Exploring Consumers' Evaluations of Counterfeits: the Roles of Country of Origin and Ethnocentrism

ABSTRACT - Counterfeit products account for up to six percent of all world trade. Theoretical and empirical research on counterfeit products is scarce, particularly research from consumers' perspectives. This paper presents an empirical study that focuses on factors that influence U.S. consumers' perceptions of risk and attitudes about counterfeits. The results indicate that ethnocentrism and country of origin of the original manufacturer jointly influence consumer perceptions of risk and attitudes about counterfeits. Specifically, we found that highly ethnocentric consumers evaluate counterfeits to be of lesser quality when the original is made in the U.S. rather than in Germany. Conversely, low ethnocentric consumers' quality evaluations of counterfeits do not vary whether the original is made in the U.S. or Germany.

Citation:

Goutam Chakraborty, Anthony T. Allred, and Terry Bristol (1996) ,"Exploring Consumers' Evaluations of Counterfeits: the Roles of Country of Origin and Ethnocentrism", in NA - Advances in Consumer Research Volume 23, eds. Kim P. Corfman and John G. Lynch Jr., Provo, UT : Association for Consumer Research, Pages: 379-384.

Advances in Consumer Research Volume 23, 1996      Pages 379-384

EXPLORING CONSUMERS' EVALUATIONS OF COUNTERFEITS: THE ROLES OF COUNTRY OF ORIGIN AND ETHNOCENTRISM

Goutam Chakraborty, Oklahoma State University

Anthony T. Allred, Oklahoma State University

Terry Bristol, Oklahoma State University

ABSTRACT -

Counterfeit products account for up to six percent of all world trade. Theoretical and empirical research on counterfeit products is scarce, particularly research from consumers' perspectives. This paper presents an empirical study that focuses on factors that influence U.S. consumers' perceptions of risk and attitudes about counterfeits. The results indicate that ethnocentrism and country of origin of the original manufacturer jointly influence consumer perceptions of risk and attitudes about counterfeits. Specifically, we found that highly ethnocentric consumers evaluate counterfeits to be of lesser quality when the original is made in the U.S. rather than in Germany. Conversely, low ethnocentric consumers' quality evaluations of counterfeits do not vary whether the original is made in the U.S. or Germany.

The sale of counterfeit products, unauthorized copies sold as legitimate products, has become a serious threat to national economies, the manufacturers of legitimate products, and consumer welfare. The Department of Commerce estimates that counterfeit products cost U.S. business anywhere from $8 billion to $20 billion annually, with estimates for total domestic job loss starting at 130,000 to as high as 750,000 (Harvey 1988). Counterfeit products are also economically devastating to manufacturers of legitimate products, with the Swiss watch industry losing more than $900 million annually; motor parts industry, $200 million; perfume companies, $70 million; and pharmaceutical companies, $50 million (Matthews 1993). In fact, counterfeit merchandise is an estimated $200 billion enterprise worldwide and is growing rapidly, accounting for up to six percent of all world trade (Levine and Rotenier 1993; Matthews 1993). Although most law enforcement officials view it as a victimless crime and therefore do virtually nothing about it, it can also victimize the consumers who purchase counterfeits. For example, fake amphetamines and tranquilizers are believed to have caused deaths, bogus birth control pills have caused internal bleeding, and counterfeit heart pacemakers have been sold to hospitals for implantation into their patients (Harvey 1988). Additionally, counterfeit airplane engine parts have been brokered to the airlines, and a number of fatal auto accidents have been traced to failures of counterfeit auto parts (Dugan 1984; Ott 1993). Thus, across different industries and industrialized countries, counterfeits affect hundreds of thousands of jobs, increase the costs of marketing legitimate products, destroy brand equity and company reputation, and threaten consumer health and safety. Therefore, marketers of legitimate products as well as labor, national economists, and consumer safety advocates are very interested in identifying ways to reduce and, if possible, eliminate counterfeit products.

Counterfeit activities can be reduced by attacking either one of the two sources in the exchange C the supply of counterfeits or the demand for counterfeits. Most research and anti-counterfeiting efforts have focused on how to keep the supply of counterfeits from reaching consumers. A large number of supply-side research have investigated industry, company, channel, government, and independent actions designed to stop counterfeit products (Bush, Bloch, and Dawson, 1989; Harvey, 1988; Higgins and Rubin, 1986; Olsen and Granzin, 1992, 1993). Despite these numerous supply-side studies and efforts aimed at reducing counterfeiting, the problem continues to grow. It appears that similar to the illicit drug trade, the supply of counterfeits will always exist as long as there is demand for them (Bloch, Bush, and Campbell 1993). Thus, a relatively unexplored alternative to reducing the supply of counterfeits is to reduce consumer demand for counterfeits. The goals of this research are to: (1) present the findings from an exploratory study that examines how the country of manufacturerer of the product being imitated and consumer ethnocentrism impact consumers' perceptions of risk in buying counterfeits, evaluations of quality of counterfeits, and post-purchase feelings about their decisions; and (2) discuss how these findings can be used to develop strategies to dissuade consumers from knowingly purchasing counterfeits. As such, we offer an initial investigation into the demand side of the counterfeit issue, with particular focus on the impact on the public at large and on the national economy.

CONCEPTUAL FOUNDATIONS

Deceptive Versus Non-Deceptive Counterfeiting

Before an effective demand side business strategy or academic study can be designed, it is important to differentiate between two separate types of transactions involving counterfeits: deceptive and non-deceptive. Deceptive counterfeits represent situations in which consumers do not know that they are buying a counterfeit product at the time of purchase, i.e., consumers think they have purchased a genuine product when in fact it is a fake (Grossman and Shapiro 1988). However, in many cases, the public is well aware of illegal markets and the availability of bogus products, i.e., the counterfeits are non-deceptive (Grossman and Shapiro 1988). Non-deceptive counterfeits represent situations in which consumers may be fully aware based on price, quality, and the type of outlet from which the product is purchased that they are buying a counterfeit at time of purchase.

Counter measures to combat deceptive counterfeiting have concentrated on the supply-side, because consumers are unaware that they are purchasing counterfeits. Almost all supply-side solutions propose educating both retailers and consumers in spotting fakes. Thus, the solutions assume that consumers are not going to purchase counterfeits knowingly. In other words, supply-side solutions essentially involve transforming a deceptive counterfeit purchase situation into a non-deceptive counterfeit purchase situation. Because all efforts to stem demand ultimately seem to involve non-deceptive counterfeits, we have focused our investigation on this type of counterfeit.

Country of Origin

Country of origin of a product has been found to influence consumers' product evaluations across a variety of product classes and purchase situations (Bilkey and Nes 1982). In the context of a non-deceptive counterfeit purchase, there are two different countries of origin that may influence consumers' evaluations of counterfeits. First, American consumers tend to believe that most counterfeits are manufactured abroad in less-developed or developing countries and imported to the U.S. (Bamossy and Scammon 1985). Thus, the country of origin of the counterfeit (COC) may influence consumers' judgments of these products. Second, because evaluating non-deceptive counterfeits necessarily involves comparisons with the legitimate product being imitated, the country of origin of the original manufacturer (COM) may also be important to consumers' evaluations of counterfeits.

FIGURE 1

EFFECTS OF ETHNOCENTRISM AND COUNTRY OF ORIGIN IN NON-DECEPTIVE COUNTERFITS

Country of origin has also been found to influence consumers' perceived risk of purchase such that consumers perceive more risk in purchasing a foreign-made product than one manufactured in the U.S. (Hampton 1977). Consumers' perceptions of risk may also influence their evaluations of and feelings toward counterfeit products (Allred, Chakraborty, and Sukhdial 1994). There is some risk involved in buying counterfeit products that are perceived to be made abroad. Part of this risk may be derived from the possibility of inferior performance resulting in financial, safety, and time risk. In fact, consumers perceive that such risks exist in purchasing counterfeit products (Bamossy and Scammon 1985).

Additionally, consumers may also perceive other more psychological or social risks in buying counterfeits, some of which may be derived from the purchase of foreign counterfeits in particular. American consumers seem to have a clear idea of the consequences of buying counterfeits made abroad given that the COM is the U.S., e.g., financial losses to U.S. companies and lost U.S. jobs (Bamossy and Scammon 1985). Thus, nationalistic biases, patriotism, and concerns about U.S. companies and jobs are likely to mean that American consumers will perceive foreign-made counterfeits as more risky to their self-image or the image portrayed to others, leading to more negative evaluations of the counterfeit, particularly when the original product is made in the U.S. rather than abroad. In other words, American consumers are more likely to perceive higher risk and feel more negatively toward a counterfeit if they know that the foreign-made counterfeit is "ripping off" a U.S. brand rather than a foreign brand. However, these effects are probably more likely for highly ethnocentric consumers than those who are low in ethnocentrism.

Consumer Ethnocentrism

Consumer ethnocentrism represents an individual difference characteristic, with American consumers who are highly ethnocentric believing that purchasing imported products is inherently wrong because, from their perspective, it hurts the domestic economy, causes job loss, and is plainly unpatriotic (Shimp and Sharma 1987). Shimp and Sharma (1987) found that ethnocentrism is positively correlated with American consumers' attitudes toward U.S. products and negatively correlated with their attitudes toward foreign-made products, suggesting that judgments by consumers high in ethnocentrism are likely to be biased towards valuing the positive aspects of domestic products and devaluing those aspects of foreign-made products. Thus, highly ethnocentric consumers are likely to perceive foreign-made counterfeits as more risky and of lesser quality when the original is made in the U.S. than when the original is made abroad, while the COM is unlikely to influence the risk perceptions and subsequent evaluations of foreign-made counterfeits by those consumers low in ethnocentrism. These effects are summarized in Figure 1, which is an adaptation of Dowling and Staelin's (1994) model of perceived risk in the context of non-deceptive counterfeit purchase.

We designed an experiment to investigate these ideas. Specifically, we were interested in the effects of consumer ethnocentrism and the COM on consumers' perceptions of risks, their evaluations of counterfeits, and their expected post-purchase feelings. Although the COC may also influence consumers' evaluations of counterfeits, we decided to hold the COC constant because American consumers tend to believe that counterfeits are manufactured mostly in less-developed countries. We expected that highly ethnocentric American consumers would judge foreign-made counterfeit products as more risky and of less quality, leading to higher levels of post-purchase feelings of guilt when imitating a U.S.-made product than when imitating a non-U.S.-made product. Conversely, we expected that the COM would make no difference to low ethnocentric American consumers in their perceptions of risk or assessments of quality in buying counterfeits and in their feelings of guilt.

METHOD

Subjects and Product Selection

One hundred and thirty undergraduate marketing students (all U.S. nationals and 47% male) from a large midwestern university were provided extra credit for participating in our scenario-based quasi-experiment. As mentioned earlier, a wide variety of products is being counterfeited. Based on the results of informal interviews where we asked students to identify products that they believed were most frequently counterfeited, we chose auto parts as the product class for our study. Counterfeit auto parts are frequently mentioned in the literature. The literature is not clear, however, about which specific counterfeit products are purchased knowingly (non-deceptive counterfeiting). The informal interviews suggested that in the student consumer population, counterfeit auto parts are often purchased knowingly. Ninety-six percent of our sample owned a car.

Experimental Design

Subjects were randomly assigned into a 2 X 2 between-subjects factorial design. The first manipulated factor was the COM, with two levels C U.S. and Germany. Pretests indicated that subjects' perceptions of quality of auto parts made in the U.S. or Germany were about equal. Specifically, on a 9-point scale with end-anchors as unfavorable (1) and favorable (9), the mean perceptions of 40 students were 7.65 for U.S. and 7.43 for German-made auto parts (t(39)=0.61, p= .54). The second factor was derived based on subjects' scores on the shortened version (ten items) of Shimp and Sharma's (1987) CETSCALE measured on a 7-point Likert-type format. In our sample, the range of CETSCALE score was from 10 to 70, with a mean of 44.63 and s.d. of 15.01. These summary statistics are similar (after appropriate conversion from 7 to 5 point format) to those reported by Shimp and Sharma (1987) for testing the shortened version. To create a clear difference between the high and low ethnocentric groups, subjects were classified as low or high ethnocentric based on whether their scores were in the lower 33rd percentile (less than a score of 39) or upper 33rd percentile (a score of 51 or higher) of the CETSCALE scores in our sample. Subjects whose scores fell in the middle third of the distribution of the CETSCALE were not included in the data analysis. This procedure has been used by prior consumer researchers (Inman et al. 1990).

Procedure

The scenarios and questionnaires were distributed to students in two sections of the same class taught by the same instructor and took about fifteen minutes to complete. Participants were told that the study was divided into parts. In the first part they were asked to read a short article from a business publication. This article described the global nature of the counterfeiting problem and the efforts by IACC (an international organization) to stop counterfeiting. The COC was held constant by stating in the article that counterfeits are typically made in developing countries such as Mexico or India. In the pretest, we found subjects' quality perceptions about auto parts made in Mexico and India were about equal (means of 3.22 and 3.24, respectively; t(39)=0.08, p=.98), but the average ratings of auto parts made in India or Mexico were significantly lower than the average ratings of auto parts made in the U.S. or Germany (t(39)=12.70, p=.0001). Subjects were first asked to indicate their perceptions about the business article and then to read a scenario describing a purchase situation involving a counterfeit auto part. Subjects were instructed to imagine that they were in the purchase situation. Several pretests were conducted to create scenarios that were realistic and easy to understand.

In the scenarios, the COM was manipulated by designating the manufacturer of the genuine auto part as "a U.S. company" or "a German company" as described below:

"Your car has been giving you problems for last couple of weeks. Sometimes it just won't start. However, if you keep turning the key in the ignition, it eventually starts after several attempts. You take it to a repair facility to have it checked. You are told that you need to replace the part that regulates the flow of gas to the engine.

After checking with a couple of stores, you come to know that the auto part, made by a U.S (German) company, is readily available in many stores and sells for about $350. It comes with a one- year warranty. However, a friend of yours tells you that he has recently purchased a counterfeited copy of a similar auto part for only $75.00 from a small independent store."

Dependent Measures

We were interested in measuring three sets of dependent variables: perceived risk, quality evaluations, and post-purchase feelings of guilt. We conjectured that the COM and consumer ethnocentrism would interact to influence the perceived risk of purchasing a counterfeit. In turn, we thought that this risk would influence both product quality evaluations as well as post-purchase feelings of guilt. Our risk measures included 9-point items designed to tap both overall risk as well as financial, performance, safety, time, social, and psychological risk (Bauer 1960; Cunningham 1967; Jacoby and Kaplan 1972). For instance, "What is the risk that the counterfeit auto part will not perform as expected?" was used for measuring performance risk; and "Considering the expense associated with the purchase of this product, how risky would you say purchasing the counterfeited auto part would be?" was used for measuring financial risk, with anchors "not risky at all" and "very risky." Subjects indicated their quality evaluations on two 9-point items assessing counterfeit quality and value. Subjects' expected post-purchase feelings of guilt were measured on three 7-point Likert-type items, such as "If you bought the counterfeit, you would feel guilty." Finally, subjects responded to a shortened version of the CETSCALE (a 10-item version of the original scale designed to measure consumer ethnocentrism). This scale was administered last in order to avoid the possibility of cueing subjects to the fact that we were examining the role of ethnocentrism in their judgments about counterfeits.

RESULTS

Assessment of Measures

A common factor analysis of the CETSCALE confirmed the unidimensionality of the 10 items. The Cronbach's alpha for these items was .93. The factor analysis of the eight questions related to consumers' perceptions of risk in buying counterfeits suggested two orthogonal dimensions, accounting for about 73% of the variance. The first dimension appears to be the "loss" risk (The risk questions pertaining to investment, expense, performance, safety, time, and opportunity had loadings of .74 or more on this dimension.) The second dimension appears to be the "psycho-social" risk. (The risk questions pertaining to self-image and what others may think of you had loadings of .90 or more on this dimension.) The Cronbach's alpha for the two dimensions were .90 and .89, respectively. We used the average scores of the items loading on these two dimensions as measures of perceived risk C loss risk and psycho-social risk.

TABLE 1

MEAN PERCEIVED RISK IN BUYING COUNTERFEITS

TABLE 2

MEAN QUALITY EVALUATIONS OF COUNTERFEITS AND POST-PURCHASE FEELINGS OF GUILT

An index for quality evaluations was created by averaging the two questions pertaining to the ratings of quality and value (r=.93). An index for post-purchase feelings of guilt was also created by averaging the three questions related to feelings of shame and guilt after buying a counterfeit auto part (Cronbach's alpha=.85).

We expected an interaction within the 2 X 2 analysis of variance. Specifically, we expected highly ethnocentric subjects would evaluate the foreign-made counterfeit auto part as more risky and of lower quality and express more expected post-purchase feelings of guilt when the COM was U.S. rather than when the COM was Germany. However, no such effect of COM would occur for those subjects low in ethnocentrism. We tested this hypothesized interaction first on the two perceived risk dimensions, then on quality evaluations and expected post-purchase feelings of guilt, and finally examined the mediating nature of perceived risk on the latter two variables.

Effects of COM and Ethnocentrism on Perceived Risk

We used MANOVA to investigate whether consumers' perceptions of risk in buying counterfeits are influenced by their nationalistic feelings as well as the COM of the original product. The dependent variables are subjects' average scores on the loss risk and the psycho-social risk dimensions. The interaction between COM and ethnocentrism is significant at the multivariate level (Wilk's Lambda=0.873, F(2,83)=6.02, p=.003) as well as at the univariate levels (F(1,84)=6.49, p=.01 for the loss risk, and F(1,84)=9.83, p=.001 for the psycho-social risk). However, the main effects are not significant either at the multivariate or univariate levels. The means for interpreting the interaction effect for the risk dimensions are reported in Table 1.

The pattern of the interaction for both dimensions of risk are consistent, although the effect is more pronounced for the psycho-social risk. The means indicate that when the original is made in the U.S. high ethnocentric consumers perceive more loss and psycho-social risk in buying counterfeits than low ethnocentric consumers. However, the situation is reversed when the original is made in Germany. The high ethnocentric consumers perceived lower loss and image risk in buying counterfeits than low ethnocentric consumers.

Effects of COM and Ethnocentrism on Quality Evaluations and Post-Purchase Feelings of Guilt

We also used MANOVA to check whether the evaluations and post-purchase feelings of low or high ethnocentric subjects are differentially influenced by the COM of the original product. The interaction effect is marginally significant at the multivariate level (Wilk's Lambda=0.943, F(2,83)=2.56, p=.09) as well as at the univariate levels (F(1,84)=2.99, p=.08 for quality evaluations, and F(1,84)=4.63, p=.03 for expected post-purchase feelings of guilt). However, the main effects are not significant either at the multivariate or univariate levels. The means for interpreting the interaction effect of COM and ethnocentrism on consumers' judgments and post-purchase feelings are reported in Table 2.

The pattern of the interaction is very similar between evaluations and post-purchase feelings. The means indicate that high ethnocentric consumers evaluate counterfeits more negatively when the original is made in the U.S. compared to when the original is made in Germany. However, for low ethnocentric consumers, the differences in evaluations of counterfeits are about equal regardless of where the original is made. For post-purchase feelings, the means indicate that high ethnocentric consumers expect to feel more guilty when buying counterfeits knowing that the original is made in the U.S. compared to when the original is made in Germany. However, low ethnocentric consumers expect to feel about the same level of guilt regardless of where the original was made.

Mediating Effects of Perceived Risk

In order to generate some insights about the mediating role of perceived risk on consumers' evaluations of counterfeits, we conducted a MANCOVA using the perceived risk dimensions as the covariates and the consumers' quality evaluations and post-purchase feelings as dependent measures (Mitchell 1986; Petty and Cacioppo, 1977). The results of this analysis indicate that when the effects of perceived risk are controlled for, the COM and ethnocentrism interaction effects on consumers' evaluations of counterfeits and their post-purchase feelings of shame and guilt are eliminated (F(1,82)=0.97, p=.32 and F(1,82)=0.01, p=.98, respectively). Thus, perceived risk is necessary to explain the differences in quality evaluations and feelings. To determine whether perceived risk precedes consumers' evaluations and feelings, we also analyzed the data using the latter as covariates with the risk dimensions as the dependent variables. The results of this analysis indicate that the COM-by-ethnocentrism interaction remains significant even after the effects of consumers' evaluations and feelings are partialled out of the risk perceptions (loss risk: F(1,82)=2.76, p=.09, and psycho-social risk: F(1,82)=4.85, p=.03). This seems to indicate that perceived risk is acting as a mediator between the COM and ethnocentrism and consumers' evaluations of counterfeits and post-purchase feelings of guilt.

DISCUSSION

We started this research with the belief that any strategy aimed at managing the counterfeit problem should include ways to reduce the demand for counterfeits. In reviewing the consumer behavior literature, we identified at least two constructs, COM and ethnocentrism, that we thought would influence consumers' perceptions of risk in buying counterfeits, which in turn would affect consumers' evaluations of counterfeits. The results of our study support our conjecture.

Our results should be viewed with caution because of the exploratory nature of the study and the relatively small sample size from a rather homogenous population. These limitations notwithstanding, the results provide several interesting insights into how the COM and ethnocentrism impact consumers' evaluations of counterfeits and their post-purchase feelings about their decisions to purchase counterfeits. For instance, we find that when considered in isolation, the COM and ethnocentrism have no effect on consumers' evaluations of counterfeits or their post-purchase feelings. That is, on an average, high or low ethnocentric consumers evaluate the quality of counterfeits to be about equal. Also, on an average, consumers' evaluations of the quality of counterfeits are about equal whether the original is made in the U.S. or Germany. However, we find that high ethnocentric consumers evaluate the counterfeit to be of lesser quality when the original is made in the U.S. rather than in Germany, whereas low ethnocentric consumers evaluations of the quality of counterfeits remain the same whether the original is made in the U.S. or Germany.

Although our results are generally consistent with what we predicted, the increase in perceived risk by low ethnocentric consumers when the COM changed from U.S. to Germany was unexpected. We can offer a post hoc explanation for this result. Although we had pretested subjects' quality expectations for the U.S. and Germany and found them to be approximately equal, perhaps those subjects low in ethnocentrism generally believed German automotive parts to be of higher quality than their U.S. counterparts. Given this possibility, the risk of purchasing a counterfeit originating from a developing country may be greater when the COM is Germany rather than the U.S. We did not measure consumers' ethnocentrism in our pretests; however, Shimp and Sharma's (1987) findings regarding consumer ethnocentrism would seem to support such results.

The managerial implications of our results relate to reducing demands for counterfeits. Our results suggest that U.S. manufacturers may be able to use emotional appeals to tap the nationalistic and patriotic feelings of some consumers by making salient that the counterfeits are made abroad, and thus buying counterfeits essentially hurts the U.S. economy. Specifically, those consumers high in ethnocentrism may be more likely to internalize and act on such appeals. Additionally, perceived risk appears to mediate these effects on consumers' evaluations of counterfeits, at least those pertaining to the COM and consumer ethnocentrism. Thus, communicating the risks of counterfeits may be important for policy-makers concerned about consumer protection against potentially harmful counterfeit products.

The theoretical contribution of this research is in extending the domain of the country of origin research to include counterfeit purchases. The extant research on country of origin effects has focused on the role of country of origin as a cue for evaluation of product quality for a single product. We extended this research first by arguing that in non-deceptive counterfeit purchase situations the country of origin of both legitimate manufacturers (COM) and counterfeiters (COC) would influence consumers' perceptions of risk in buying counterfeits and their evaluations of quality of counterfeits. Thus, while previous research has documented only direct effects of country of origin (i.e., influence of country of origin of a product on consumers' evaluation of the same product), we found indirect effects of country of origin (that is, the country of origin of the product being imitated had an effect on consumers' evaluations of counterfeits). Second, our results show that rather than being a simple cue for quality, the country of origin has a more complex effect in the sense that it interacts with ethnocentrism, an individual difference variable, in influencing subjects' evaluations of quality of counterfeits.

Limitations and Future Research Directions

One of the limitations of this study is the use of a single product class. This is particularly important because the perceived risk in buying counterfeits may depend on the product class. In this study, the use of auto parts as a product class may have produced identical effects of the COM and ethnocentrism on both loss and psycho-social risk. However, it would be interesting to explore whether the effects are different across product classes where one of the risk dimensions may dominate the others. For instance, psycho-social risk elements may be more salient than risk of loss when consumers consider buying a counterfeit Rolex watch. Similarly, the loss risk may be more salient than psycho-social risk in a counterfeit pharmaceutical drug purchase situation. In such cases, the effects of the COM and ethnocentrism on perceived risk as well as consumers' evaluations may be very different than what we found in this study.

In this study, the countries of the manufacturer of the counterfeit product (COC) were developing countries such as Mexico or India, and this variable was held constant across the experimental cells. However, many counterfeits are also made in developed countries. Thus, it would be interesting to investigate whether the pattern of the COM-by-ethnocentrism interaction remains the same when consumers believe that the counterfeits are manufactured in a developed country.

Our focus in this paper was on the functional characteristics of counterfeits as they influence consumers' perceived risk, which in turn affect their evaluations of counterfeits. Our conceptualization was therefore built on the model of perceived risk. Future research could look into other related literatures concerning authenticity, forgery, brand quintessence, sacralization, and singularity in an effort to enrich the proposed theoretical framework.

Conclusions

Counterfeits constitute a significant portion of world trade, yet very few academic research exists about why consumers purchase counterfeits knowingly. We pointed out at the beginning of this paper that manufacturers of legitimate products are primarily directing their efforts to the channel members to reduce the supply of counterfeits. However, the results from our exploratory study indicate that when highly ethnocentric consumers buy counterfeits knowingly, they feel more guilty when the original is made in the U.S. versus Germany. This suggests that manufacturers of legitimate products may also be able to reduce the demand of counterfeits by using suitable advertising appeals directed to highly ethnocentric consumers' feelings of nationalism and patriotism.

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