Original Empirical Research

Does the COO label effect matter? How Japanese consumers
respond to the effect on a mobile device.
Connie Chang
Researcher, Musashino University Creating Happiness Incubation

Associate Professor, Faculty of Global Studies, Musashino University

Abstract
This study aims to examine the conditional effect of Country-of-Origin (COO,
thereafter) label moderates the relationship between price, quality, risk and customerperceived value. Research specifically focuses on these relationships is still very limitedin the field of retailing. A theoretical model is proposed and tested that proposes by using
PROCESS V4.0. Self-administered questionnaires were distributed in Japan throughsnowball sampling. The results suggest that COO label is positively related to quality andpartially related to risk in purchasing a high-tech hybrid mobile device. Japanese
consumers are likely to use the COO label information to determine the product quality
and risks related to purchasing a product. Although current COO label regulations solely
mandate to certain industries, more COO information is preferred in making a purchasedecision.
1. Introduction
The term “globalization” was first mentioned in the 1960s by Perroux (James & Steger,2014), however, it was not until the late 1980s that Levitt brought this term into thebusiness and management field (Levitt, 1983). In the past four decades, the advance of
globalization has brought both a positive and a negative impact on one’s daily lives in thefield of politics (Williamson, 2005), economics (Marginean, 2015), education (Fox &Hundley, 2010), culture and society (Albrow, Eade, Washbourne, & Durrschmidt, 2012)and environment (Leal & Marques, 2021). Moreover, globalization has also increased
global competition and global cooperation (Kotabe & Helsen, 2020). For example,
Samsung and Apple are not only competing with each other in the mobile devices

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Does the COO label effect matter?
How Japanese consumers respond to the effect on a mobile device.

business but also supplying critical components to its competitor (Kubota & Mochizuki,2018).
Globalization refers to a process, or multiple processes (Hardt & Negri, 2000), that
increase the spread of products, services, technology, ideas and information, and people
across national boundaries and cultures (Albrow & King, 1990; Lindsey, 2001). The
process of globalization has accelerated, making the global economy grow moreinterdependent and posing both opportunities and threats to businesses and individual
countries. Japanese companies started to venture abroad and become world-class, large
businesses since the 1970s (Fortune, 2021). For example, Toyota expanded its businessto the United States in the 1980s and established its own plants in the US and Canada. It
contributed to the local economy in terms of supplying sufficient passenger cars, creating
employment opportunities, sourcing local materials, increasing cross-border investment
and so on. Furthermore, consumers in the local market had a greater choice of goods andservices, leading to lower prices, higher quality, greater variety and access to the latest
innovations.
In order to gain a competitive advantage through globalization, more and more
multinational corporations source globally for raw materials, advent technology andfinished products (Li, Murray, & Scott, 2000). Nowadays, most products are no longer
manufactured exclusively in a single country. Therefore, on a global basis, a product canbe designed in one country, manufactured in several countries, and finally assembled inanother country. It is common to see that a significant number of emerging countries are
becoming involved in the global supply chain, producing these hybrid products globally.
For example, Japanese consumers may wear a pair of Adidas shoes (an American brandmade in Vietnam) (Reuters, 2021), use an iPhone (an American brand assembled in
China) (Barboza, 2016), listen to a K-pop song and carry a Louis Vuitton handbag (aFrench brand made in Spain) (Hope, 2017). Most consumers would still rely on “madein”, “assembled-in”, or the product-country image (COM) to evaluate the product orservice quality which subsequently influences their perceptions of value (Ahmed,
Johnson, Lin, Fang, & Hui, 2002; Lew & Sulaiman, 2014). For consumers, label seems
to be the only source for them to evaluate the product attributes, information shown on

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Does the COO label effect matter?
How Japanese consumers respond to the effect on a mobile device.

the label might sometimes mislead consumers about the product or service they bought
due to an information asymmetric. Moreover, previous studies have demonstrated that
COO has a moderate to weak effect on customer-perceived value in different product andservice categories across nations. Therefore, this study would like to examine if the placea product is manufactured still matters in today’s world? To be specific, does the ‘madein’ effect still exist?
2. Literature Review
2.1 COO
COO has been worked out in several forms since the 1960s. In view of the fact thatvery little extant research in either International Management or International Marketing
fields has synthesized or classified the different types of COO, Table 2.1 provides asummary of the various types.
The information in Table 2.1 differs from that provided by Han and Terpstra (1988) inthat while the table indicates the differences among different types of COO, Han andTerpestra (1988) use product modes versus uni- or bi-national products to determine
perceived quality. However, their approach requires updating as the mode of COO has
increased in complexity, and hybrid products render it impossible for consumers to
identify product origin or determine quality. Analysis of the differences among those
COO types may enhance the conceptualization, evaluation and measurement of the COO
construct. The implications are as follows:(1) The difference between domestic-made foreign brand and domestic brand showsthe effects of the degree of the country’s industrialization. For example, Japan isconsidered a developed country and a technologically advanced society.
Therefore, the differences between domestic and foreign brand goods made inJapan are likely to have little difference, as the technology and craftsmanship arereliable. On the other hand, Chinese parents tend to buy foreign brand toys fortheir children although those foreign brand or domestic brand toys are all madein China. They believe that the factories manufacturing foreign brand toys are

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Does the COO label effect matter?
How Japanese consumers respond to the effect on a mobile device.

Original Empirical Researchunder more rigorous inspection, and their quality is higher than domestic brandtoys (Kurtenbach, 2007).
Table 2.1. Types of Country-of-Origin
Domestic-madeForeign-madeForeign Brand

Domestic Brand

Japan-brand, US-

US-brand, US-made,made, e.g. Toyota

e.g. KitchenAid stand

Camry

mixer

Purely imported

US-brand, Taiwan-

product, made in themade, e.g. Polo shirts

original country
Designedinoriginalcountry, Swedish-design,

Foreign-madeUS-brand,Swedish brand, India-

manufactured in its

made, e.g. H&M

overseas subsidiaries

clothes
Designedinforeign-made,originalcountry, Original Equipment Manufacturer (OEM) or

manufactured

in Outsourcing

more than one country
Designedin

anothercountry, Original Design Manufacturer (ODM)

foreign-madeDesigned in one country, foreign- UK-design, Taiwan-

US-design, Taiwan-

made, manufactured in more than made, Malaysia-

made, Vietnam-made,one country, assembled in anothermade, Brazil-made,China-assembled, e.g.

Poland-assembled,

iPhonee.g. Dell studio XPS(2) The difference between purely imported foreign brand and foreign-madedomestic brand goods indicates that the effects of replacing a foreign brand namewith a domestic brand name and their goods are all made in foreign countries
with a favorable or unfavorable country image. Customers may perceive
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Does the COO label effect matter?
How Japanese consumers respond to the effect on a mobile device.

different value when purchasing a polo shirt made in Taiwan and a Burberry polo
shirt made in England. In brief, both brand images (foreign versus domestic) andcountry images influence consumers’ choice behavior.
(3) The difference between foreign-made goods for both foreign and domestic
brands shows the effects of the country of manufacture (COM). Certain producttypes such as garments, ceramics, and stationery fit this type of COO. In thiscase, it is assumed that these foreign brand or domestic brand products are madein overseas subsidiaries. For example, the Burberry polo shirt is made in its
Macau subsidiaries. However, the Burberry polo shirt made in English factories
may command a higher price than its Macau-made counterpart.
(4) The difference between foreign brand and domestic brand goods manufactured
in foreign countries reflects the effects of country of manufacturer (COM) andcountry of brand (COB). The convergent point of this kind of COO is that theheadquarters control the design and manufacture of goods overseas. These goods
are sold under their brand name. For example, a Taiwanese factory produces
shirts or components of a polo shirt (e.g. label, collar or button) according to thecompany’s design. This polo shirt is then sold under the Polo Ralph Lauren brand
name. Companies may face some quality control problems related to operation
issues. For example, the outsourcer may use less experienced workers toassemble products, apply lead-based paint for children’s toys and leave roughedges and spikes unfinished.
(5) The difference between foreign brand- and domestic brand-purchased productsthat are designed (country of design, COD) and manufactured (COM) by anothercompany shows the effects of replacing country of brand with the country ofdesign and manufacture. Chao (1993) points out that COA is closely correlated
to price when ranking product quality. For example, SONY VAIO Division Two
adopted the ODM form (Melanson, 2010). In doing so, these brands must use

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Does the COO label effect matter?
How Japanese consumers respond to the effect on a mobile device.

better materials and control their product quality. Moreover, those ODM
factories may be able to sell the same design to competitors under thecompetitor’s brand.
(6) The difference between foreign brand and domestic brand goods manufactured
in several countries and assembled in another indicates the complexity of theemergence of the hybrid product manufacturing process in modern society. This
type of COO can be found in the IT, automobile and telecommunicationindustries. For example, the components of the Apple iPhone are made in Hong
Kong (e.g. metal cover and lens displacement), Taiwan (e.g. 3G baseband
modem and chips by UMC), Japan (e.g. NAND by Toshiba) and South Korea(e.g. application processor by Samsung). The phone is assembled and packaged
in China. However, the information shown on the iPhone box is “designed-in
California, assembled in China.” iPhone does not reveal other information
concerning its outsourcers. By not showing this information, it blurs the effectsof country of parts (COP) and country of assembly (COA) and generates
ambiguity concerning the information on the made-in label (Baughn & Yaprak,1993). At the same time, it reflects the asymmetrical nature of the informationthat consumers receive and their difficulty in determining product quality andgauging value.
2.2 Country-of-Origin Labeling (COOL)
Both the U.S. and E.U. governments made the Country-of-Origin labeling mandatory(USDA Foreign Agricultural Service, 2018). The consumer labeling law requires retailers,
processors, and importers to provide consumers with COO information at the point ofpurchase. This COOL law only applies to the agricultural and food industries, including
all meat, fish and shellfish, fresh and frozen fruit and vegetables, peanuts and so on(Krissoff & Kuchler, 2007). It seems that other products or services are exempted under
this COOL law. It is also important to note that consumers may want to get more COO
information in order to determine certain product features and quality (Herz &p.23

Original Empirical Research

Does the COO label effect matter?
How Japanese consumers respond to the effect on a mobile device.

Diamantopoulos, 2017; Nicolescu, 2012; Visbal, Herrera-Mendoza, Orozco-Acosta, &Herzberg, 2017).
Previous studies found that the use of COO information changes consumers’ attitudes
toward specific products and determines product quality. Sometimes, the COO labels areeven more important than brand labels (Roosen, Lusk, & Fox, 2003; Schupp & Gillespie,
2001). This COO label effect was proved to be significant when a disease outbreak occurs
in a community or geographic area. For example, Ward, Bailey, and Jensen (2005) foundthat COO information became an important extrinsic cue during the Mad Cow Diseasecrisis in the United States. Consumers looked for the traceable information on the package,
especially since BSE may cause human memory loss, slurred speech and loss ofcoordination if a piece of contaminated meat is consumed (Budka & Will, 2015).
Given that there is a relationship between the COO label and consumer attitudes, otherstudies reported that the COO did not influence consumer attitudes toward certain
products, for example, bread and coffee (Ahmed, Johnson, Yang, Fatt, Han, & Boon
2004). Furthermore, if the COO and other marketing variables such as price and brandare taken into account simultaneously, Suwannaporn and Linnemann (2008) pointed outthat the effect of the COO label on consumer attitude becomes weaker, whereas the brandseems to be more influential. They also found that the COO had less impact on price,
quality and other marketing cues.
2.3 Price
Price is unquestionably one of the most important extrinsic cues used during acustomer’s product evaluation process. Price may be defined as the customer’s perceptual
representation or subjective perception of the objective price of the product (Jacoby &Olson, 1977). Zeithaml (1982) proposes that consumers encode and interpret actual pricein ways that are meaningful to them. Specifically, it has been suggested, on the basis of
the adaptation level (Helson, 1964) and assimilation-contrast theory (Sherif, Sherif, &Nebergall, 1965), that customers carry with them adaptation level prices or a latitude of
acceptable prices for a given product category. Customers judge the actual price of a
product to be high, low or fair in comparison with these internal standards (Monroe, 1990).

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Does the COO label effect matter?
How Japanese consumers respond to the effect on a mobile device.

The conclusion drawn is that it is the perceived price, not the actual price, of a productthat affects customer product evaluation and choice (Jacoby & Olson, 1977; Zeithaml,1988). Consequently, it is argued that customers’ perceived price influences theirperceptions of value.
Monroe (2003) regards perceived value as an antecedent to a person’s willingness tobuy, and as the outcome of perceived product quality and perceived risk. He also statesthat both product quality and risk are influenced by perceived price. For example,
perceived price can be an indicator of the degree of risk needed to purchase a product orservice and an indicator of the level of quality. A higher perceived price leads to higher
perceived quality and a greater willingness to buy. At the same time, the higher perceived
price represents a monetary measure of what must be sacrificed to purchase the service,leading to a reduced willingness to buy. The cognitive trade-off between perceptions ofquality and risk results in the perceptions of value observed by Dodds, Monroe, andGrewal (1991). Thus, perceived price has a dual effect. First, price is a monetary sacrificeand contributes negatively to perceived value. However, perceived price influences
perceptions of perceived quality and has a positive influence on value. Furthermore, ahigher perceived price reflects higher levels of perceived quality, which enhancesatisfaction (Oliver, 1999).
Existing research suggests that customers may have different attitudes toward products
made in developed countries or developing countries (Balabanis & Diamontopoulos,
2004). This, in turn, leads to the willingness to pay a premium or discounted price forcertain goods. Specifically, Hastak and Hong (1991) point out that price and COO aresignificant factors in product evaluation. Consumers in developing countries are preparedto pay a premium for imported products from developed countries (Nebenzah & Jaffe,1993). When purchasing a bottle of wine, COO (e.g. France) and price are the mostimportant factors for Chinese consumers to evaluate wine quality (Balestrini & Gamble,2006). In contrast, consumers in developed countries are likely to pay a higher price forimported goods from developed countries. For example, American or French goods are
more favored by Taiwanese consumers than those made in China (Han, 2010). However,consumers have different perceptions of goods made in developed countries. Japanesep.25

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Does the COO label effect matter?
How Japanese consumers respond to the effect on a mobile device.

products are perceived more favorably than American products even when priced at alower level (Becker, 1986). Moreover, Canadian consumers are willing to pay more fordomestic goods if imported and domestic product quality are identical (Wall & Heslop,1986).
2.4 Quality
Bolton and Drew (1991) show perceived quality to be a direct antecedent of perceived
value, which is suffered as a result of positive pre-purchase and repurchase intention.
Moreover, Ravald and Grönroos (1996) suggest that reducing customer-perceived costs
is the recommended method for providing value to the customer since it can improvecustomer satisfaction and reduce the perceived monetary sacrifice associated with atransaction.
COO is also widely used in determining product quality (Ahmed & d’Astous, 1996;
Ahmed et al., 2002; Hong & Wyer, 1989; Insch & McBride, 2004; Josiassen, Lukas, &Whitwell, 2008; Pharr, 2005; Samiee, 1994; Verlgn & Steenkamp, 1999). For example,
customers will use the level of industrialization of a country to assess or imagine its
product quality (Khachaturian & Morganosky, 1990). They find that clothes made in
more industrialized countries (e.g. US or Italy) are preferred to those from lessindustrialized countries (e.g. South Korea, China or Costa Rica). However, specificproduct categories may also influence customers’ perceptions of foreign-made products.
For example, India and China are renowned for manufacturing 100% silk scarves becauseof their rich resources. Although both countries are viewed as less industrialized, theirsilk products are recognized as being of outstanding quality.
2.5 Risk
Bauer (1967) first introduced the concept of risk in consumer behavior. Part of thereason for the debate about sacrifice, risk, uncertainty and fear is the ambiguity
surrounding the definition of the terms and the overlap between the concepts. This
ambiguity makes the concepts more difficult to grasp. For example, Knight (1921)
distinguishes the concept of risk and uncertainty by stating that risk has a known

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Does the COO label effect matter?
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probability while uncertainty exists when knowledge of precise probability is lacking.
This distinction between risk and uncertainty has been made in terms of outcomes.
However, some marketers have allowed the two concepts to be used interchangeably
because they believe customers never really know the exact probability of an outcome(Mitchell, 1999). For this reason, this study intends to use perceived risk to refer to theconcepts of risk, sacrifice, fear and uncertainty.
Roselius (1971) identifies four different forms of risk: hazard loss, money loss, egoloss and time loss. Other dimensions, notably social risk and performance risk, areintroduced by Jacoby and Kaplan (1972, cited in Mitchell, 1999). The operational
definitions of the principal dimensions of risk found in the literature are presented below.
These dimensions have been identified essentially in relation to an analysis of thedifferent dimensions of customer perceived risk. However, the perceived risk engenderedby the online shopping mode has rarely been studied, although the sacrifice associatedwith purchasing products or services has. Moreover, when the distinction between
product and service pertains to perceived risk, services are associated with greater degrees
of intangibility, the simultaneity of product and consumption, and non-standardization(Zeithaml, Parasuraman, & Berry, 1985). Given these characteristics, the amount andquality of comprehensible information for customers is diminished, and thus, the level ofperceived risk is anticipated to be elevated (Cox, 1967).
Table 2.5 Operational Definitions of Perceived Risk Dimensions
Risk Dimension

Operational Definitions

Financial Risk

Related to the loss of money in the case of a bad purchase.

Performance Risk

Related to the functional aspects of the product.

Psychological Risk

Reflects an individual’s disappointment in him/himself.

Physical Risk

Related to safety or health.

Social Risk

Reflects disappointment in the individual among friends.

Time Risk

Related to the time spent for the purchase of a product and thetime wasted in the case of a bad purchase.
Source: Roselius (1971)

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How Japanese consumers respond to the effect on a mobile device.

As previously discussed, both intrinsic (e.g. quality) and extrinsic (e.g. price) cues areused to evaluate customers’ purchase intention. The closer the association between costand product malfunction, the greater the COO affects. This leads to a preference awayfrom products from less industrialized countries. For example, the Chinese-made Thomas
and Friends Wooden Railway Toys (Rowley, 2008) and Chinese-produced leather sofas(Tyldesley, 2010) could damage consumer health and cause unforeseen consequences.
Josiassen et al. (2008) claim that the COO effects become significant when evaluating
unfamiliar and less involved product categories. However, it seems that the COO effects
are stronger when the product categories are associated with psychological and physicalrisks that may be detrimental to consumers' lives. In this case, the monetary risk seems to
be weak.
2.6 Customer-perceived Value
Studies on perceived value have frequently examined the relationship between
perceived quality and price (Zeithaml, 1988). Perceived value is often viewed as “aconsumer’s overall assessment of what is received and what is given” (Zeithaml, 1988,
p.14) and as a trade-off between perceived quality and its affordability within a choicesetting (Monroe, 2003). If the perceived value is analogous to the perceived product value,then Zeithmal’s (1988) work suggests that value may be considered as involving a tradeoff between a customer’s evaluation of the benefits of using a service product and its costs.
Customers’ assessments of value are hypothesized to influence purchase intentions andbehavior.
Zeithaml (1988) suggests that all costs that are salient to customers, such as monetary
price and non-monetary price (e.g. time and effort) should be classified as perceived costs.
She further suggests that the components of perceived value should include perceived
quality and other intrinsic and extrinsic attributes. It is this perception of the customer’sview of what is created and delivered that should be determined and taken into accountwhen the organization defines its value offering (Payne & Holt, 2001).
Payne and Holt (2001), who have a broader approach to value rooted in social exchange
theory, also use monetary terms to express value. Their value concept is based on benefits

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Does the COO label effect matter?
How Japanese consumers respond to the effect on a mobile device.

that calculate the difference or tradeoff between perceived worth and price paid. Eachmarket offering can be viewed as having two essential characteristics: its value to thecustomer and its price. Value is a net benefit perceived by the customer. The fundamental
value equation allows the comparison of an offering with its next best alternative. This
concept of value strongly focuses on the offering (or the set of economic, technical,
service and social benefits received by a customer); more precisely, its exchange.
In common with this and other views of customer-perceived value (Christopher, 1996;
Ravald & Grönroos, 1996) is the idea of a trade-off between perceived benefits andperceived sacrifice. Perceived sacrifice involves the recognition of all costs incurred bycustomers making purchases, such as purchase price, transportation, risk of failure andpoor performance. The perceived benefits represent a combination of elements, including
physical attributes, service attributes and technical support for the product, the purchaseprice and other indicators of perceived quality.
Research into customer-perceived value is rooted in the literature on customer value,customer satisfaction and quality. This perspective is crucial because it links desired
product attributes and performance to desired consequences within the context of usage.
It also shows the correlation between customer-perceived value and customers’ goals andpurposes. Much of the work so far has been conceptual. As a consequence, there is now
a need for further empirical work. In emphasizing the central role of the customer, theliterature currently available does not focus adequately on the potential costs and gains toorganizations seeking to increase customer-perceived value. The assessment of perceived
value is a complex task due to problems pertaining to identifying and measuring both themonetary and non-monetary benefits and sacrifices.
Several empirical investigations into the antecedents of perceived value provide thebasis for the proposed model. A study by Dodds et al. (1991) finds that increasing theprice has a negative effect on product value for money and on people’s willingness to buy
durable goods but a positive impact on perceived product quality. Monroe (1990; 2003)
also highlights this dual role of price. The study by Dodds et al. (1991) suggests thatperceived quality has a significant effect on perceived value. Rangaswamy, Burke, andOliva (1993) find that product value is enhanced by the promotion of quality, durability,p.29

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Does the COO label effect matter?
How Japanese consumers respond to the effect on a mobile device.

style and reputation. Therefore, the proposed model is as follows,
Figure 2.6 Proposed model

COOL

Price
Quality

Customerperceived value

Risk

The hypotheses are formulated as follows,
H1: The effect of price on customer-perceived value depends on COO label does not exist.
H2: The effect of quality on customer-perceived value depends on COO label does notexist.
H3: The effect of risk on customer-perceived value depends on COO label does not exist.
3. Methodology
A mixed method approach was employed. Firstly, a total of four face-to-face consumer
interviews were conducted. Interviewees were chosen based on their age groups and past
purchase experience with hybrid products. Each interview lasted more than 45 minutes toan hour which allowed the researcher to explain the purpose of this study and thequestions to the consumers. During the interview, the consumers were asked to describe
the process of their most recent purchase experience and provide some examples of how
the COO label influences the different stages of buying a product. The insights gained
regarding the consumer decision process and the market context were used to develop thequestionnaire.
3.1 Sample
A self-administered online survey was developed. A snowball sampling method was
adopted, and participants were contacted via an email invitation. Participants werep.30

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restricted to Japanese consumers who are at least 18 years old and had at least one hybrid
product purchase experience in the past twelve months. Firstly, approximately 20
respondents were identified and invited. After completing the questionnaire, theseparticipants were asked to identify and forward the link to other participants. The total
data collection periods were approximately three weeks. Involvement in this study was
voluntary, and the anonymity and confidentiality of participation were provided.
121 valid respondents were collected and used in the analysis. Of these, 55.4% werefemales and 44.6% were males. 40% of the respondents were 20-29 years old, 15.7%
were 30-39 years old, 22.3% were 40-49 years old, 14% were 50-59 years old, and theremaining 5% were 60 years or over. Of the respondents, 76.9% had at least a Bachelor’s
degree, and 23.1% had a senior high school diploma, vocational school diploma, technicalcollege degree or junior college degree. 45.5% reported an annual family householdincome of no more than 5 million Japanese Yen, 29.8% of respondents reported annual
family household incomes that ranged from 5 million to 10 million Yen and the remaining
24.8% of respondents reported family household incomes more than 10 million Yen. This
seems to be in line with the basic survey results on wage structure (Ministry of Health,
Labor and Welfare, 2020). Around 66.9% of respondents were single, 40.5% of
respondents were married, and 5% of respondents were divorced or widowed.
3.2 Scales and measures
A 7-point Likert-type scale was used to assess all constructs; 1 represents strongly
disagree, and 7 means strongly agree. The scale’s reliability was measured by Cronbach’s
alpha (N=30, α=0.834) which exceeded the threshold of 0.7 (Hair, Black, Babin, &Anderson, 2019). In order to measure internal consistency, a split-half reliability test was
conducted. The Spearman-Brown coefficient is 0.889, which indicates good reliability.
In this study, an iPhone was used to test how the COO label influenced customerperceived value. A smartphone, namely an iPhone, was chosen because (1) it has a highglobal market share (Counterpoint, 2022), (2) it totally relies on an international supply
chain (Apple, 2021), (3) it is genuinely the product of global cooperation and (4) it focuseson product design rather than manufacturing. Therefore, the COO information, including

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country-of-assemble (COA), country-of-manufacture (COM), country-of-design (COD)
and country-of-parts (COP), influenced customer-perceived value simultaneously.
Validated scale items from previous COO related studies were used. The questionnaire
comprised five parts. Price was measured using seven items underlying monetary priceand non-monetary price constructs, respectively, which assessed the degree of price therespondents felt during the purchase process. Next, quality refers to the use of COO
information or product attributes to determine product attributes. Risk measures thedegree to which customers perceive risks involved in the buying process via four items.
Customer-perceived value describes how customers assess the degree of perceived value.
Five items were adapted from Dodds et al. (1991) and Zeithaml (1988). Finally, five items
were adapted to measure the COO label.
4

Data Analysis
To test the moderation effect, SPSS PROCESS V4.0 were employed (Hayes, 2018).

PROCESS provides an alternative way to estimate conditional process analysis andgenerates similar results to those who adopted Structural Equation Modeling (SEM).
Moreover, PROCESS does not care whether the moderator is dichotomous or continuous,and it is more user-friendly than other SEM software. To test hypotheses 1 to 3, apreprogrammed moderation model (Model 1) was used to estimate the effect of focal
antecedents (X38=Price, X39=Quality, X40=Risk) on customer-perceived value(X41=Customer-perceived Value) is moderated by COO label (X=43) if its strength
depends on COO label.
4.1 H1: The effect of price on customer-perceived value depends on COO label does notexist.
Table 4.1 summarizes the results of using PROCESS.
R
.5641

p.32

R-sq
.3182

MSE
.7032

F
10.7366df1
5.0000df2
115.0000p.0000

Does the COO label effect matter?
How Japanese consumers respond to the effect on a mobile device.

Original Empirical Research
Table 4.1.1 Model
coeff

se

t

p

LLCI

ULCI

Constant.2409

1.9420

.1240

.9015

-3.6058

4.0875

X38

.2934

.3845

.7630

.4470

-.4683

1.0551

X43

.2732

.4347

.6284

.5310

-.58791.1343

Int_1-.0334.0856-.3901.6972-.2030

.1362

X39

.4059

.0950

4.2712

.0000

.2176

.5941

X40

.1563

.0750

2.0852

.0393

.0078

.3049

Table 4.1.2 Test of highest order unconditional interaction
R2-chng
X*W

.0009

F

df1

df2

p

.1521

1.0000115.0000.6972

Figure 4.1 Moderation Chart

The Model can be shown as ŷ=0.2409+0.2934X+0.2732W-0.0334XW, where
W=X43, XW=the effect of price on customer-perceived value depends on
COO label.

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According to Table 4.1.2, the p-value (p=0.6972, LLCI=-0.2030, ULCI=0.1362) isgreater than 0.05 and the confidence interval contains zero, indicating it is not significant.
Therefore, the null hypothesis is accepted. That is, the effect of price on customerperceived value depends on COO label does not exist.
A pick-a-point approach was employed in PROCESS to conduct a statistical test toprobe the interaction (Hayes, 2018). The program selected three values of the moderator
to estimate the conditional effect and these values are defined as relatively low, relatively
moderate and relatively high. In his study, Hayes (2018) suggested using the 16th
(value=3.70), 50th (value=4.60) and 84th (value=5.20) percentiles of the distribution of the
COO label. Price is related to customer-perceived value among relatively low in the COO
label (θx→ylw=3.7=0.1697, p=0.1304), relatively moderate in the COO label(θx→ylw=4.6=0.1398, p=0.1617) and relatively high in COO label (θx→ylw=5.2=0.1198,
p=0.3256). There is no statistically significant association between price and customerperceived value.
4.2 H2: The effect of quality on customer-perceived value depends on COO label does
not exist.
Table 4.2 summarizes the results of using PROCESS.
R

R-sq

MSE

F

df1

df2

p

.5634

.3174

.7041

10.69465.0000115.0000

.0000

coeff

se

t

p

LLCI

ULCI

Constant.7098

2.7196

.2610

.7946

-4.6772

6.0969

X39

.4465

.4604

.9699

.3341

-.4654

1.3584

X43

.1633

.6079

.2687

.7887

-1.04071.3674Int_1-.0094.0996-.0940.9252-.2067

.1880

X38

.1477

.0971

1.5211.1310-.0446

.3401

X40

.1581

.0751

2.1053

.0374

.0093

.3068

Table 4.2.1 Model

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Does the COO label effect matter?
How Japanese consumers respond to the effect on a mobile device.

Table 4.2.2 Test of highest order unconditional interaction
X*W

R2-chng

F

df1

df2

p

.0001

.0088

1.0000115.0000.9252

Figure 4.2 Moderation Chart

The Model can be shown as ŷ=0.7098+0.4465X+0.1633W-0.0094XW, where
W=X43, XW=the effect of quality on customer-perceived value depends on
COO label.
According to Table 4.2.2, the p-value (p=0.9252, LLCI=-0.2067, ULCI=0.1880) is
greater than 0.05, and the confidence interval contains zero, indicating it is not significant.
Since the COO label is a continuous construct, this study uses the Johnson-Newman
technique to analyze the interaction effect (Hayes, 2018). The results of Table 4.2.3 showthat COO label is positively related to quality among those relatively low, relatively
moderate and relatively high in COO label. It is about 5.8th (value=2.6068) percentile ofthe distribution of COO label and above are significant. Therefore, the second hypothesis
is rejected. The effect of quality on customer-perceived value depends on COO label
exists.

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Does the COO label effect matter?
How Japanese consumers respond to the effect on a mobile device.

Original Empirical Research

Table 4.2.3 Conditional effect of focal predictor at values of the moderator
X43

effect

se

t

p

LLCI

ULCI

1.000

0.43710.36341.20270.2316-0.2828

1.15701.31580.43420.33321.30310.1952-0.2258

1.0941

1.6316

0.43120.3032

1.42240.1576-.0.1693

1.03172.26320.42530.2442

1.74150.0843-0.05840.90902.57890.42230.2156

1.95920.0525-0.00470.84932.60680.42210.21311.98080.05000.00000.84412.89470.41940.18782.23270.02750.473

0.7914

4.3 H3: The effect of risk on customer-perceived value depends on COO label does notexist.
Table 4.3 summarizes the results of using PROCESS.
R

R-sq

MSE

F

df1

df2

p

.5643

.3185

.7029

10.7484

5.0000115.0000

.0000

coeff

se

t

p

LLCI

ULCI

Constant

1.5892

1.56401.0161.3117-1.5088

4.6871

X40

.0252

.3134

.0803

.9361

-.5957.6460

X43-.0381.3401-.1121.9109-.7119

.6356

Int_1

.0299

.0681

.4388

.6616

-.1051

.1648

X38

.1506

.0970

1.5529.1232-.0415

.3428

X39

.4042

.0949

4.2594

.0000

.2162

.5922

Table 4.3.1 Model

Table 4.3.2 Test of highest order unconditional interaction
X*W

p.36

R2-chng

F

df1

df2

p

.0011

.1925

1.0000115.0000.6616

Original Empirical Research

Does the COO label effect matter?
How Japanese consumers respond to the effect on a mobile device.

Figure 4.3 Moderation Chart

Table 4.3.3 Conditional effect of focal predictor at values of the moderator
X43

effect

se

t

p

LLCI

ULCI

1.000

0.05510.24780.22220.8245-0.4358

0.54593.84210.14000.08601.62760.1063-0.0304

0.31044.15790.14950.0776

1.92490.567-.0.0043

0.30334.22710.15150.07651.98080.05000.00000.30694.47370.15890.07472.12670.03560.01090.32264.47895

0.16830.07792.16210.03270.01410.34905.10530.17780.08642.05730.04190.0066

0.3646The Model can be shown as ŷ=1.5892+0.0252X-0.03812W+0.0299XW, where
W=X43, XW=the effect of risk on customer-perceived value depends on COO
label. According to Table 4.3.2, the p-value (p=0.6616, LLCI=-0.1051, ULCI=0.1648)
is greater than 0.05, and the confidence interval contains zero, indicating it is not
significant.
Risk is related to customer-perceived value only among relatively moderate in COO

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Does the COO label effect matter?
How Japanese consumers respond to the effect on a mobile device.

label (θx→ylw=4.6=0.1627, p=0.0327) and relatively high in COO label (θx→ylw=5.2=0.1806,
p=0.0467), among relatively low in COO label (θx→ylw=3.7=0.1359, p=0.1383), there is no
statistically significant association between risk and customer-perceived value.
Hayes (2018) suggested using the Johnson-Newman technique to analyze theinteraction effect. The results of Table 4.3.3 show that COO label is positively related torisk among relatively moderate and relatively high in COO label. About the 37th
(value=4.2271) percentile of the distribution of the COO label and above is significant.
Therefore, the third hypothesis is partially rejected. The effect of risk on customerperceived value depends on the COO label exists.
The COO effect has been studied for two decades. It is an essential theoretical andpractical topic for many marketing researchers and practitioners, as the COO effectsignificantly influences how consumers make their purchase decision (Herz &Diamantopoulos, 2017). More specifically, customers use COO label as a quality
indicator, a tool to differentiate and a label of country. This study contributes to themarketing literature by examining the relationship between price, quality and risk andhow the COO label moderates customer-perceived value.
The importance of the COO label effect has been largely reported in the food industry,
however, COO label related studies on other product or service categories seem very
limited. Results from the current study support H2 and partially support H3. However,when further probing the interaction, there are some interesting findings. Firstly, in thisstudy, within the context of high-tech hybrid products, the results show that the effect ofprice on customer-perceived value depends on the COO label does not exist. The results
suggest that the COO label does not moderate the relationship between price andcustomer-perceived value. When evaluating an iPhone, consumers did not take theinformation cue on the COO label, “designed in California, assembled in China”,
seriously. Since the Apple company brand is controlled in this study and Apple itself does
not manufacture its own parts and chips, every part of an iPhone is outsourced in various
countries and finally assembled in China and India (only the iPhone 12 base model). The“made-in” effect becomes relatively weak and has no significant impact on the price;
therefore, emphasizing the made-in information in a high-tech hybrid device may not

p.38

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Does the COO label effect matter?
How Japanese consumers respond to the effect on a mobile device.

influence Japanese consumers. The result is in line with Ahmed et al. (2004) and
Suwannaporn and Linnemann (2008) who reported that the COO label does not influence
customer attitude toward the price of coffee, bread and rice. A further significant
contribution is that the current study also found that the COO label has no impact on theprice of purchasing a high-tech gadget regardless of the effect of the COO label (relatively
low, relatively moderate and relatively high).
The second theoretical contribution of this study is to examine whether or not the effectof quality on customer-perceived value depends on the COO label exists. Roosen et al.
(2003) pointed out that the COO label seemed more important than the brand labels when
French, German and British customers used the COO information to determine beef
quality. Although the second hypothesis was not supported, it found a significant
association between quality and customer-perceived value depends on the COO label
when using a pick-a-point approach to probe the interaction effect. To be more specific,
among relatively low in COO label, relatively moderate in COO label and relatively highin COO label, there is a statistically significant association between quality and customerperceived value. It indicates that Japanese consumers are influenced by the COO label
when determining product quality. For example, Apple publishes its global supplier list
on its website or discloses its latest innovative technologies (for example, M1 max chips
produced by Taiwan Semiconductor Manufacturing Company (TSMC) and used for a
personal computer) during the annual press conference. This COM information directly
influences the customer’s perception of product quality as TSMC is the world’s leading
semiconductor company. Customers are likely to use the COO's information to determine
the product quality, which influences customer-perceived value.
Furthermore, quality is related to customer-perceived value among relatively low in
COO label, relatively moderate in COO label and relatively high in COO label; there is astatistically significant association between quality and customer-perceived value. In
addition, this provides insights into the conditional effects. The use of different amountsof COO labels significantly impacts the relationship between quality and customerperceived value, which is different from the findings of Suwannaporn and Linnemann(2008).

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Does the COO label effect matter?
How Japanese consumers respond to the effect on a mobile device.

Finally, this research suggests the effect of risk on customer-perceived value depends
on the COO label partially exists among relatively moderate in COO label and relatively
high in COO label. Once more, research focusing on this concept is minimal. As Josiassen
et al. (2008) have found, the role of the COO becomes significant when evaluating
unfamiliar products. Since the majority of consumers may not acquire specific knowledge
about high-tech products, they tend to rely more on expert reviews and Apple’s public
relations and global supplier list. For example, a new iPhone 13 device costs $699 to$1,099+, and customers may plan to use it for a few years.

Therefore, it is essential to

make sure risk factors related to product performance and financial, psychological andsocial risks are minimized. This study pointed out that risk is significant among relatively
moderate in COO label and relatively high in COO label. Providing more COO
information is likely to work on customers from these two groups.
5

Conclusion
The objective of this study was to examine if it still matters where the manufacture ofa product happens. To be specific, does the “made-in” effect still exist? The progressive
process of globalization has influenced consumers’ everyday lives over the past few
decades. Consumers enjoy a higher quality of life, lower costs for products and a varietyof choices. This study aims to address a significant gap in the marketing literature in termsof testing the COO label as a moderator that influences the price, quality and risk tocustomer-perceived value. The results suggest the COO label is positively related toquality and partially related to risk in purchasing a high-tech, hybrid mobile device.
Japanese consumers are likely to use the COO label information to determine the productquality and risks related to purchasing a product. Although COO label law solely
mandates the food and beverage industry, more COO information is preferred in otherproduct and service product categories.
There are several implications of this study for future research projects. The obvious
implication is the need for further consideration of similar composite models. For
example, the brand effect is controlled in this study. Additional variables such as brandand country image can also be included in future research. Moreover, the effect of thep.40

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Does the COO label effect matter?
How Japanese consumers respond to the effect on a mobile device.

COO label might be varied across different products or services such as luxury goods,
pharmaceutical products or education. Thus, it is worth cross-validating the model inother industries. The COO label effect may differ in different cultural environments. A
cross-cultural study (e.g. developed country versus developing country) of the COO label
effect may provide valuable insights to explain the phenomenon further.

Acknowledgement
This work was supported by the Creating Happiness Incubation Research Fund 2021
(Research theme: A Study of How Country-of-Origin Labeling Influences CustomerPerceived Value)
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