The country-of-origin dilemma: domestic bias or need for transparency? Assessing consumer’s value of information for country-of-origin labelling in Italy

Abstract

PurposeThe main objective of this study is to analyze consumers’ willingness to pay (WTP) for country-of-origin (COO) labels of two processed food products, disentangling the value of information (VOI) that consumers place on COO information from the value they place on specific countries of origin.Design/methodology/approachA convenience sample of 96 university students completed a face-to-face experiment that included a multiple price list and a discrete choice experiment. Data are analyzed employing interval censored regressions, and random parameter logit models.FindingsOur results indicate that, on average, consumers place a higher value on origin information when a country name is explicitly mentioned. Furthermore, COO information is, on average, more relevant to consumers for products with low involvement than for products with high involvement. Finally, the effect of ethnocentrism is heterogeneous across product categories.Research limitations/implicationsMandatory COO labeling may or may not reinforce domestic bias, depending on the rationale behind consumer support. If consumers are driven by blind ethnocentrism, it may lead to market inefficiencies. However, if they use COO as a cue to align their stated preferences with their choices, it will not. For this alignment to occur, consumers must be fully informed about product attributes, which requires new and smart methods of communicating product attributes.Originality/valueThe present study contributes to the literature on COO food labels, being the first in Italy to disentangle the VOI consumers place on origin information itself from the value they place on specific countries of origin. In addition, it is the first study that applies this methodology across different product categories, each of which has a different level of cultural sensitivity to consumers.