrated on the individual consumer level, the notion of country reputation contributing to aggregate effects has so far been based mostly on conjecture and anecdotal evidence. This is the only study to the authors’ knowledge that empirically tests this relationship using a bilateral measure of reputation as a determinant of export volume within one of the most successful empirical frameworks, the structural gravity model of international trade. The findings suggest that for many countries, their reputation may contribute to billions of dollars in export volume.
The authors thank the Oxford Centre for Corporate Reputation and the LeBow Center for Corporate Reputation Management for their generous support of this research.
Dimitrova, B.V., Korschun, D. and Yotov, Y.V. (2017), "When and how country reputation stimulates export volume", International Marketing Review, Vol. 34 No. 3, pp. 377-402. https://doi.org/10.1108/IMR-10-2015-0211
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