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Collective Goods, Free Riding and Country Brands: The Chinese Experience

Published online by Cambridge University Press:  02 February 2015

Jay B. Barney
Affiliation:
The Ohio State University, USA
Shujun Zhang
Affiliation:
Sun Yat-sen University, China
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Abstract

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Company brands signify a message to consumers about the quality and value of a product. Countries can also be branded. However, unlike the brands of individual firms, country brands are collective goods. The nature of country brands creates the possibility of free riding, where individual firms benefit – in terms of price or access – from the promise made by a country brand but deliver at a level lower than what is promised by the brand. Such free riding threatens the stability of what the country brand represents unless legal, governmental, or other institutions engage in activities to reduce these adverse effects. In this paper, we investigate the Chinese brand – once standing for average quality at a low price – in the light of recent recalls. We examine how country brands emerge and the incentives that firms operating in a country have to either support or not support a country brand. We also explore the implications of diese incentives for the role of various institutions, including the government, in developing, maintaining and changing a country brand and in developing and enforcing the policies, such as protection of intellectual property, necessary to support firms' efforts toward reinforcing a trusted country brand.

Type
Editors' Forum – Made in China: Implications of Chinese Product Recalls
Copyright
Copyright © International Association for Chinese Management Research 2008

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