CHAPTER 2​ LITERATURE REVIEW 2.1 Country of Origin Theory Understanding how the origin of a brand or product affects consumer perceptions and purchase decisions has been made possible by the theory of Country of Origin (COO). Schooler (1965) established the foundation for COO literature by conducting the first empirical studies on consumers' attitudes toward products labeled with different countries of origin, proving the existence of COO effects. Building on this, Nagashima (1970) examined U.S. and Japanese businessmen's attitudes toward foreign products based on country image, while Yaprak (1978) found that purchasing intentions are influenced by both country and product qualities. Furthermore, the CoO theory has become increasingly relevant today as the global economy expands, prompting businesses to leverage CoO to enhance their competitiveness. This is demonstrated by evolving CoO signals that extend beyond "made in" package labels. Businesses often use intangible or extrinsic attributes, such as packaging and brand name, to leverage their CoO effect. This involves highlighting the geographic and cultural connection to their indicated origin as a key part of brand positioning and marketing. This approach is due to the recognition that consumers tend to rely more on these extrinsic cues when they are unfamiliar with a product or have no prior knowledge of it (Han, 1990; Skaggs et al., 1996). Additionally, the concept of "brand origin effect" was developed to represent the nation or area that customers identify with a brand's identity (Thakor & Kohli, 1996). For example, consumers might associate Japanese food with freshness and precision due to Japan’s culinary culture. These country associations can influence consumer choices, even if the brand itself is not familiar. It is also important to note that the effect has a dynamic perspective, demonstrating that a nation's product image evolves over time (Nagashima, 1970). For example, perceptions of Asian food have shifted, with sushi becoming increasingly popular moving from "exotic" to "mainstream" in Western markets. The brand origin effect is particularly relevant in the global food market, where consumers often rely on CoO as a cue for perceived quality, taste, or authenticity of food products. Therefore, businesses are expected to have a deep understanding 9 of the country of origin theory and emerging trends, as this knowledge provides valuable insights for international marketing strategies. It also enables businesses to gain competitiveness by shaping consumers' attitudes toward products associated with a particular country, ultimately guiding their purchase intentions (Bilkey and Nes, 1982; Han, 1989; Johansson, 1989; Knight and Calantone, 2000; Kotler and Gertner, 2002; Roth and Diamantopoulos, 2009). 2.2 Resource-based view (RBV) The resource-based view argues that a company has a competitive advantage when it employs a value-creating strategy that none of its rivals, either present or future, are also using at the same time (Barney, 1991). According to Barney (1991), businesses must react to environmental opportunities and set strategy into effect which make use of internal strengths while avoiding internal weaknesses and controlling off external risks. This is accomplished by preserving firm-specific resources and capabilities' immobility (i.e., inimitability) and heterogeneity (i.e., value, rarity).