Consumer animosity and foreign direct investment: An investigation of consumer responses

This study proposes the concepts of host identity and foreign identity to explain the effect of foreign direct investment (FDI) entry modes and branding strategies on foreign subsidiary product purchases in an animosity context. Two experiments were conducted in two host countries with varying animosity levels toward the home country of a foreign entrant. Experiment 1 examined consumer purchase intentions toward products launched through three FDI modes (greenfield, acquisition joint venture [AJV], and greenfield joint venture [GJV]). Experiment 2 further examined consumer purchase intentions toward an equal-equity GJV subsidiary adopting a co-brand with different brand orders (foreign-local [F-L]) and local-foreign [L-F]). Results show that in a high-animosity host country, consumers prefer products launched through an entry mode and with a brand having a higher host identity (lower foreign identity). In a low-animosity host country, the FDI entry mode and branding strategy have no effect.