QUALITY MANAGEMENT
The Effect of Cosmopolitanism
on Perceived Foreign Product
and Purchase Intentions: Indonesia Case
Edi PURWANTO*
Abstract
The purpose of this study is to analyse: (1) the effect of consumer cosmopolitanism on perceived foreign product
quality, (2) the effect of perceived foreign product quality on foreign purchase intentions, and (3) the effect of
consumer cosmopolitanism on foreign purchase intentions. The design of this research is quantitative. A total 175
School of Management students at a university in Jakarta were respondents for this research. The study’s result
proves that the first hypothesis was supported. Consumer cosmopolitanism has a positive and significant impact on
perceived foreign product quality. The study also proves that the second hypothesis was supported, i.e. perceived
foreign product quality has a positive and significant impact on foreign purchase intentions. Furthermore, the third
hypothesis was supported. Consumer cosmopolitanism has a positive and significant impact on foreign purchase
intentions.
Keywords: consumer cosmopolitanism, perceived product quality, purchase intentions.
1. Introduction
Today, Indonesian domestic products and services should
be ready to compete in global competition as well as in the
domestic market itself (Purwanto, 2014).The launching of
ASEAN Economic Community (AEC) at the end of 2015 with its
blueprint to manifest a single market and production base
makes ASEAN raise its competition. In this case, many
Indonesians doubted that Indonesian domestic products have
the ability to compete with foreign products. SindoNews.com
published an article titled, ‘Indonesia is attacked by foreign
brands’, which was reported by Endarwati and Amin, on May 21,
2015. In the article, Yuswohady, the Program Director for
Indonesia Brand Forum (IBF) said that competition between
foreign and domestic brands is just like a heavyweight boxing
match against a featherweight, which means that they were not
balanced. Furthermore, an attack of foreign brands touched in
all of Indonesian consumers’ need lines currently. It begins from
the kitchen, bathroom, and into drinking water. The foreign
brands practically made domestic brands to be marginalised
(Endarwati and Amin, 2015). Furthermore, Gita Irawan
Wirjawan, a former Ministry of Trade, said that Indonesian
people must have a positive attitude on domestic products, love
it, purchase, and use domestic products rather than foreign
products (Ratomo, 2013). He said that if Indonesian consumers
would like more to purchase import products rather than
domestic products, foreign producers would get benefits. Our
money will flow out and it will not give benefits for our domestic
economics (Ratomo, 2013). Although Hamin and Elliott (2006)
found that the overall level of consumer ethnocentrism of Indonesian consumers, compared with published results for a range
of countries were notably high, Purwanto (2014) found a low
level of perception on domestic product quality and domestic
product purchase intentions among young Indonesian consumers.
This research was motivated by the above problem and
recommendations of the study by Purwanto (2014) to look for a
relation between consumer cosmopolitanism with the perception
of foreign product quality and relationship of consumer cosmopolitanism with foreign product purchase behaviour. Previous
studies showed a positive influence of consumer cosmopoli-
tanism on perceived foreign product quality and purchase intentions. Parts and Vida (2013) and Rawwas et al. (1996) found the
effect of consumer cosmopolitanism on perceived foreign
product quality. Parts and Vida (2011) and (2013) found the
effect of consumer cosmopolitanism on foreign product buying
behaviour.
Furthermore, based on the above study background, this
study aims to analyse the following hypotheses: (1) consumer
cosmopolitanism has an effect on perceived foreign product
quality, (2) perceived foreign product quality has an effect on
foreign product purchase intentions, and (3) consumer cosmopolitanism has an effect on foreign product purchase intentions.
2. Literature Review
2.1. Consumer Cosmopolitanism
Levy et al. (2007, in Parts and Vida, 2011) applied the
cosmopolitanism construct in international business and
marketing research. The term itself was originally introduced by
Merton (1957). The term refers to individuals who are oriented
towards the outside world. Furthermore, according to Parts and
Vida (2011) the construct is related with a preference for foreign
products by Balabanis and Diamantopoulos (2008), Crawford
and Lamb (1982) and Suh and Kwon (2002). Moreover, according to Caldwell et al. (2006), a cosmopolitan consumer orientation manifests when people regard the world to be their
marketplace, consciously seeking to consume products, places,
and experiences originating from cultures other than their own
(Caldwell et al., 2006).
2.2. Perceived Foreign Product Quality
According to Rawwas et al. (1996) cosmopolitanism can
make consumers have a better perception of foreign products,
including the quality of a foreign product (Parts and Vida 2013).
According to Parts and Vida (2013), the influence of cosmopolitanism on the perceived product quality is rarely examined.
A number of researchers proved that consumer ethnocentrism
has an influence on product quality. For example, Acharya and
———————
* Department of Management, Bunda Mulia University, Jakarta, Indonesia; Email: epurwanto@bundamulia.ac.id.
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Elliott 2003; Hamin and Elliott 2006; Huddleston et al. 2001;
Klein 2002; Klein et al. 1998; Pecotich and Rosenthal 2001;
Verlegh 2007; Wong et al. 2008; Yelkur et al. 2006; Yoo and
Donthu 2005; Parts and Vida 2013; Purwanto 2014. Because
the concept of cosmopolitanism is the opposite of ethnocentrism, a number of studies above demonstrate a positive effect
of ethnocentrism on perceived domestic product quality and a
negative effect on perceived foreign product quality. Therefore,
cosmopolitanism would have a negative effect on perceived domestic product quality and a positive effect on perceived foreign
product quality. Based on previous research findings, it can be
built, but first, the research hypothesis as follows:
H1: Consumer cosmopolitanism has a positive effect on perceived foreign product quality.
2.3. Foreign Product Purchase Intentions
According to Purwanto (2014), product quality has a correlation with product purchase intentions. Consumers will be interested in buying a particular product, however, it is not without
attention to product quality. Therefore, a good perception of product quality will encourage consumers to buy them. A number of
studies showed that perceived product quality has a positive and
significant effect on purchase intentions (i.e. Pecotich and
Rosenthal 2001, Hui and Zhou 2002, Parts and Vida 2013, and
Purwanto 2014). Based on the findings, a second research
hypothesis can be built as follows:
H2: Perceived foreign product quality has a positive effect on
foreign product purchase intentions.
Parts and Vida (2011) said that cosmopolitanism has a direct
and positive effect on foreign product buying behaviour. A higher
level of cosmopolitanism could make consumers more open to
try foreign products (Parts and Vida 2013). When the activities
of international trade increases, many researchers studied
consumer ethnocentrism in order to better understand consumer
behaviour (e.g. Shimp and Sharma, 1987; Han, 1988; Rybina et
al., 2010; Purwanto, 2014). Ethnocentric consumers are more
interested in buying domestic products, while consumer cosmopolitanism is more interested in buying products overseas. As
explained by Yoo and Donthu (2005), a number of literature
explains that consumer ethnocentrism is associated with a
negative attitude towards the purchase of foreign products and
generally does not trust the quality of foreign products
(Brodowsky 1998; Durvasula, Andrews, and Netemeyer 1997;
Kaynak and Kara 2002; Klein, Ettenson, and Morris 1998;
Netemeyer, Durvasula, and Lichtenstein 1991; Sharma, Shimp,
and Shin 1995; Shimp and Sharma 1987; Suh and Kwon 2002;
Supphellen and Rittenburg 2001; Yu and Albaum 2002; Yoo and
Donthu, 2005). Based on previous research findings,a third
research hypothesis can be built as follows:
H3: Consumer cosmopolitanism has a positive effect on
foreign product purchase intentions
Figure I. Conceptual Framework
3. Materials and Methods
3.1. Measure
All the scales used in this study were derived from scales
previously used in the literature. The cosmopolitanism construct
was measured using an adopted version of Yoon et al. (1996, in
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Rybina et al. 2010). Perceived Foreign Product Quality construct
was measured using an adapted version of Yoo and Donthu
(2005). Foreign Purchase product intentions construct was
measured using an adapted version of Abraha et al. (2015). All
items used for this study were measured on a seven-point Likert
scale, which ranged from strongly disagree (1) to strongly agree
(7).
3.2. Data collection and analysis
Data collection was done by sharing questionnaires to
School of Management students at a university in Jakarta. The
time frame of data collection was from April to August 2015. The
samples in this study use a non-probability sampling technique,
i.e. convenience sampling. In this research, 175 samples were
taken and the collected data was analysed using partial least
squares structural equation modelling (PLS-SEM).
An assessment of reflective outer models involves
determining indicator reliability (squared standardised outer
loadings) and it should be higher than 0.70 (if it is an exploratory
research, 0.4 or higher is acceptable, Hulland, 1999, in Wong,
2013), internal consistency reliability (composite reliability) and
it should be higher than 0.70 (in exploratory research, 0.60 to
0.70 is considered acceptable), convergent validity (average
variance extracted, AVE) and it should be higher than 0.50, and
discriminant validity (Fornell-Larcker criterion, cross-loadings)
(Hair et al., 2011 and Hair et al., 2012).
Assessment of a structural model uses bootstrapping in
order to assess the path coefficients’ significance. According to
Hair et al. (2011), the minimum number of bootstrap samples is
5,000, and the number of cases should be equal to the number
of observations in the original sample. Critical t-values for a twotailed test are 1.65 (significance level = 10 percent), 1.96
(significance level = 5 percent), and 2.58 (significance level = 1
percent) (Hair et al., 2011).
4. Results and Discussion
The result of reflective outer models test showed squared
standardised outer loadings of items of constructs higher than
0.70, except Item 1 and 4 for the cosmopolitanism construct and
Item 6 for the product quality construct; however, the items were
higher than 0.40 (according to Hulland, 1999, it is acceptable in
an exploratory research). Therefore, all items of constructs were
reliable. The composite reliability value of constructs was higher
than 0.70, therefore, all constructs were reliable. Cronbach’s
Alpha of constructs were higher than 0.60, therefore, all constructs were reliable. Convergent validity or average variance
extracted (AVE) value of constructs were higher than 0.50,
therefore, all indicators of constructs were valid. See Table I.
The research hypotheses were tested by a bootstrap analysis of 5,000 sub samples (follow Hair et al., 2011) and its results are as is on Table II. Critical t-values for a two-tailed test
were >t-table at significance level = 1 percent. H1 = 5.48 > 2.58
and p-value = 0.00 > 0.01, H2 = 6.34 > 2.58 and p-value = 0.00
> 0.01, and H3 = 5.35 > 2.58 and p-value = 0.00 > 0.01.
Hypotesis Test 1:
H0: The effect of consumer cosmopolitanism on perceived
foreign product quality was not positive and significant.
H1: The effect of consumer cosmopolitanism on perceived
foreign product quality was positive and significant.
Conclusion: t-value is 5.48 >2.58 (significance level = 1 percent), therefore, H0 is rejected and H1 is accepted, because
consumer cosmopolitanism influences perceived foreign
product quality positively and significantly. This research finding
supported the previous study by Parts and Vida (2013) and
Rawwas et al. (1996).
Hypotesis Test 2:
H0: The effect of perceived foreign product quality on foreign
product purchase intentions is not positive and significant.
H1: The effect of perceived foreign product quality on foreign
product purchase intentions is positive and significant.
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Table I. Reflective Outer Models
Items
Outer Loadings
Cosmopolitanism
Item 1
Item 2
Item 3
Item 4
Perceived Foreign
Product Quality
Item 1
Item 2
Item 3
Item 4
Item 5
Item 6
Foreign Product
Purchase Intentions
Item 1
Item 2
Item 3
Convergent Validity
Cronbach’s Alpha
Composite Reliability
AVE= 0.515415
0.725059
0.808102
AVE= 0.579144
0.853019
0.891210
AVE= 0.698004
0.791457
0.873655
0.714250
0.699799
0.823237
0.619734
0.767230
0.747102
0.744882
0.823691
0.835624
0.629664
0.876142
0.773799
0.853008
Table II. Structural Model
Hypotheses
β-value
H1
Cosmopolitanism ->
Perceived Foreign Product Quality
H2
H3
T Statistics
Conclusion
0.39
5.48
Supported
Perceived Foreign Product Quality ->
Foreign Product Purchase Intentions
0.46
6.34
Supported
Cosmopolitanism ->
Foreign Product Purchase Intentions
0.15
5.35
Supported
Conclusion: t-value is 6.34 >2.58 (significance level = 1
percent), therefore, H0 is rejected and H1 is accepted, because
perceived foreign product quality influences foreign product
purchase intentions positively and significantly. This research
finding supported the previous studies by Pecotich and Rosent
(2001), Hui and Zhou (2002), Parts and Vida (2013), and
Purwanto (2014).
5 to 7 is agree, approximately, 76.1 percent of the respondents
believed in the statement, ‘I like immersing myself in different
cultural environments.’ A total of 82.9 percent of the respondents
believed in the statement, ‘I like having contact with people from
different cultures.’ A total of 92.6 percent of the respondents
believed in the statement, ‘I would enjoy travelling to foreign
countries for an extended period of time.’ Furthermore, a
majority of respondents also believed in the statement, ‘Getting
information and news from around the world is important to me’,
because 81.7 percent of the respondents believed it. Therefore,
a total of 83.33 percent of respondents agree with cosmopolitanism, a total of 13.13 percent were neutral, and about a total
of 3.54 percent disagree.
Hypotesis Test 3:
H0: The effect of consumer cosmopolitanism on foreign
product purchase intentions was not positive and significant.
H1: The effect of consumer cosmopolitanism on foreign
product purchase intentions was positive and significant.
Conclusion: t-value is 5.35 >2.58 (significance level = 1 percent), therefore, H0 is rejected and H1 is accepted, because the
effect of consumer cosmopolitanism on foreign product purchase intentions was positive and significant. This research
finding supported the previous study by Parts and Vida (2011)
and Parts and Vida (2013).
Table IV shows that the level of perceived quality of foreign
products is high. Approximately, 62.9 percent of the respondents
believed in, ‘Foreign products are carefully produced and have
fine workmanship.’ A total of 45.6 percent of the respondents
believe in, ‘Foreign products are generally of a higher quality
than similar products available from other countries’, and 28
percent were neutral. A total of 67.4 percent of the respondents
believed in, ‘Foreign products show a very high degree of
technological advancement.’ A majority of respondents also
On Table III, it can be seen that the level of cosmopolitanism
of the respondents was high. The study identified that a frequency range of 1 to 3 is disagree, range 4 is neutral, and range
Table III. Descriptive Statistics of Cosmopolitanism
Strongly
disagree
%
Disagree
%
Statement
1
2
1. I like immersing myself in different
cultural environments.
2. I like having contact with people from
different cultures.
3. I would enjoy travelling to foreign countries
for an extended period of time.
4. Getting information and news from around
the world is important to me
1.1
96
Neutral
%
Agree
%
3
4
5
6
7
1.1
2.3
19.4
22.9
28.6
24.6
1.1
1.1
1.7
13.1
19.4
38.9
24.6
1.1
1.1
0.6
4.6
8.0
20.6
64.0
0.6
0.6
1.7
15.4
16.0
21.7
44.0
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Strongly
agree
%
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Table IV. Descriptive Statistics of Perceived Foreign Products Quality
Strongly
disagree
%
Disagree
%
Neutral
%
Agree
%
Statement
1
2
1. Foreign products are carefully produced
and have fine workmanship.
2. Foreign products are generally of a higher
quality than similar products available
from other countries.
3. Foreign products show a very high degree
of technological advancement.
4. Foreign products usually show a very clever
use of colour and design.
5. Foreign products are usually quite reliable
and seem to last the desired length of time.
6. Foreign products are usually a good value
for the money.
2.9
Strongly
agree
%
3
4
5
6
7
8.6
5.7
20.0
24.6
22.9
15.4
6.9
8.6
10.9
28.0
19.4
17.1
9.1
2.3
5.1
5.7
19.4
23.4
23.4
20.6
4.0
4.6
6.3
20.6
25.1
26.3
13.1
4.6
4.6
10.3
19.4
25.1
25.7
10.3
4.6
5.7
6.3
17.7
28.0
23.4
14.3
Kanaya Tabitha, an Indonesian designer stated that the
fashion market for professional women above 25 years old is still
dominated by foreign brands, today (Kompas.com, May 17,
2016). Irawan (2012) said that one of the Indonesian consumer
differences characteristics is that they like foreign products.
Indonesian consumers increasingly do not believe in the quality
of domestic products. They are like imported products or products that have frills abroad more. They further believe that
foreign products have a better quality. Muchtar et al. (2012) said
that although Indonesians have deeply rooted traditions and values, they are quickly becoming an emerging consumer society.
The strong growth in imports (Central Bureau of Statistics Indonesia, 2010) could indicate an insatiable appetite for foreign
brands.
believed that, ‘Foreign products usually show a very clever use
of colour and design’, because 64.5 percent of the respondents
believe it. A total of 61.1 percent of the respondents believed in,
‘Foreign products are usually quite reliable and seem to last the
desired length of time.’ A total of 65.7 percent of the respondents
believed in, ‘Foreign products are usually a good value for the
money.’ Therefore, a total of 61.20 percent of respondents agree
that the quality of foreign product is high, a total of 20.85 percent
were neutral, and about a total 17.95 percent disagree.
It was realised by investors that Indonesian consumers like
import products more than domestic products. One example,
when Samsung produced two smartphones (Galaxy S6 and
Galaxy S6 Edge) in Indonesia, Lee Kanghyun, Vice President
Corporate Business and Corporate Affairs Samsung Indonesia,
worried about the status being ‘made in Indonesia’ for the
products. At the launching event of the Samsung Galaxy S6 and
Galaxy S6 Edge in Jakarta, Wednesday (May 29, 2015), Lee
said, ‘Indonesian did not so like made in Indonesia, therefore, I
am worry’ (in Wahyudi, 2015).
Irawan (February 2015) gave three rules of success in
building s top brand, and one of them is quality before price.
Enterprises that have a top brand are enterprises that believe in
the importance of quality. Quality as a weapon to build a top
brand is undeniable. Therefore, in order to build the perceived
quality on Indonesian costumers, raising the quality first is
needed. Marketing Magazine (February 2015) showed domestic
producers, such as Citicon, PT Vitapharm, and Garuda Indonesia are able to build their brand through quality. Therefore,
they create good perceived quality on consumers.
5. Conclusions and Policy Implications
The result of the study gave evidence that cosmopolitanism
consumers influence the perceived quality of foreign products.
The result of this study also gave evidence that perceived quality
of foreign products impacts the purchase intentions of foreign
products. Furthermore, the result in this study gave evidence
that cosmopolitanism consumers influence the purchase
intentions of foreign products.
To follow up on the findings of this study, it would be better
to consider the declaration of an Indonesian brand awakening of
Indonesia Brand Forum (IBF) in 2015 to be one of the policy
implications. It was stated that the Indonesian government must
be involved to develop a national brand in the middle of foreign
brands’ domination. The Indonesian government must be involved to build and develop consumer nationalism to have a
higher belief in buying, using, and consuming Indonesian
brands. Furthermore, the Indonesian government must be involved in the fight to manifest independence of Indonesia brands
to be host in its own country (Endarwati and Amin, 2015).
Yuswohady (in Endarwati and Amin, 2015) said that it is time to
promote consumer nationalism. It must be the spirit of all people
in the country to use domestic brands. The importance of government involvement in building domestic brands was also said
by Irwan Hidayat, CEO PT Sido Muncul Tbk. (Endarwati and
Amin, 2015).
Table V shows that the level of purchase intentions for
foreign products is relatively high. Approximately 57.7 percent of
the respondents believed in the statement, ‘I like the idea of
owning foreign products.’ A total of 51.5 percent of the respondents believed in the statement, ‘My quality of life would improve
if more imported goods were available.’ A total of 45.1 percent of
the respondents believed in the statement, ‘I find imported
goods more desirable than domestically produced products.’
Therefore, a total of 51.43 percent of respondents agree to purchase foreign products, a total of 19.80 percent were neutral,
and about a total of 28.77 percent disagree.
Table V. Descriptive Statistics of Foreign Products Purchase Intention
Strongly
disagree
%
Disagree
%
Statement
1
2
1. I like the idea of owning foreign products.
2. My quality of life would improve if more
imported goods were available.
3. I find imported goods more desirable
than domestically produced products.
5.1
13.7
12.0
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Neutral
%
Agree
%
Strongly
agree
%
3
4
5
6
7
6.9
7.4
9.7
12.0
20.6
15.4
25.1
18.9
20.6
14.9
12.0
17.7
6.9
12.6
23.4
14.3
21.1
9.7
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It is also better to consider and support, ‘Love Indonesia
movement’. Jakarta Newspaper (Koran-Jakarta.com, 3/2/2015)
reported that there were organisations or communities that
move Indonesia consumers to love ‘made in Indonesia’ products. They proposed slogans, such as ‘Love Indonesia product
100 per cent’, or ‘I happy use domestic products’, or ‘Please love
Indonesia products’. They said that if you support products
made in Indonesia, you show evidence that you have a nationalistic attitude. The campaign was one of the efforts to raise
awareness to love domestic products (Purwanto, 2014b).
It is also important to consider input that Indonesian producers must improve the quality. Gusmardi Bustami, a former
Indonesia Ambassador for WTO said that the developed
countries take anticipative action to face competition in free
industrial and did trade defence to protect domestic industries.
Therefore, Indonesia must watch and raise its products quality
(www.kemenperin.go.id). Taking example from domestic enterprises, such as Citicon, PT Vitapharm, and Garuda Indonesia
that success in building a brand through quality (Marketing
Magazine, February 2015).
Q-as
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Vol. 17, No. 155/December 2016
QUALITY
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