Basking in reflected glory: Reverse status transfer from foreign to home markets

Heewon Chae, Jaeyong Song and Donald Lange

Strategic Management Journal, 2021, vol. 42, issue 4, 802-832

Abstract: Research summary In this study, we investigate reverse status transfer from foreign to home country markets. We argue that a positive product status accrued in a leading foreign country, or outside status, increases domestic market performance by providing home country audiences with a means of self‐enhancement. We predict that the impact of outside status will be stronger when the foreign and home countries have similar economic conditions, and when the products are high priced, luxury goods—as social approval and prestige‐seeking are important factors in purchase decisions for these products. We test our hypotheses using a sample of firms and vehicles in the automotive industry. Results from two‐stage multi‐level analysis support our arguments. Our results have several implications for research related to status transfer and international business. Managerial summary We look at how consumers in the home country of an automaker (Germany, Japan, and Korea) increase purchases of a car model that wins the J.D. Power APEAL award in the United States. Rather than telling those consumers anything new about the car's quality, the award bestows status on the vehicle from the leading outside market. (We call that reverse status transfer, as it flips the idea that domestic status helps firms competing in foreign markets.) Domestic consumers can share in some of that status by purchasing the vehicle, and they are especially likely to do so when it is a high priced or luxury model, as those aspects amplify the status effects, as does economic similarity between the United States and the home country.

Date: 2021
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