Country-of-Origin Relationship (CoOR): A Relational Approach to Understanding the Association Between a Multinational Company in Crisis and Its Country of Origin

ABSTRACT

Extant research has examined country-of-origin (CoO) from a marketing perspective, examining the effects of consumers’ evaluations of a country’s image on attitudes toward products from the country. To advance research on CoO, there are calls to approach CoO from the perspectives of other disciplines. From the perspective of public relations, this study conceptualizes country-of-origin relationship (CoOR) and examines it as individuals’ evaluations of a country’s pursuit of a mutually beneficial relationship with their home countries. Using South Korea as an example, survey data collected from a representative sample of 514 Australian citizens found a positive association between CoOR and evaluations of the relational efforts made by multinational companies from South Korea. In response to a hypothetical event involving a South Korean company in a crisis in Australia, those who evaluated South Korean companies positively were less likely to subscribe to conspiracy theories related to the company involved, attribute responsibility to it or engage in negative megaphoning. The findings of this study suggest that CoOR, which consists of interactional bilateralism, power mutuality, relational trust, relational satisfaction and relational commitment, is critical in reducing the “foreignness” of a multinational company.

Introduction

Country-of-origin (CoO) effects have been extensively studied in marketing and international business literatures since the 1960s (Peterson & Jolibert, 1995). CoO is an important informational cue in consumer decision making; it guides consumers’ judgments of the quality of a product and affects their expectations of consumption experiences (Martin, 2010). In recent years, due to the heightened competition and tensions between and among countries, whether a product is made in a foreign country or associated with a foreign brand has become an emotional and moral consideration when consumers make buying decisions (Brodowsky et al., 2004). During organizational crises, multinational companies are often judged based on stereotypes of their countries of origin as they carry the burden of “a liability of foreignness” (Arpan & Sun, 2006, p. 191).Thus, multinational companies can either benefit (“honor by association”) or suffer (“guilt by association”) from the spillover from their country-of-origin image to their brand image (Diamantopoulos et al., 2011).

While extensive research in marketing has explained CoO based on the effects of country-of-origin image (CoI) on consumer attitudes, Roth and Diamantopoulos (2009) suggested that to further advance CoO research, CoO should be approached from the perspectives of other research streams. In this light, this study suggests that CoO be approached from the relational perspective advocated in the public relations discipline and explains CoO using a newly conceptualized construct, country-of-origin relationship (CoOR). The concept of relationship plays a pivotal role in explaining CoO for the following reasons. First, current research on CoO has examined CoI as a predictor to consumer attitudes (e.g., Diamantopoulos et al., 2011; Ingenhoff et al., 2018). The construct of image examines individuals’ cognitive and affective components toward different attributes of a country such as its political and economic performance, norms and values and beauty and cultural attractiveness (e.g., Buhmann & Ingenhoff, 2015). While CoI is useful for predicting consumers’ attitudes (Roth & Diamantopoulos, 2009), it does not explain how individuals construct meanings of countries. In connection with this, media-constructed associations have been found to play a significant role in consumers’ construction of meanings about countries and their related entities (Ingenhoff et al., 2018; Wang, 2005a; Wang & Wang, 2007). Individuals are observers of news events and make interpretations and evaluations of how countries behave toward other countries in those events (Grunig, 1993; Tam & Kim, 2020, 2021). Second, the examination of image fails to consider that individuals develop perceptions of a country based on their own national identities and that they evaluate countries in relation to their home countries (Li, 2008, 2009; Wang, 2005a; Wang & Wang, 2007). They observe, interpret and evaluate the relationships and interactions between and among countries in building mutual understanding and co-constructing meanings and values (Szondi, 2010; Tam & Kim, 2020, 2021). Lastly, although it is expected that countries would agree with one another on some issues and disagree on other issues, the relational perspective recognizes that countries are interdependent and that they need to manage relationships with other countries to pursue mutually beneficial outcomes (e.g., Ledingham, 2001, 2003). Countries have the power to affect the political, economic, social and cultural wellbeing of other countries (e.g., Ledingham & Bruning, 1998). Therefore, individuals make evaluations of their relational efforts and power dynamics (e.g., Barnett & Duvall, 2005; Baviera, 2015). The relational efforts they make to pursue mutual understanding, mutual expectations, mutual interests, mutual influence and mutually beneficial outcomes contribute to the formation of attitudes toward a country and its related entities over time (Fitzpatrick, 2007; Magnusson et al., 2014; Zhukov et al., 2015). This is especially prevalent during sudden and unpredictable crisis events, such as conflicts between two countries (Tam & Kim, 2017; Wang, 2005b, 2006) and organizational crises involving multinational companies in foreign host markets (Li, 2008; Tam & Kim, 2017).

In consideration of the central role of individuals’ evaluations of the relational efforts made by a country toward their home countries, this study aims to achieve three purposes. First, it adopts a relational perspective to explore country-of-origin relationship (CoOR) as the degree to which individuals evaluate a country as making relational efforts to maintain a mutually beneficial relationship with their home countries. Second, while existing research has established a positive association between CoI and brand image (e.g., Magnusson et al., 2014; Suter et al., 2020), this study also adopts a relational perspective to test the association between CoOR and the extent to which multinational companies from a country are evaluated as making relational efforts to build mutually beneficial relationships with people using an adapted construct, multinationals-publics relationship quality (MPRQ). This hypothesized association is founded on the assumption that publics’ attitudes toward a country are built over a long period of time and that such attitudes are likely to trigger associations between the country level and the organizational level (Magnusson et al., 2014; Zhukov et al., 2015). Lastly, current research has identified that spillover effects from a country to its brands and vice versa are especially prevalent during organizational crises (Aichner et al., 2021; Fan et al., 2020; Ingenhoff et al., 2018; Laufer & Wang, 2018; Xu & Wu, 2015; Xue et al., 2022). This is because people are engaged in motivated reasoning by interpreting new information in accordance with their prior beliefs to avoid cognitive dissonance during crises (Maguire et al., 2022; Zhao et al., 2022). Thus, this study will also test the applicability of the relational approach to CoO by investigating the impact of MPRQ on crisis outcomes (i.e., attribution of responsibility, conspiracy attribution, negative megaphoning) during a hypothetical crisis involving a multinational organization’s operations in a foreign country.

Literature review

Applying the concept of relationship to the study of CoO: Country-of-origin relationship (CoOR) and multinationals-publics relationship quality (MPRQ)

Even though the concepts of international relations and bilateral relations seem foreign to ordinary citizens and is seemingly limited to the interactions between and among governments, ordinary citizens are exposed to media coverage about how countries treat one another in asserting their national interests and achieving mutual interests. The more media coverage a foreign country receives, the more salience publics assign to the country (Wanta et al., 2004). The foreign policy decisions and actions a country makes are significant in predicting public opinion toward the country (Furia & Lucas, 2006). Publics are interested in understanding how their home countries and their people are treated. Furia and Lucas (2006) noted that publics generally evaluate a foreign country on the basis of the foreign country’s policy decisions and actions in regard to their home countries. According to the theory of social exchange, there is a psychology of reciprocity in international relations which is founded on the principle that countries do favors for other countries in order to make them return favors (Larson, 1988). People interpret and evaluate the motives and intentions of a counterpart country (Larson, 1988). This explains why international events as well as foreign policy decisions that affect the relationship between two countries also determine people’s public opinion toward a foreign country (Chun, 2022). As Rhee et al. (2023) noted, countries seeking favorable policy decisions and actions from other countries need to consider how their own actions and decisions are perceived by citizens in those countries. It is important to understand foreign public opinion in international relations. While variables such as motives of a foreign country have been found to be significant in predicting foreign public opinion (e.g., Furia & Lucas, 2006; Rhee et al., 2023), current research is yet to explain how publics evaluate the relationship between two countries. In this respect, the concept of relationships in public relations could be useful.

The earliest work that applied the concept of relationships in public relations to international affairs was published in the 1990s when Grunig (1993) proposed the importance of the two-way model of public relations for a country to establish and maintain relationships with other countries and publics. Although most people were not interested in news about international affairs, Grunig (1993) suggested that a small group of people who had been exposed to news events related to international affairs would become active publics and would influence others’ opinions. Rather than simply serving to influence news coverage, the application of the two-way model in public relations can guide countries to develop policies that meet the expectations of foreign publics. Since the publication of Grunig’s (1993) work, other scholars have also advocated for the application of relationships to international affairs and public diplomacy. Szondi (2010) argued that counties should replace “image building” with “relationship building” as they should focus on working with foreign publics to co-create meanings rather than using messaging strategies to change perceptions. The relational approach has been advocated for as a long-term, two-way approach to engaging with foreign countries and publics for mutually beneficial outcomes (Fitzpatrick, 2007, 2017; Golan, 2015; Ki, 2015; Storie, 2015, 2018; Yun, 2015).

The concept of relationships is founded on the assumption that when two entities require resources from each other and need to be associated with each other, they would engage in relational activities such as exchanges, transactions and communication to build and maintain their relationship (Broom et al., 1997). At the country level, this approach advances the shared interests and values of both state and non-state actors by promoting mutual understanding among countries (Fitzpatrick, 2017). For example, countries would use tools such as social media to engage with foreign countries and publics to co-create policies that promote shared interests, which in turn, shape foreign publics’ experiences of those countries (Storie, 2015, 2018). According to Tam and Kim (2020, 2021), although most foreign publics do not have direct experiences in interacting with countries, these relational activities could be seen in the news media and experienced through interpersonal exchanges, shaping foreign publics’ perceptions of the extent to which countries make efforts to pursue mutual understanding and mutually beneficial outcomes with the countries and the people with which they seek to form and cultivate a relationship. Foreign publics’ assessment of a country’s pursuit of a mutually beneficial relationship with other countries is important because this assessment has a positive association with country reputation (Tam & Kim, 2020) and foreign publics’ attitude and behavioral intentions toward products from the country (Tam & Kim, 2021).

The relational approach presents a shift from the image approach to understanding CoO effects because it emphasizes behaviors (e.g., a country’s actions and policies toward another country) rather than symbols (e.g., a country’s messages) (Grunig, 2018; Kim & Ni, 2010). In investigating individuals’ constructions of meanings of a country, the construct of relationship examines foreign publics’ evaluations of the behaviors of a country such as its pursuit of mutually beneficial relationship with other countries (Tam & Kim, 2020, 2021) whereas the construct of image examines publics’ attitudes toward different components of a country such as its political and economic performance and cultural attractiveness (Buhmann & Ingenhoff, 2015). While extensive research has already established spillover effects between countries and their brands and products (e.g., Diamantopoulos et al., 2011; Fullerton et al., 2007; Jiménez & San Martín, 2010; White, 2012), a shift to the relational approach to the understanding of CoO highlights two aspects. First, foreign publics do not only evaluate the attractiveness of a country in terms of the different components of an image such as its beauty but how well it relates to other countries and foreign publics. This is supported by literature on consumer nationalism which emphasizes that publics evaluate a country in terms of the actions and decisions it makes that affect other countries and foreign publics (J. Wang, 2005a; Wang & Wang, 2007). Second, spillover occurs when evaluations of one entity (e.g., a country) can affect evaluations of another entity (e.g., its organizations) (e.g., Poroli & Huang, 2018). Arpan and Sun (2006) identified that country image is predictive of evaluations of organizations from the country, especially during crises (Zhukov et al., 2015). From a relational perspective, CoOR, which measures the evaluations of the actions and decisions made by a country to pursue a mutually beneficial relationship with other countries, may spill over to evaluations of the relational actions and decisions made by multinational companies from the country. Based on current research on organizational-public relationship assessment (OPRA) (e.g., Huang, 2001), this study conceptualizes “multinationals-publics relationship quality” (MPRQ) as evaluations of multinational companies’ pursuit of mutually beneficial relationships with publics. The following hypothesis is proposed:

H1:

Country-of-origin relationship (CoOR) has a positive association with multinationals-publics relationship quality (MPRQ).

CoO and multinational companies in crisis

CoO has been found to be significant in influencing purchase decisions (e.g., Peterson & Jolibert, 1995) and is also especially prevalent in crisis situations (Aichner et al., 2021; Fan et al., 2020; Ingenhoff et al., 2018; Xu & Wu, 2015; Xue et al., 2022). Country image affects evaluations of organizations during organizational crises (Zhukov et al., 2015). Due to stigma-by-association effects, when an organization from a country is in a crisis, foreign publics’ animosity toward its country of origin could cause stigma on other organizations from the same country (Xue et al., 2022). An organization in crisis could also trigger prototypicality about its country of origin, triggering negative perceptions about other organizations from the same country and their products (Magnusson et al., 2014). Because crises are characterized by uncertainty (Lee et al., 2021; Nekmat & Kong, 2019), publics develop high needs for information such as the causes of the crisis events and who is responsible for them (e.g., Coombs, 2007a). In crisis situations involving a multinational company, publics’ pre-existing perceptions about the company’s country of origin could be activated to explain the causes of the crisis events. Evaluations of a country and its multinational companies can serve as judgment shortcuts when individuals have limited knowledge about a crisis (Arpan & Sun, 2006; Magnusson et al., 2014; Xue et al., 2022). The social identity theory posits that people are generally in favor of in-groups (e.g., brands from countries like their home countries) and against out-groups (e.g., brands from countries unlike their home countries) (Zeugner-Roth et al., 2015). Hence, at times of organizational crises, publics could be engaged in motivated reasoning by interpreting information about the crises to fit their prior beliefs about the involved organization’s country of origin (Kunda, 1990). Following this line of thought, we propose to test associations between MPRQ and three crisis outcomes (i.e., attribution of responsibility, conspiracy attribution and negative megaphoning).

Attribution of responsibility

During crisis situations, individuals seek causes, make attributions and evaluate organizational responsibility as they determine the causes of the crises (Coombs & Holladay, 1996). Research on crisis communication has identified the significance of crisis types (i.e., victim, accidental, preventable) on the attribution of responsibility (Coombs, 2007b). The attribution of responsibility is determined by individuals’ judgements related to the locality of the cause (i.e., external or internal), intentionality (i.e., the extent to which the organization purposefully causes the incident), and accountability (i.e., whether the organization has resources and capability to prevent the crisis) (Brown & Ki, 2013). Crisis responsibility is determined by whether the act that perpetrated the crisis was considered intentional (i.e., blame) and whether the organization could have done something to prevent it from happening (i.e., responsibility). As individuals tend to look for entities to blame during crises (e.g., Weiner, 1995, 2010), how information is conveyed and understood can affect the attribution of responsibility (Coombs, 2007a).

However, information about the crisis is not the only factor determining attribution of responsibility. Motivated reasoning, which could be conscious or unconscious, could lead individuals to interpret new information in accordance with emotion-loaded motivational biases during crises (Kunda, 1990; Zhao et al., 2022). As individuals use information to make attribution that fits their pre-existing beliefs, Zhao et al. (2022) found that individuals’ issue involvement and political orientation could affect perceived severity of a crisis and thus, responsibility attribution. In relation to this, CoO research explains that individuals’ pre-existing perceptions about a country are activated when organizations from the country are in crises (e.g., Magnusson et al., 2014; Xue et al., 2022). Research on international relations also found that individuals’ prior beliefs and stereotypes about countries are activated as heuristics when international events related to their home countries take place (Herrmann, 2017). According to Arpan and Sun (2006), when a multinational company is involved in a crisis, foreign publics are prone to attribute responsibility to it if the company itself and/or its country of origin is considered an outgroup. If a multinational company whose country of origin is perceived poorly in the minds of the publics in a foreign country is involved in a crisis, the image of its country of origin can increase their liability of foreignness and trigger higher attribution of responsibility to the company (Arpan & Sun, 2006; Wang, 2005a, 2006). As CoI shapes perceptions of multinational companies at times of crises including attribution of responsibility at times of crises (Xu & Wu, 2015; Zhukov et al., 2015), the following hypothesis is proposed:

H2:

When a multinational company is in a crisis, MPRQ is negatively associated with attribution of responsibility.

Conspiracy attribution

According to the theory of motivated reasoning, individuals are motivated to process information and engage in reasoning about specific events in order to achieve some goals (Kunda, 1990) For example, they seek or use information to arrive at a preferred conclusion (Kim & Grunig, 2021). To explain crisis events, individuals seek information consistent with their pre-existing beliefs during crisis events (Kunda, 1990), become engaged in a motivated process to serve their ideological and psychological needs (Miller et al., 2016) and cognitively frame or reframe the information to ensure consistency between their beliefs and desired outcomes (Noval & Hernandez, 2019).

During a crisis situation, individuals are confronted with the negative consequences of the problematic event (Chon, Kim, et al., 2022) and have to cope with the uncertainty and lack of information associated with the event (Lee et al., 2021; Nekmat & Kong, 2019). Amidst the absence of sufficient information and the cognitive need for information regarding the cause of a crisis (Coombs, 2007a), some individuals would engage in conspiratorial thinking about the entity involved. That is, they would develop a motivated mindset that causes individuals to be skeptical about other individuals or groups’ motives in achieving self-motivated and malevolent desires in a problematic event (Chon, Xu, et al., 2022). During problematic events, individuals would make attributions to powerful individuals and groups for causing those events (Douglas & Sutton, 2008). Tam and Kim (2023) found that poor organization-public relationship quality can trigger conspiratorial thinking about the organization. Kim and Lee (2023) classified conspiratorial thinking into two types: conspiracy orientation and conspiracy attribution. While some individuals would have a dispositional tendency to believe in conspiracy theories about various problems (“conspiracy orientation”), others tend to have a situational tendency to attribute the cause of a specific problematic event to powerful actors whose actions are motivated by self-interest (“conspiracy attribution) (Kim & Lee, 2023).

In the context of CoO, as Xu and Wu (2015) found the effects of CoO on attribution of responsibility, organizational reputation and purchase intention, it is worthwhile to also explore whether and how individuals are motivated to process information in ways to confirm their pre-existing beliefs when they are confronted with the uncertainty and limited information during crises. In this light, the construct of conspiracy attribution may help to explain individuals’ creation of and belief in conspiracy theories at times of crises when there is an information vacuum (e.g., Lee et al., 2021). As conspiracy attribution often flourishes at times of crises, organizations are advised to develop strategies for crisis management and messaging to account for the risk of conspiratorial thinking (Mortensen & Gibson, 2022).

Considering that individuals process information and engage in reasoning in ways to confirm their pre-existing beliefs, this study posits that when a multinational company is in a crisis, those that evaluate the companies from the same country negatively would have a motivated mindset to be skeptical about the company involved in the crisis. This motivated mindset would also determine attribution of responsibility. The following hypotheses are proposed:

H3:

When a multinational company is in crisis, MPRQ is negatively associated with conspiracy attribution.

H4:

Conspiracy attribution is positively associated with attribution of responsibility.

Negative megaphoning

To cope with the negative consequences of problematic events, individuals would engage in communicative behaviors such as sharing information with others (Kim & Grunig, 2011). These individuals seek to also motivate others to engage in communicative behaviors about those events in order to pressure the organizations involved to amend their organizational actions and policies. Individuals’ active communicative behaviors could cause the problematic events to become hot issues, attracting more news coverage and pressuring organizations to solve those problems (Aldoory & Grunig, 2012). In the context of organization-employee relationship, employees who are not happy with their employers would engage in negative megaphoning about their organizations (Kim & Rhee, 2011). In that context, negative megaphoning refers to employees’ engagement in the forwarding (i.e., proactive) and sharing (i.e., reactive) of negative information about their organizations to others (Kim & Rhee, 2011).

When publics find organizational behaviors problematic, they are likely to engage in negative megaphoning (Chon et al., 2021). During a crisis, especially one in which crisis responsibility is uncertain, individuals’ emotions could be triggered, increasing the intention to engage in further communicative behaviors (Lee et al., 2021). Their negative megaphoning behaviors could be explained by their increased situational motivations (i.e., problem recognition, constraint recognition and involvement recognition) (Lee & Hove, 2019). In relation to negative megaphoning, Lee and Hove (2019) suggested that the role of attribution of responsibility in triggering such behaviors be further explored. Tam and Kim (2023) found the significance of conspiratorial thinking in mediating the relationship between organization-public relationship quality and negative megaphoning. Applying these findings to the context of CoO, the following hypotheses are proposed:

H5:

Attribution of responsibility has a positive association with negative megaphoning.

H6:

Conspiracy attribution has a positive association with negative megaphoning.

Figure 1 below shows a hypothesized model to be tested.

Figure 1. Hypothesized model to be tested.

Methods

Development of measures

To operationalize the study, survey items were developed and adapted from existing literature based on the conceptual definitions of each variable (as explained in the sub-sections below). Respondents were asked to evaluate the items on a five-point Likert scale from strongly disagree (1) to strongly agree (5). Table 1 shows the factor loadings, mean, standard deviation, standard error of the mean and reliability for each survey item.

Table 1. Factor loadings, mean, standard deviation, standard error of the mean and reliability for each survey item (α = Cronbach’s alpha, KMO = Kaiser-Meyer-olkin, M = mean, SD = standard deviation, SE = standard error, α = cronbach alpha).

Variable	Survey items	Loading	M	SD	SE
CoOR (interactional bilateralism) α = .726 KMO = .68 Variance explained = 64.60%	South Korea has a mutually beneficial relationship with Australia.	.683	3.61	.807	.036
	(2) South Korea seeks symmetrical pay-gain relationship with Australia.	.64	3.39	.766	.034
	(3) South Korea maintains interactions with Australia for mutually beneficial purposes.	.732	3.62	.855	.038
CoOR (power mutuality) α = 781 KMO = .69 Variance explained = 69.60%	(1) South Korea listens to what Australia says.	.738	3.07	.948	.042
	(2) South Korea considers the interests of Australia when making decisions.	.823	2.88	.949	.042
	(3) South Korea considers the opinions of Australia to be legitimate.	.654	3.28	.925	.041
CoOR (relational trust) α = .796 KMO = .701 Variance explained = 71.70%	(1) South Korea treats Australia fairly and justly.	.733	3.5	.872	.038
	(2) South Korea could be relied on to keep its promises to Australia.	.828	3.44	.907	.04
	(3) South Korea has the ability to accomplish what it says it would do for Australia.	.698	3.45	.904	.04
CoOR (relational satisfaction) α = .772 KMO = .700 Variance explained = 69.84%	(1) South Korea is happy with its relationship with Australia.	.705	3.6	.799	.035
	(2) South Korea prefers maintaining its relationship with Australia than not.	.727	3.82	.819	.036
	(3) South Korea enjoys dealing with Australia.	.754	3.69	.796	.035
CoOR (relational commitment) α = .808 KMO = .687 Variance explained = 72.26%	(1) South Korea invests resources into continuing its relationship with Australia.	.654	3.49	.805	.036
	(2) South Korea maintains a long-term commitment to Australia.	.883	3.6	.86	.038
	(3) South Korea is committed to its relationship with Australia.	.761	3.58	.873	.039
MPRQ (trust) α = .837 KMO = .719 Variance explained = 75.42%	(1) South Korean companies are truthful to people.	.808	3.24	.869	.038
	(2) South Korean companies treat people fairly and justly.	.843	3.2	.9	.04
	(3) South Korean companies keep their promises to people.	.734	3.22	.83	.037
MPRQ (control mutuality) α = .791 KMO = .68 Variance explained = 70.61%	(1) South Korean companies are attentive to what people say.	.673	3.21	.885	.039
	(2) South Korean companies consider opinions of people as legitimate.	.887	3.26	.87	.038
	(3) South Korean companies listen to what people say.	.69	3.2	.869	.038
MPRQ (relational commitment) α = .829 KMO = .802 Variance explained = 66.14%	(1) South Korean companies maintain long-term commitment to people.	.74	3.3	.864	.038
	(2) South Korean companies want to maintain relationship with people.	.834	3.49	.868	.038
	(3) There is a long-lasting bond between South Korean companies and people.	.741	3.35	.853	.038
	(4) It is worthwhile to value our relationships with South Korean companies.	.647	3.62	.856	.038
MPRQ (relational satisfaction) α = .805 KMO = .795 Variance explained =63.06%	(1) South Korean companies meet the needs of people.	.702	3.43	.872	.038
	(2) People are satisfied with South Korean companies.	.722	3.4	.844	.037
	(3) People benefit from our relationships with South Korean companies.	.735	3.57	.883	.039
	(4) People are pleased with our relationships with South Korean companies.	.691	3.41	.843	.037
Conspiracy attribution α = .809 KMO = .712 Variance explained =72.50%	(1) The South Korean company’s top management must have plotted actions secretly behind the scenes to conceal their problem.	.747	3.06	1.025	.045
	(2) This is not the first time for this South Korean company. These data breaches must have happened repeatedly but were not caught.	.737	3.18	.926	.041
	(3) The South Korean company intentionally conspired to use its customers’ data in ways it was not permitted to for business gains.	.816	3.09	.995	.044
Attribution of responsibility α = .753 KMO = .651 Variance explained =66.98%	(1) The issue was caused by an intentional act by the South Korean company.	.783	3.16	.906	.04
	(2) A deliberate act by someone in the South Korean company caused the issue.	.826	3.29	.888	.039
	(3) The issue was caused by a problem inside the South Korean company.	.532	3.47	.819	.036
Negative megaphoning α = .799 KMO = .658 Variance explained =71.39%	(1) As a result of this issue, I am likely to speak negatively about the South Korean retailer.	.583	3.09	1.001	.044
	(2) As a result of this issue, I am likely to speak negatively about all companies from South Korea.	.917	2.68	1.106	.049
	(3) As a result of this issue, I am likely to speak negatively about South Korea.	.778	2.61	1.085	.048
Nationalism α = .694 KMO = .66 Variance explained =62.06%	(1) Australian people are among the finest in the world.	.563	3.62	.992	.044
	(2) Australia should have the biggest say in deciding the future of the Asia Pacific region.	.739	3.2	1.048	.046
	(3) Other countries should try to make their government as much like ours as possible.	.67	3.19	1.055	.047

To contextualize the study in a real relationship between the respondents’ home country (i.e., Australia) and a foreign country, South Korea was used as a case. South Korea was selected for the following reasons. While most CoO studies on Asian countries have been conducted on large countries like China (e.g., Heine et al., 2018; Wang et al., 2012), the significance of South Korea and its brands should not be underestimated. According to Magnusson et al. (2014), consumers thought South Korea was less advanced than other countries but its automobile brands, Hyundai and Kia, were in fact one of the top 100 global brands. In recent years, Australia and South Korea have advanced its relationship; in addition to trade, there have been more collaborations in defence, culture and education (Robertson, 2021). Despite the prominence of the buy-local “Australian Made” campaign in encouraging Australians to buy local (Amonini et al., 1998; Cameron & Elliott, 1998; Quester et al., 1996), South Korean brands have been increasing in popularity in Australia (e.g., Chesterton, 2023). Robertson (2021) wrote that Australia and South Korea have “some commonalities on which to build a stronger relationship” (para. 10). Thus, the survey items tested respondents’ evaluations of the South Korea-Australia relationship.

To provide the respondents with a context of the study, they were provided with this information at the beginning of the survey: “According to the Department of Foreign Affairs and Trade (DFAT), Australia and the Republic of Korea (ROK, also known as South Korea) are strong economic, political and strategic partners with shared values and interests. People-to-people links between the two countries are growing and make a significant contribution to the relationship.” Also, to test attribution of responsibility, conspiracy attribution and negative megaphoning, prior to presenting the survey items, the respondents read a short message about reports of a data breach involving a South Korean company: “There have been reports of data breach from a South Korean retailer. The retailer is one of the biggest in the world and has presence in Australia. Some Australian customers’ personal information was accessed.”

Survey items for country-of-origin relationship (CoOR)

The conceptualization and measurement items for CoOR were adapted from the Relationship Assessment of Diplomatic Interaction Outcome (RADIO) scale (Tam & Kim, 2017; Tam et al., 2018). Like the propositions made in this study, the RADIO scale was developed to shift the focus from image to relationship as public diplomacy outcomes. The scale also emphasized the significance of individuals’ experiences of the relational behaviors of a country rather than their perceptions of the symbols (e.g., messaging strategies) associated with a country. This study adopted five dimensions used in the RADIO scale. First, interactional bilateralism was defined as “individuals’ perceived degree of mutually beneficial interactions between their home country and a foreign country” (Tam & Kim, 2017, p. 218) and was operationalized using three measurement items. Second, power mutuality was defined as “perceived degree of shared power in influencing each other in the relationship between his or her home country and a foreign country” (Tam & Kim, 2017, p. 219) and was measured using three survey items. Third, relational trust refers to the extent to which individuals perceive a country to be treating another country with dependability and competence (Tam & Kim, 2017); three survey items were developed to measure the variable. Fourth, relational satisfaction refers to the extent to which individuals feel favorable towards a country in terms of having positive expectations (Tam & Kim, 2017); the variable was also measured using three items. Lastly, relational commitment (also known as relational continuance) is defined as the extent to which individuals perceive the relationship to be worth maintaining (Tam & Kim, 2017); three survey items were developed to measure this variable.

Survey items for multinationals-publics relationship quality (MPRQ)

To measure possible spillover effects from CoOR to how companies from South Korea are evaluated, the Organization-Public Relationship Assessment (OPRA) scale (Hon & Grunig, 1999; Huang, 2001) was adapted to measure multinationals-publics relationship quality (MPRQ) as individuals’ assessments of the relational efforts made by multinational companies from a foreign country. Four dimensions were measured: trust, control mutuality, relational commitment and relational satisfaction. First, trust is defined as “one party’s level of confidence in and willingness to open oneself to the other party” (Hon & Grunig, 1999, p. 14). This study used three items to measure the variable as individuals’ evaluations of people’s confidence in and willingness to open oneself to companies from South Korea. Second, control mutuality is defined as “the degree to which parties agree on who has rightful power to influence one another” (Hon & Grunig, 1999, p. 13). This study used three items to measure the variable as individuals’ evaluations of whether companies from South Korea listen to and consider people’s opinions. Third, relational commitment refers to “the extent to which one party believes and feels that the relationship is worth spending energy to maintain and promote” (Hon & Grunig, 1999, p. 14) and is measured using four items in this study in terms of efforts made by South Korea to maintain the relationship with publics. Lastly, relational satisfaction refers to “the extent to which one party feels favorably toward the other because positive expectations about the relationship are reinforced (Hon & Grunig, 1999, p. 14). This study used four items to measure this variable in terms of people’s satisfaction with companies from South Korea.

Survey items for crisis outcomes (attribution of responsibility, conspiracy attribution and negative megaphoning)

To test the significance of MPRQ on crisis outcomes, the three variables included, namely attribution of responsibility, conspiracy attribution and negative megaphoning, were conceptualized and operationalized based on existing studies. First, based on Brown and Ki’s (2013) scale of responsibility attribution, this study uses three items to measure the involved organization’s intentionality and locality for the crisis. Second, adopting and Kim and Lee’s (2023) conceptualization of conspiracy attribution as individuals’ situational tendency to subscribe to conspiracy theories about a specific problem, this study uses three survey items to measure individuals’ perceptions about the involved organization’s motives in achieving malicious gains through the crisis. Lastly, negatively megaphoning is examined as individuals’ proactive forwarding of negative information about the involved organization, other organizations from the same country of origin and its country of origin (e.g., Kim & Rhee, 2011).

Data collection

Upon approval from the University’s ethics committee, a survey questionnaire was completed by a nationally representative sample (by age and gender) of 514 Australian citizens in December 2019. The respondents were recruited via Qualtrics and were remunerated based on their agreements with Qualtrics. The demographic characteristics of the sample, including age, gender, education attainments, pre-tax income and political affiliation, are shown in Table 2. For age, the mean is 45.8 and the standard deviation is 18.101.

Table 2. Demographic characteristics of the sample.

Individual-level variables	N	Percent
Age	514
18–20	39	7.6%
21–30	92	17.9%
31–40	96	18.7%
41–50	80	15,6%
51–60	80	15.6%
60 and above	127	24.7%
Gender
Male	253	49.2%
Female Prefer not to answer	259 2	5.4% .4%
Education
Less than high school	27	5.3%
High school graduate	169	32.9%
Some university	85	16.5%
Bachelor’s	136	26.5%
Master’s	48	9.3%
Doctorate	8	1.6%
Other	41	8%
Annual pre-tax income
Less than AUD$30,000	265	51.6%
AUD$30,001–$60,000	97	18.9%
AUD$60,001–$90,000	43	8.4%
AUD$90,001–$120,000	42	8.2%
More than AUD$120,000	32	6.2%
Prefer not to answer	35	6.8%
Political affiliation
Labor	187	36.4%
Liberal	165	32.1%
Greens	53	1.3%
Other	53	1.3%
Prefer not to answer	56	1.9%

Data analysis

To test the hypothesized model, structural equation modelling (SEM) was then conducted on AMOS (version 28). SEM was considered appropriate for data analysis in this study because of its strengths in testing hypotheses involving latent constructs and the recognition of measurement errors (Goodboy & Kline, 2017). In addition to testing the paths specified in the hypothesized model, individual-level variables, including age, gender, education, pre-tax income and political affiliation, were all included as control variables to be tested. As nationalism can be significant in influencing how people evaluate their home and other countries, it was also included as a control variable in the model tested. The survey items for nationalism were adopted from an existing study (Karasawa, 2002). Three items were developed based on the definition of nationalism as “an ideological belief that one’s own nation should be superior to other nations” (Kosterman & Feshbach, 1989, as cited in; Karasawa, 2002, p. 646). The items for nationalism are also shown in Table 1.

Findings

The testing of H1-H6 showed acceptable model fit (χ2 = 232.161, df = 55, χ2/df = 4.221, p=.000, CFI = .948, RMSEA = .079 SRMR = .0435) based on recommended model fit indices (Bentler, 1990; Fabrigar et al., 1999; Hu & Bentler, 1999). H1 was supported, showing a positive association between CoOR and MPRQ (β = .826, p<.001). However, H2 was rejected; no association between MPRQ and attribution of responsibility was found. H3 was supported, showing a negative association between MPRQ and conspiracy attribution (β =-.112, p<.05). H4 was also supported due to the positive association between conspiracy attribution and attribution of responsibility (β = .657, p<.001). Lastly, H5 and H6 were also supported, showing a positive association between attribution of responsibility and negative megaphoning (β = .121, p<.01) and between conspiracy attribution and negative megaphoning (β = .494, p<.001). Of all the control variables tested, nationalism was the only variable that was significantly associated with conspiracy attribution (β = .175, p<.001) and negative megaphoning β = .170, p<.001) in the model. Figure 2 shows the results of the model tested.

Figure 2. Results of the model tested.

Theoretical implications

Through the lens of public relations, this study shifts the focus of the study of CoO from image to relationship, arguing that it is not only country-of-origin image (CoI) that affects image of brands from a country but also country-of-origin relationship (CoOR) that affects evaluations of the relational efforts made by multinational companies from the country (as tested in multinational-publics relationship quality (MPRQ). The relational approach acknowledges that foreign publics actively evaluate the behaviors and performance of a country in terms of its pursuit of mutually beneficial relationships with other countries (e.g., Grunig, 2018). This approach also acknowledges that when evaluating other countries, individual make references to the self (i.e., their home countries) (Hornsey, 2008) and activate their nationalist sentiments (Li, 2009; Wang & Wang, 2007). Although most publics have no interest in news about international affairs, there would still be subsets of publics who would turn into active publics (Grunig, 1993), especially if the news events are related to their home countries (Wang, 2005a). These publics would be motivated to engage in reasoning and to make judgments about other countries (e.g., motivated reasoning, Herrmann, 2017) in ways to confirm prior beliefs (Kim & Grunig, 2021). Therefore, when multinational companies are involved in a crisis, individuals’ prior beliefs about their countries of origin could be activated, making CoOR an important cue in determining crisis outcomes (i.e., attribution of responsibility, conspiracy attribution and negative megaphoning).

The propositions of this study advocate a relational approach to CoO, arguing the significance of a country’s pursuit of mutually beneficial relationships with another country in determining how individuals evaluate multinational companies from the country and their crisis outcomes during crises. As public relations research has emphasized, communication programs that practice two-way communication work best in advancing relationships (Huang, 2004; Men & Stacks, 2014; Men & Sung, 2022) These relational activities should reflect countries’ efforts in pursuing mutually beneficial relationships. Although current research has consistently found positive outcomes of positive relationship quality (e.g., Cheng, 2018), this study proposes that observations of efforts to build and maintain positive relationships are also critical. This is especially prevalent in the country context when most publics have never experienced a country in person but have consumed news information about the country (Golan, 2015). Further research should be conducted to examine what relational efforts (by a country) would lead to positive evaluations and how. Since individuals’ attitudes toward countries are formed over time (Fitzpatrick, 2007; Magnusson et al., 2014; Zhukov et al., 2015), the significance of the relational efforts made by a country’s associated entities should also be examined (Suter et al., 2020).

While existing research on CoO has mainly focused on the negative consequences of spillover effects during organizational crises (e.g., Jonsson et al., 2009; Poroli & Huang, 2018; Yu et al., 2008), this study found that the spillover from a country to its multinational companies could be positive. By examining reactions to a hypothetical crisis involving a hypothetical South Korean company, this study found the significance of MPRQ in determining crisis outcomes. Despite this, there was no direct relationship between MPRQ and attribution of responsibility. The relationship between the two variables, however, could be explained via conspiracy attribution. This finding corresponds to Tam and Kim’s (2023) finding that conspiratorial thinking significantly mediates the relationship between organization-public relationship quality and negative megaphoning. The model tested in the study contributes to crisis communication research by also identifying the significance of conspiracy attribution in explaining the relationship between MPRQ and attribution of responsibility. Crisis responsibility reflects the degree to which key publics attribute blame for the crisis to an organization and thus, communication managers are advised to monitor the frames used by the news media in framing crisis responsibility (Coombs, 2019). When an organization is primarily held responsible for causing the crisis, the crisis itself can be categorized as an intentional crisis which damages the organization’s reputation (Coombs, 2007b). The model tested in this study found that attribution of responsibility could be determined by conspiracy attribution resulting from CoOR and MPRQ.

This study aims to understand CoO in relational terms. CoO can be understood through the associated networks in individuals’ minds, as their perceptions of the connections between activated items can influence their assessments of other ideas and thoughts (Roehm & Tybout, 2006). This effect is especially significant during crisis situations involving a multinational company. Even though current research has proposed strategies such as for multinationals to dissociate themselves from their countries of origin and to localize their brands’ associations (Wang, 2005a), it is inevitable that multinational companies suffer from “a liability of foreignness” (Arpan & Sun, 2006, p. 191) and that they are considered as outgroups (social identity theory, Hogg, 2006). As early as the 1970s, Nincic and Russett (1979) had identified the effects of perceptions of similarity of one’s home country and another and perceptions of economic and security interest in another country in determining attitudes toward the country. Future research should examine how and why relational efforts made by a country and its multinational companies may (or may not) work to alleviate the outgroup bias over time. After all, countries depend on one another to achieve mutually beneficial outcomes through the balance of power (Morgenthau, 1985).

Practical implications

The findings demonstrate that when multinational companies are in a crisis in a foreign market, they need to consider CoOR and MPRQ as possible sources of biased perceptions when developing crisis communication strategies. Based on the social identity theory and the case for motivated reasoning, during a crisis, individuals are likely to attribute responsibility to our-groups (Zhao et al., 2022). Hence, negative CoOR and MPRQ are risk factors that increase individuals’ biased perceptions. If individuals associate a multinational company in crisis with negative CoOR and MPRQ, they will retrieve negative information from memory (Laufer & Wang, 2018) and engage in motivated reasoning to interpret information about the crisis negatively (Zhao et al., 2022). Therefore, their crisis communication strategies should aim to reduce motivated reasoning (by reducing conspiratorial thinking). To do so, they should consider adopting public-centered principles, such as disclosure, symmetry and accountability, to work with publics to negotiate crisis solutions (Chon et al., 2022).

Limitations and future directions

This study was conducted with the proposition that publics evaluate relationships (in addition to the image) of a country. To test this proposition, the study had to be situated in a relationship between two countries in real life. Thus, the relationship between Australia and South Korea was tested in an Australian sample. Although South Korean brands like Samsung, LG, Kia and Hyundai are popular in Australia, compared to bigger countries like the U.S. and China which receive more news coverage, South Korea is a lesser-known country. The use of a single case involving a South Korean brand in Australia reduced the generalizability of the results and thus, the overall validity of the study. Thus, future studies should test the applicability of the relationship approach to multiple brands of different countries of origin in different foreign markets. Future research should also use longitudinal designs and mixed methods to further explore the relationships amongst CoOR, MPRQ and crisis outcomes. Potentially, in addition to individuals’ factors such as nationalism and internationalism (Karasawa, 2002; Kosterman & Feshbach, 1989), it is possible that individuals’ pre-existing knowledge about a country could make an impact on their evaluations of the country and its companies. Also, this study has conceptualized that CoOR serves as an informational cue when individuals evaluate its multinational companies and when they evaluate an organization in a crisis. Although the theory of motivated reasoning explains individuals’ search for consistency between their pre-existing beliefs and preferred conclusions in an organizational crisis, there could be situations when CoOR might not relate to MPRQ and crisis outcomes. There could also be situations when CoOR positive but companies from the country are not, such as when the companies are involved in intentional crises. Further studies could be conducted to examine how individuals react to this inconsistency, potentially in experimental studies.

Conclusion

This study has examined CoO from a relational perspective, identifying that country-of-origin relationship (CoOR) has a positive association with multinationals-publics relationship quality (MPRQ). When an organization from the country is in a crisis, CoOR and MPRQ can make an impact on crisis outcomes including conspiracy attribution, attribution of responsibility and negative megaphoning. These findings highlight that it is important for countries to engage in relational activities to build and maintain relationships with other countries. Particularly, these relational activities should show their willingness and efforts to pursue relationships which are not only self-interested but achieve shared interests and mutually beneficial outcomes with other countries. This relational perspective is built on the proposition that individuals make judgements of foreign countries in relation to how they behave toward their own countries (rather than simply considering elements like their political, economic and cultural attractiveness). Furthermore, the positive association between CoOR and MPRQ portray how experiences of one entity could influence expectations of another associated entity. Thus, when evaluations of a country and expectations for companies from the country are low, then individuals will have a motivated mindset to think negatively when an organization from the country is in a crisis.

Disclosure statement

No potential conflict of interest was reported by the author(s).