Introduction

1.1 Preamble

This chapter begins with a treatment of the background of this survey ; it is followed by the job statement this research dealt with, the aims, and the inquiries that this survey will reply. The chapter so covers the research significance, the underpinning theories adopted and range of the survey. It ends with a presentation of the construction of this research in order to achieve the aims.

1.2 BACKGROUND OF THE STUDY

Over the half 50 old ages, international exchange-trade has grown at a faster rate than in any old period in history ( Jordan Times, 2008 ) . The decrease of duties and other trade roadblocks have besides contributed to the detonation on international trade. Governments have actively worked to convey down trade roadblocks through international understandings such as the General Agreement on Tariffs and Trade ( GATT ) and at the World Trade Organization ( WTO ) .

Despite the fast rate of growing in planetary trade, many hosting ( importing ) states such as Jordan are enormously challenged in holding to cover with the high hard currency flow toward imported merchandises and black import-substitution economic policies.

Since Independence, Jordan has exported far less than it has imported ( CIA World Fact book, 2009 ) , but in the last 10 old ages, monolithic deregulatings and free trade have created a new environment for the Jordan economic system ( Jordan state profile, 2007 ) . Globalization has removed the boundaries between Jordan and other industrial states. To promote investings and better its domestic economic system, Jordan has signed many understandings with other states while take parting in bilateral and many-sided trade understandings ( Jordan state profile, 2006 ) .

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In May 2002, Jordan signed negotiated bilateral trade understandings with the United States and the European Union ( EU ) , and joined the many-sided WTO. Today, Jordan has Free Trade Agreements ( FTAs ) with many states, the last of which is Canada with whom Jordan concluded FTA dialogues on August 25, 2008 ( Government of Jordan on-line information, 2008 ) .

The FTAs with these states have helped to extinguish responsibilities and commercial roadblocks to bilateral trade on goods and services that manufactured in Kingdom of Jordan. In visible radiation of these, Jordan has sought to take high duty walls, and has brought about new policies that have facilitated the operation of importing merchandises ( Al Rai, 2008 ) . Over clip, the Jordanian consumer buying behaviour towards imported goods has raised more than of all time before ( Al Rai, 2008 ) .

Despite these understandings and new constabularies, still unluckily Jordan did non seek to accomplish a trade balance with any major trading spouse ( Al Rair, 2008 ) . In mid-2006, the United States and Western Europe accounted for about 50 per centum of Jordan ‘s imports, while Arab states purchased about half of the state ‘s exports ( Jordan state profile, 2007 ) .

Harmonizing to a Petra intelligence bureau study of 2008, the addition in the shortage still remains. On June 10, 2007, Jordan ‘s trade balance shortage increased by 6.7 % up to JD1594.2 million during the first tierce of 2007, compared to JD1494.1 million during the same period of 2006. Furthermore, harmonizing to the Department of Statistics ( 2006 ) , Jordan’s imports had increased by five per cent during the twelvemonth 2006.

Table 1-1 shows the Jordanian trade balance with the universe. The department’s records for the twelvemonth 2008 indicated that the shortage in the trade balance ( see Table 1-1 ) increased by 22.3 per centum as the shortage amounted to USD 7,427.0 billion compared to USD 9,086.0 billion during the twelvemonth 2008.

Table 1-1: Jordan Trade with the World, 2003-2008

Universe

In USD Billion

2003

2004

2005

2006

2007

2008

Import

4,595.8

8,176.9

10,478.4

11,561.0

13,127.0

15,607.0

Export

1,898.7

3,881.8

4,282.8

5,204.0

6,312.0

6,521.0

Balance

( 2,697.1 ) –

( 4,295.2 ) –

( 6,195.6 ) –

( 6,357.0 )

( 7,427.0 )

( 9,086.0 )

Beginning: ( Jordan Country profile, 2009 )

The figures shown in Table 1.1 are expected to decline in 2009. More specifically, as the foreign merchandise flows have expanded dramatically, the consumers buying behaviour towards foreign merchandises in Jordan has become easier and has increased more than earlier.

The Jordan Times, an English-language day-to-day paper based in Amman discussed on April 17, 2007 that many consumers prefer planetary or foreign merchandises and see them as symbols of position ; really few exhibit strong penchants for Jordanian-made merchandises and have attitude which expresses denial or refusal attitudes towards local merchandise or manufactured in Kingdom of Jordan.

Douglas et Al. ( 1999 ) related this phenomenon, more penchants towards foreign merchandises ; due to “satellite telecasting and international travel have made consumers more cognizant of other civilizations ‘ life styles and merchandises, and has increased the power of planetary brands” .

With a storm “ border-thinning planetary economic system ” , many Earth consumers have been more and more open to foreign goods made, bring forthing to them more purchasing options ( D’Silva, Stephen, Modi, & A ; Bulsara, 2008 ) . Vision of a borderless universe has bared purchaser throughout the universe to open and widen scope of foreign trade names than of all time before.

The new government’s constabularies have brought a inundation of foreign goods to consumers ; there is besides an increased exposure to western thoughts ( Yim, Garrma & A ; Polonsky, 2008 ) ; and many Jordanians are progressively likely to buy foreign merchandises ( Government of Jordan on-line information, 2008 ; Al Rai, 2009 ) .

Previous research has found that in less developed states ( LDCs ) there is small precedence and fancy for merchandises manufactured domestically when equated with to imported merchandises as the merchandises manufactured in their place states disposed to be of lower quality than those from developed states ( Yim, Garrma & A ; Polonsky 2008 ; Jin & A ; Chansarkar, 2006 ; Bailey and Pineres, 1997 ; Ghadir, 1990 ; Hussein, 1997 ) .

As such, it is expected that version “ positive attitude towards to foreign merchandises ” would besides press against consumers’ assessment and appraisal of merchandises manufactured from place state in contrast to foreign “imported” 1s with regard to plan and assembly location, every bit good as constituents supply state, and therefore alteration and adjust purchase behavior ( Yim, Garrma & A ; Polonsky, 2008 ; Xu et al. , 2004 ) .

Such effects would perchance hold a bearing on attitudes towards place and host states in general, similar to ethnocentrism ( Vida, Dmitrovic & A ; Obadia, 2008 ; Yagci, 2001 ) . Several surveies found consumer ethnocentrism an of import factor could assist domestic economic system ; Kotabe and Helsen ( 1998 ) said that “ CET can be institutionalized in the signifier of an informal authorities procurance policy that unduly favours domestic companies” .

Regardless of the merchandise property, it is incorrect to purchase imported-made goods, as this would consequence negatively the domestic economic system, causes loss of occupations, or, it would be obviously disloyal in consumer ethnocentric believe ( Shimp and Sharma, 1987 ) . The fact that ethnocentrism increases the rejection of foreign merchandises and escalate the purchase purposes towards domestic merchandises ( Granzin and Painter, 2001 ; Suh, 2002 ) .

Therefore, look intoing attitudes and ethnocentrism could assist in understanding the forecaster of buying behaviour toward foreign merchandises in Kingdome of Jordan which will give insight both to the seller, and the authorities to understand the Jordanian consumer purchase behaviour.

In the face of the importance of this subject, “very few surveies on this country in less developed countries” ( Hammin & A ; Eliot, 2006 ) , and “most surveies of buying behavior towards foreign merchandises have been conducted in big industrialised states where a scope of domestic options or trade names are available” ( Douglas et al. 1999 ) .

Besides notably, Hammin & A ; Eliot ( 2006 ) found non merely the old surveies done in more developed state, even theories explicating and foretelling behaviors have been created in more developed states, and non tested strictly in less developed state, that increased our abetment that both of the theories foretelling consumer behavior and subject toward foreign merchandise purchase behavior, need to be investigated in state of affairs such less developed state viz. Kingdome of Jordan..

Based on the above, the job statement for this survey can be as shown in following measure.

1.3 PROBLEM STATEMENT

Jordan has imported far more than it has exported ( CIA World Fact book, 2009 ) . Obviously, this has led to a trade shortage in Jordan, and has besides had a negative consequence on local companies ( Jordan Times, 2008 ) . This is evidenced by the negative trade balance in Jordan ( See Table 1-1 ) .

As for the selling and authorities sectors, it was believed that the copiousness of foreign merchandises in Jordan, and version to ‘foreign’ merchandises would besides impact consumers’ rating of merchandises sourced from place state versus foreign 1s, and there would be less penchant ‘negatively’ for domestic merchandises manufactured in Jordan.

Once more, this can be seen by the negative trade balance in Jordan. Shimp and Sharma ( 1987 ) found that some “consumers believe it is incorrect to buy foreign-made merchandises, as this would ache the domestic economic system, cause loss of occupations, or, because it would be obviously unpatriotic” , which has been referred to as “Consumer Ethnocentrism” .

The state of affairs however has been found to be inconsistent with the companies covering with domestic goods in Jordan in clip degree of Jordanian consumer ethnocentrism is non known ( Jordan Times, 2008 ) . Knowing the strength of consumer ethnocentrism in Jordan will give insight both to the seller and the authorities to understand the Jordanian consumer purchase behavior and develop appropriate schemes that can better the state of affairs for both.

Several surveies and paper written justified the demand of cognizing CET degree, “finding degree of consumer ethnocentrism has of import deductions for both authorities policy shapers and local owned business” ( Hamin & A ; Elliott, 2006 ) , “different selling schemes could use depending on the degree of consumer ethnocentrism of the target-group selected” ( Chryssochoidis et al. , 2008 ) , “due to the copiousness of imported merchandises in Jordan, the local merchandisers felt the pinch and this was apparent in Jordan balance sheets: Are Jordanian consumer concern of ethnocentrism, how strong? ” ( Jordan Times News, 2006 ) , “there is turning grounds for the position that it is necessary for LDC’s to be more cognizant of the issues of the construct of CET” ( Hamin & A ; Elliott, 2006 ) .

Yet, really few surveies have been done to foretell the determiners that influence consumer purchase behavior towards foreign merchandises in less developed states ( LDCs ) ( Lee & A ; Bory, 2008 ; Hamin & A ; Elliott, 2006 ) , and more specifically in Kingdom of Jordan ( Hussein, 1997 ) . There seems to be really limited empirical grounds and deficiency of researches on forecasters of consumer purchase behaviour towards foreign merchandises in Jordan as a less developed state ( LDC ) .

Research workers ponder the inquiry, in little industrialised states or less developed state ( LDC ) , where a scope of domestic options or trade names are non available, how consumers ‘ behavior will respond toward foreign merchandise?

In fact, a overplus surveies have been done on consumer purchase behavior toward foreign merchandises, nevertheless, the dressed ore of the bulk of old work peculiarly has been from the position of more developed states ( MDCs ) ( Hammin & A ; Elliott, 2006 ) . Czech ( Orth & A ; Firbasove, 2002 ) ; France ( Javalgi et al. , 2003 ) ; Poland ( Huddleston et al. , 2001 ) ; Turkey ( Kaynak & A ; Kara, 2000 ) ; The United States, Germany and France ( Netemeyer, Durvasula and Lichtenstein 1991 ) ; Japan and Sweden ( Hult and Keillor 1999 ) ; Spain ( Luque-Mart? nez, Ibanez-Zapata & A ; Barrio-Garcia 2000 ) .

An grounds proved the demand of this research in less developed states such as Nijssen et Al. ( 1999 ) “much research associating to consumer attitudes toward foreign merchandises has been conducted in big industrialised states, with large internal markets and a scope of domestic trade names, the generalizability of findings to little states, where there are no domestic trade names or merchandises in many merchandise classs, is slightly questionable” .

Furthermore, late Al Rai ( 2009 ) mentioned “Jordan has suffers from the hapless quality of consumer behaviour databases that are available, still there are chilling researches on Jordanian consumers behaviour which need more probe in understanding the Jordanian consumers, all the facts information of Jordanians is non more than statistical issues running under the statistical authorities section and corporate with other states such as USA” , Nijssen et Al. ( 1999 ) “the generalizability of findings to little states is slightly problematic” .

In this survey, the focal point is on understanding purchase behavior towards foreign merchandises from the point of position of consumers populating in a LDC viz. land of Jordan.

Previous research analyzing purchase behavior towards foreign or imported goods has typically concentrated and focused on the influence of a individual concept as an illustration consumer ethnocentric attitudes or “ made in…country of beginning COO ” cues, non on holistic attack ( Nijssen et al. , 1999 ) .

It is noted that most old survey used to choose several domestic and foreign merchandises so, make a comparing between these merchandises based on state of beginning “ COO ” construct. At the same clip extinguish that when choice certain merchandise many other factors “ confusing ” could consequence on these merchandise picks behaviour such as selling run, trade name name, and many other elements extrinsic or intrinsic related this certain merchandises, or even the merchandise handiness.

In a survey on Jordanian behavior towards foreign merchandises, Hussein ( 1997 ) used merely a one manner ANOVA and t-test to separate between certain foreign merchandises and local merchandises. From an empirical position, it was found that the survey by Hussein ( 1997 ) on Jordanian consumer behavior towards foreign merchandises has focused merely on a individual concept such as COO, or quality or monetary value.

However other surveies have found that irrespective of the consequence of these concepts on consumer behavior, the ruling factor was consumer ethnocentrism which could still be a barrier on consumer behavior towards foreign merchandises, Shimp and Sharma ( 1987 ) .

Notwithstanding, the generalized penchant for merchandises manufactured in MDCs, there is grounds that nationalism and trueness towards the place state play an of import function in carrying some consumers to buy merchandises that have been made in their place state. This form of behavior has been referred to as “Consumer Ethnocentrism” , a term coined by Shimp and Sharma ( 1987 ) . They found that some consumers by and large believe that purchasing merchandises that are locally manufactured is morally appropriate in a normative sense.

Therefore, there is justification of deficiency of research which would incorporate consumer ethnocentrism theory with consumer existent buying behavior theories such as TRA ( Hamin and Elliott, 2006 ; Kinra, 2006 ) , “the influences on foreign merchandise ratings may be well more complex than consequence COO, farther research is clearly needed to research attitude toward foreign merchandises within a theory” ( Klein et al 1998 ) , “in Jordan, extra surveies need to be carried out investigate consumer belief instead than merchandise properties or choice certain merchandise to compare” ( Hussein, 1997 ) .

As explained in ( 3 ) above, the deficiency of surveies researching attitude towards foreign merchandises within a theory. In fact, it is believed that many theories sing purchase behavior have been developed largely in the USA. Ticehurst and Veal ( 2000 ) found, up to 80 per centum of concern & A ; direction surveies published to-date has been conducted by North American research workers on Americans and in American organisations.

One of the well-known theories is that of Theory of Reasoned Action ( TRA ) which was established by Ajzen & A ; Fishbein in1980. This theory has been found to be really utile in the survey of foretelling behavior ( Sheppard, B. , Hartwick, J. & A ; Warshaw, P.R. , 1988 ) , but notably non tested strictly in less developed state or even in non-western civilization such as Jordan ( Malhotra & A ; McCort, 2001 ) .

It is clear that great attention needs to be taken when widening the findings of these surveies conducted in other states such as in the US to states or civilizations such as Jordan. The findings of these researches done in more developed states are non needfully applicable to organisations in other states such as Jordan. Harmonizing to Ticehurst and Veal ( 2000 ) , civilization can besides act upon the results of the research.

Despite its popularity and usefulness, many research workers are of the sentiment that the Theory of Reasoned Action should be revised, extended or modified to take into history the rapid alterations that have taken topographic point in the environment, “recent unfavorable judgments have questioned the TRA application among non-Western topics, emic steps of etic latent concepts are required” ( Malhotra & A ; McCort, 2001 ) , “the TRA theoretical account contains Western cultural biases” ( Bang et al. , 2000 ; Tuten and Urban, 1999 ) , “TRA should be revised, extended or modified to take into history the rapid alterations that have taken topographic point in other environment” ( Javalgi et al. , 2005 ) , “yet, TRA must be operationalzed with the typical idea procedures of each civilization in mind” ( Malhotra & A ; McCort, 2001 ) , “consumers express their attitudes towards merchandises from different states unequally” ( Cordell, 1992 ) , “culture can besides act upon the results of the research” ( Ticehurst and Veal, 2000 ) , “ the cogency of the TRA theory challenge exists ” ( Hui, 1982 ) .

This survey tries to formalize and bring forth a research theoretical account that can show consumer purchase behavior towards foreign merchandises in Jordan utilizing TRA theory.

In line with the theory “TRA” , the most of import determiner is behaviour purpose ( BI ) . The single purpose to execute is a combination of attitude toward the behavior ( Ab ) , and subjective norm ( SN ) Ajzen & A ; Fishbein ( 1980 ) .

Earlier surveies used TRA focused on concepts ‘ of ( Ab ) and ( SN ) without adding external variables to the full theoretical account ( Bagozzi, 1981 ; Warburton & A ; Terry, 2000 ) . Based on Summers and Belleau ( 2006 ) found most research workers related to TRA “focused merely on the cardinal variables of attitude toward the behaviour and subjective norm, though some research workers did besides include the influence of external variables but non in all as one model” .

Some research workers have besides added the effects of external concepts such as quality, monetary value, guarantee, and advertisement to their surveies, but, these surveies have used t-tests or analysis of discrepancy ( ANOVA ) . From a statistical point of view, one-at-a-time trials, like t-test, may non be as valid when other variables, in this instance, the cardinal variables, have an consequence on the dependent variables, these is weak instrument robust statistics ( Summers et al. , 2006 ) .

At the same clip, “others included subjective norms in their survey as a general subjective norms’ explanatory power was comparatively weak, even though significant” ( Tarkiainen & A ; Sundqvist, 2006 ) . Therefore, research workers seek to add an external variables “external variables to TRA theoretical account could supply insight into the factors to assist foretell behavior” ( Bagozzi et al. , 2000 ) “strongly suggested external variables to better the power of the TRA theory” ( Candan et al. , 2008 ) .

This survey uses multivariate analysis statistical methods “ SEM ” including the external concepts ( conservativism and involvement in foreign travel ) , which have non been researched in the original TRA theoretical account. Both these constructs could strongly act upon the Ab and SN of consumer purchase behavior in state of affairss similar to Jordan.

1.4 RESEARCH OBJECTIVES

The aims of this survey are to analyze consumer purchase behavior toward foreign merchandises in an less developed state. Specifically, the research aims are as follows:

To mensurate the degree of the consumer ethnocentrism in an “ LDC ” ( Jordanian consumer in Amman ) that can assist in suggestion for new schemes for both sellers and authorities.

Investigate the determiners that influence consumer behavior towards foreign merchandises in an “ LDC ” ( Jordanian consumer in Amman ) .

To explicate the structural interrelatednesss between the external variables “ conservativism and involvement in travel abroad ” within TRA theory.

To formalize and bring forth a research theoretical account that will be able to show existent purchase behavior towards foreign merchandises in an “ LDC ” ( Jordanian consumer in Amman ) , utilizing TRA theory and structural equation patterning “ SEM ” .

1.5 RESEARCH QUESTIONS

The consequences of this research will assist to get at sensible decisions and reply the undermentioned inquiries:

How strong is the consumers’ ethnocentrism towards foreign merchandises in an “ LDC ” the capital of Jordan “ Amman ” ?

What are the determiners that influence consumer behavior towards foreign merchandises in an “ LDC ” the capital of Jordan “ Amman ” ?

What is the interrelatedness between the external variables “ conservativism and involvement in travel abroad ” within TRA theory?

Will the TRA research theoretical account be able to show existent purchase behavior towards foreign merchandises among Jordanian consumers’ in Amman?

1.6 SIGNIFICANCE OF THE STUDY

The findings from this research will be good non merely to persons at the academic degree, but will besides profit the state as a whole at a practician degree. In other words, this survey will be really utile at two degrees including the practician degree and academic degree in the undermentioned ways:

1.6.1 Practitioner degree

The findings from this research will assist the authorities of Jordan in be aftering its schemes to back up and actuate consumers to buy domestic merchandises. This research seems to hold been done at the right clip and at the right topographic point, the authorities ongoing many bilateral understandings which will increase the foreign merchandise flows that demand to be cognizant of any side consequence of this dramatically flows.

Knowing the strength of consumer ethnocentrism in Jordan will give insight both to the seller, and the authorities to understand the Jordanian consumer purchase behaviour and develop appropriate schemes that can better the state of affairs for both.

CET can be “institutionalized in the signifier of an informal authorities procurance policy that unduly favours domestic companies” ( Kotabe and Helsen, 1998 ) , “ happening degree of consumer ethnocentrism has of import deductions for both authorities policy shapers and local owned concern ” ( Hamin & A ; Elliott, 2006 ) , “ different selling schemes could be applied depending on the degree of consumer ethnocentrism of the target-group selected ” ( Chryssochoidis et al. , 2008 ) , “one of the most abiding signifiers of non-tariff barriers is that of ( CET ) ” ( Shimp and Sharma, 1987 ) .

It is expected that it will profit building of national policies, particularly the policy to increase support for domestic merchandises which in bend will hold a positive consequence on Jordan’s trade balance. Since the authorities wants to make more domestic merchandises, it needs to develop its national industries. The theoretical account generated from this research will set up the degree of Jordanian consumer ethnocentrism.

This will supply information to the authorities counterpart what is the consumer purchase behavior toward foreign merchandise, what will cut down the Jordan trade shortage and better the economic system. This in bend will hike the GDP and lead to greater economic prosperity.

This survey will profit the selling director in supplying him with a better apprehension of the grounds why consumers buy imported merchandises, and why there is less penchant for domestic merchandises. This cognition will besides assist local companies to device appropriate selling schemes which can help in bettering their fiscal state of affairs.

1.6.2 Academic degree

The survey adds to the literature on Jordanian consumer purchase behavior. Consumer purchase behavior has been widely studied in developed states. However, there have non been many researches on this country in developing states like Jordan that will supply clear description of consumer behaviour toward foreign merchandise from a LDC position.

Structural Equation Modelling ( SEM ) serves as a methodological analysis which promotes better quality of research. There are no other widely and easy applied methods as compared to SEM ; it has many utile characteristics, peculiarly in patterning multivariate dealingss ( Byrne, 2006 ) .

Furthermore, these findings will turn to the null literature & A ; back up the cross-cultural cogency of TRA in Jordan. Many of the theoretical accounts of consumer purchase behavior that have been developed and tested in the United States such as TRA, have been found to be really utile in foretelling a broad scope of behavior in western states and USA, Lee & A ; Bory ( 2008 ) ; Sheppard et Al. ( 1988 ) .

This survey attempts to turn to the nothingness in literature where the Theory of Reasoned Action developed in the USA has been applied in a nonwestern context ( Jordan ) , and where the survey result will be utile from an academic or scholarly point of view and will enable other research workers to carry on similar surveies in Jordan. It will besides lend to the bing organic structure of literature on TRA and consumer ethnocentrism in Jordan.

Therefore, incorporating the survey of consumer ethnocentrism with behavior theory and the development of the research theoretical account in a Jordan cultural context has contributed significantly to the planetary apprehension and back up the cross-cultural cogency of the theory of sound action of TRA.

By including two external variables to the original variables in the full theoretical account of TRA, and utilizing multivariate analysis statistical method, the survey illustrates the effects of some cultural facets ( conservativism & A ; involvement in foreign travel ) that may act upon consumer purchase behaviour. Both these constructs could strongly act upon the attitude and subjective norm of consumer purchase behavior in state of affairss similar to Jordan.

The theoretical account generated from this research can be a utile tool for academicians to understand the determiners of consumer purchase behavior toward foreign merchandise. The theoretical account generated from this research can assist the on-going attempts of theory-building in this field & A ; supply a utile tool for academicians to understand the determiners of existent purchase behavior towards foreign merchandise.

1.7 SCOPE OF THE STUDY

This survey targeted merely Jordanian consumers who were registered in Jordan Yellow Pages ( Edition: 2006 ) . The entire population of this survey comprised merely families in Amman, the capital of Jordan. This survey focuses on purchase behavior of Jordanian consumer toward foreign merchandises, and in order to happen out the deciding factors, this survey applies TRA theory in add-on to, consumer ethnocentrism theory.

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