Does NAFTA influence Mexico's product image? A theoretical framework and an empirical investigation in two countries (1).

Abstract

* This paper is an attempt to study the impact of a trading bloc on a member country's product image. Specifically, we examine whether consumers' attitude toward NAFTA influences consumers' confidence, attitude, and purchase intention of Mexican-made product.

* Drawing from stimulus generalization and attitude conditioning theory, a theoretical etic-based cross-cultural model is developed and tested using two samples of student buyers/users of Mexican-made personal computers in the United States and Canada.

Key Results

* In general, attitude toward NAFTA positively influences confidence, attitude, and purchase intention of Mexican-made product in both samples. The similarity of the consumer decision model in the two countries implies that marketing strategies derived from this model may be similar.

Introduction

Along with the rapid globalization of the world economy, there has also been the emergence of major regional trading blocs (e.g., European Union, North American Free Trade Agreement, MERCOSUR, and Association of South East Asian Nations) in recent years. Although at different stages of economic integration, trading blocs have brought many scope and scale advantages of globalization. They permit countries and organizations to exploit existing competencies resulting in increased global competitiveness (Dunning 1998, Morrison/Roth 1992).

Despite the recent emergence of trading blocs and the abundance of country-of-origin research, there has been a lack of research initiative in studying the impact of a trading bloc on a member country's product image. In the case of North American triad bloc, Heslop/Wall (1993) note that despite political and public debates, the US-Canada Free Trade agreement (FTA) in 1988 was facilitated by long standing trade ties and the already existing mutual preference for each country's products. However, in the case of NAFTA, which took effect on January 1, 1994, unlike the US-Canada FTA, the inclusion of Mexico in a free trade agreement generated a great deal of controversy in the U.S (Fatemi 1993, Hufbauer/Schott 1993, Mello 1995). While the United States and Canada are developed industrialized countries, Mexico is a newly industrialized country. Country-product image research also indicates that American and Canadian consumers have in the past given unfavorable evaluations of Mexican-made products in general (Cordell 1992, Hong/Wyer 1989, Hung 1989, Roth/Romeo 1992).

In light of this argument, an important question that surfaces in the post-NAFTA period is whether or not consumer attitude toward NAFTA influences the product image of Mexico? The general consensus of most economic studies is that the United States, Canada, and Mexico would all benefit economically from NAFTA, with the benefits for Mexico exceeding those for the US and Canada (Weintraub 1993). However, there is a lack of research to show how these economic benefits translate into consumer perception of Mexican product image. The purpose of this paper, therefore, is to specifically address the following research questions. Does attitude toward NAFTA influence consumers' confidence, attitude, and purchase intention of Mexican-made products in both the US and Canada? Do US and Canadian consumers share similarities in terms of attitude towards NAFTA, its antecedents and consequences?

First, we briefly discuss the primary motivation underlying the formation of a trading bloc especially in the context of NAFTA. We propose a conceptual framework that examines the antecedents of attitude toward NAFTA and its influence on confidence, attitude, and purchase intention of Mexican-made products. Second, the cross-cultural model comparison between two samples (US and Canada) is further examined using the etic versus emic framework. Third, we establish the measurement and structural equivalence of the two samples using Multiple Group LISREL while carefully addressing some of the methodological concerns prevalent in past cross-cultural studies (Aulakh/Kotabe 1993, Malhotra/Agarwal/Peterson 1996). Finally, findings and implications of this research are discussed.

Trading Bloc and Product Image--Conceptual Framework

Background

The greatest motivation for countries to become members of a regional trading bloc is the potential for trade creation. The benefit from economic union comes when the trade creation effect seems to be greater than the trade diversion effect (Viner 1950). Trade creation takes place when a member country's domestic production of an item falls and is displaced by lower cost of production from a partner country. Economic integration leads to the most efficient use of scarce resources due to allocation and production efficiencies (Hunter 1991).

Comparative Advantage theory explains how allocation efficiency stems from comparative advantage where resources are allocated among firms and industries in the least cost country. Similarly, production efficiency stems from economies of scale as a result of increased market size. However, a firm also assesses the transaction cost, in addition to allocation and production cost, in deciding the governance structure--i.e., market, internal organization, or some hybrid arrangement. From the transaction cost analysis (TCA) perspective, the primary objective of a firm is to economize on transaction costs (i.e., costs related to asset specificity, behavioral and performance uncertainty) through choosing appropriate governance structures (Hennart 1988). Thus, when these costs are high and exceed the production cost advantages in the market, firms will favor internal organization. From a broader perspective (i.e., industry and national), TCA theory can be extended to include macro economic costs (job losses and wage reductions) as a result of trading bloc formation. A trading bloc offers an augmented market potential for firms to develop resources for global competitiveness. Resource Based theory explains how firms maximize long run profits through exploiting and developing their resources (Barney 1991). Because firm resources are heterogeneous and relatively immobile, some firms will have a comparative advantage, which then results in competitive advantage and superior financial performance (Hunt/Morgan 1995).

In the context of NAFTA, we briefly discuss these economic implications next. Given the extensive literature on NAFTA, we will focus our attention on only those studies that are of direct relevance to our study. These studies can be broadly categorized into two groups: (a) economic benefits of NAFTA, and (b) economic costs of NAFTA. Attitude toward NAFTA is contingent upon these antecedent factors. Figure 1 presents the conceptual framework.

[FIGURE 1 OMITTED]

Antecedents of Attitude toward NAFTA

Economic Benefits of NAFTA

NAFTA eliminates tariffs between the US, Canada, and Mexico (over a 15-year period), thereby lowering the cost of imports to consumers in each country. Under NAFTA, US and Canadian consumers would increase their purchase of Mexican-made products because of lower imported prices. Prior to NAFTA, it was estimated that Mexican exports to the US and Canada would increase due to trade liberalization resulting in increased global competitiveness (Hufbauer/ Schott 1993, Shiells/Shelburne 1992, Weintraub 1990). Post-NAFTA results validate these estimates. For example, Mexico's exports to US/Canada in 2000 totaled USS 154 billion up from USS 45.5 billion in 1993 marking 238 percent increase (Department of Foreign Affairs and International Trade 2001).

The removal of non-tariff trade barriers also allows more Mexican-made consumer products to enter the US and Canada. In addition, there are other benefits of NAFTA such as increased global competitiveness and greater market access (Burfisher/Robinson/Thierfelder 2001, Braun/Traichal 1999, Weintraub 1990). Mexican firms have been benefiting from economies of scale, improved access to technology and advanced production sharing. NAFTA also means that there will be a greater degree of standardization of technical standards, better quality control and lower risk factor of Mexican-made products (Department of External Affairs and International Trade Canada 1993, Mejias/Vargas-Hernandez 2001, Wood 2001). For example, under Article 904 of NAFTA, Mexico is obligated to meet certain technical standards to ensure quality. Therefore, it is expected that consumers in the US and Canada would perceive products manufactured in Mexico as falling under the broader umbrella of "North America" and thereby attribute higher value (i.e., higher quality at lower price). These potential benefits of NAFTA are likely to result in consumers' favorable attitude toward NAFTA.

Economic Costs of NAFTA

While most studies tend to indicate the benefits of NAFTA, there are concerns that NAFTA is in fact detrimental to the US and Canada (Jackson 1991, Nicholson et al. 1994). The main concern in the US and Canada is that low Mexican wages and poor enforcement of Mexican labor standards will continue to attract investment, deprive US and Canadian workers of their jobs, and drive down US and Canadian wages (Carr 1999, Hufbauer/Schott 1993, Martin 1992, Peach/ Adkisson 2000, Simmons 1998, Taylor 2000). Some studies have indicated that NAFTA will generate increased US investment in Mexico, thereby reducing aggregate investment in the United States (Spriggs 1991). In essence, some US industries will shift their production facilities to Mexico to take advantage of inexpensive Mexican wages and lower production costs. It is true that while NAFTA has caused increased US investments in Mexico, aggregate investments in the US did not decline, rather increased by over USS 500 billion between 1993 and 1999 (Department of Foreign Affairs and International Trade 2001). Similarly, it was estimated that Canada would suffer large employment declines in certain sectors such as non-electric machinery, textiles, chemicals, etc., as a result of NAFTA (Brown 1991). There are concerns that some manufacturing sectors in both the US and Canada are vulnerable to Mexican competition under NAFTA (Brown 1991, Martin 1992). While, statistical data till date provides no evidence of employment declines as a result of NAFTA (Office of the United States Trade Representative 2000), the perception of potential costs of NAFTA are likely to result in consumers' unfavorable attitude toward NAFTA (Nicholson et al 1994).

Consequences of Attitude toward NAFTA

Country image studies in the last three decades have looked at several factors including multiple informational cues, consumer characteristics, product partitioning and product-country fit, cultural orientation, and environmental factors (Chao 1993, Gurhan-Canli/Maheswaran 2000a, 2000b, Granzin/Painter 2001, Han 1989, Johansson/Douglas/Nonaka 1985, Klein/Ettenson/Morris 1998, Maheswaran 1994, Roth/Romeo 1992). [For a recent comprehensive list the reader is referred to Baughn/Yaprak 1993, Peterson/Jolibert 1995, and Verlegh/ Steenkamp 1999]. Table 1 summarizes selective literature review on country-of-origin research in the last two decades (1982-2001).

As evidenced from Table 1, despite the abundance of country-of-origin research, there has been a lack of research initiative in studying the impact of a trading bloc on a member country's product image. Most researchers agree that the country image effect can be explained as a halo construct when the consumer knows little about a country's products. In this case, country image is based on whatever knowledge the consumer has about the country including economic, political, and cultural knowledge (Han 1989, Hong/Wyer 1989). With political and economic change will come social attitude change, which will undoubtedly lead to different perceptions of value (Nebenzahl/Jaffe/Lampert 1997).

Attitude conditioning and change can best be explained by Classical Conditioning theory. Research on classical conditioning has established that conditioning is an effective mechanism for changing attitudes via (a) direct affect transfer process and (b) cognitive belief formation process (Allen/Janiszewski 1989, Allen/Madden 1985, Shimp 1991). According to the classical conditioning theory, when an unconditioned stimulus (US) spontaneously provokes a positive or negative affective response, the systematic pairing of the conditioned stimulus (CS) and the US causes a transfer of affect from the US to the CS. Affect transfer explains the success of stimulus generalization in attitudinal conditioning. The cognitive belief formation process posits that inferential learning about the CS takes place on the basis of information provided by the US (Janiszewski/Warlop 1993, Shimp 1991). Both mediational processes can occur concurrently to shape attitude.

We apply the dual mediation theory to explain how attitude toward NAFTA generalizes over to attitude toward Mexican-made products. Over time, consumers' positive attitude toward NAFTA will favorably transfer to Mexican-made products (see Figure 1). As a result of NAFTA, consumers would attribute higher quality to Mexican-made products (Nicholson et al. 1994). Both affect transfer and inferential learning based on attitude toward NAFTA would generalize over to attitude toward Mexican-made products. Initially, when the association is weak, affective influence is stronger than the cognitive influence. However, as the association becomes stronger, the cognitive influence becomes stronger in comparisqn to the affective influence (Kim/Lim/Bhargava 1998).

Similarly, consumers' attitude toward NAFTA will influence their purchase intention of Mexican-made products. If consumers evaluate NAFTA positively, it is likely that they are more willing to purchase Mexican-made products. Thus, a positive link is modeled between attitude toward NAFTA and purchase intention of Mexican-made products. Also, consumers' attitude toward Mexican-made products is likely to influence their purchase intentions. The more favorable they perceive Mexican-made products, the more likely they would purchase Mexican products (Bagozzi/Baumgartner/Yi 1989, Netermeyer/Bearden 1992).

Role of Confidence

Despite the acknowledgement of the critical role of confidence, it has been virtually absent in country-product research (Baughn/Yaprak 1993, Chao 1993). The role of confidence is important especially when consumers are confronted with less familiar products. Its impact becomes more pronounced when trading partners are not similar in terms of economic, political, and cultural conditions as in the case of Mexico. Therefore, we introduce the confidence construct in our model.

Confidence can be defined as the buyers' degree of certainty that his/her evaluative judgment of the product is correct. The dual mediation theory of attitudinal conditioning can also explain how duration and strength of the association between the unconditioned stimulus and the conditioned stimulus can influence the confidence in conditioned stimulus. As the perception of the association between NAFTA and attitude toward Mexican-made products increases, the certainty of the evaluative judgment (confidence) based on inferential reasoning becomes stronger (Kim et al. 1998). In addition, Howard's (1994) information-processing model of consumer decision-making explains the important role of confidence. When confidence in a product is low, consumers look for information to validate and augment the confidence. When minimal (or partial) information is available, consumers rely upon associative knowledge and inferential reasoning. Hence, NAFTA provides the information necessary to augment confidence in Mexican-made products.

In the context of NAFTA, consumers' attitude toward NAFTA can provide powerful information, which has the potential to augment the confidence in Mexican-made products. When consumers have a more favorable image of NAFTA, they are likely to have more confidence in Mexican-made products. Based on the Howard (1994) model, a positive link is drawn between attitude toward NAFTA and confidence in Mexican-made products (see Figure 1). Lim/Kim (1992) found a direct effect of confidence on attitude. The stronger the confidence is, the more favorable the attitude toward Mexican-made products. Therefore, a positive link between confidence and attitude is added in our model. Studies have also shown a positive relationship between confidence and intention (Howard 1994, Laroche/Howard 1980). Therefore, a positive link between confidence and intention is drawn in our model.

Etic-Emic Cross-Cultural Approach

In the preceding section, we discussed the antecedent links of attitude toward NAFTA and its influence on confidence, attitude and purchase intention of Mexican-made products. An important question is, are there any similarities between American and Canadian consumers with respect to attitude toward NAFTA, its antecedents, and consequences?

We conceptualize culture as a knowledge system that is represented in cognitive processes (Rohner 1984) which is of major concern in most cross-cultural marketing applications (Lonner/Triandis 1980). When undertaking any cross-cultural or cross-national study, it is critical that the researcher approaches from an etic or emic perspective. The etic approach examines the phenomenon from outside the system, investigates many cultures, and the criteria adopted are considered absolute or universal (Berry 1989, Malhotra et al 1996). In contrast, the emic approach examines the phenomenon from within the system, investigates only one culture, and the criteria adopted are relative to internal characteristics of the culture.

One could begin with the etic perspective characterized by the presence of universals. Emic descriptions can then be made by progressively altering the imposed eric until it matches an emic point of view. Thus, the etic-emic distinction is not a dichotomy or an either/or phenomenon, but a matter of degree (Church/ Katigbak 1988). We next examine the specific case of United States and Canada in the light of etic-emic framework.

United States Versus Canada

In many respects, the US and Canada are very similar in terms of economic, political, and cultural conditions. The US and Canada not only share a common boundary, but also a similar legal system, a common language, and a Jewish-Christian religious tradition. Both countries are advanced industrialized countries with similar standards of living and established democratic traditions.

Baer/Grabb/Johnston (1990) argue that there are no significant national differences between the US and Canada due to the increasing economic integration between these two countries. The economic benefits of NAFTA are perceived in like manner in US and Canada (Hufbauer/Schott 1993). Similarly, there are concerns that both the US and Canada may suffer from job losses, lower wages, and industry relocations as a result of NAFTA. While there are no comparative studies on economic costs of NAFTA, such economic hardships affect people in much the same way regardless of whether they are from the US or Canada.

US and Canada share more similarities than differences in their culture (Baer et al. 1990, Grabb/Curtis 1988) despite some studies that have suggested some differences in risk-taking behavior (Lipset 1986, 1990). It is the institutions and cultural patterns in a country that determine the modal behavior and traits of its people. For a long time, Canada has been a great culture importer from the United States, especially in the area of mass media. The work of Hofstede (1980) and Hofstede/Bond (1988) on cultural dimensions reveals that the cultural distance between the US and Canada is very small. Both the United States and Canada are high on individualism and low in power distance, masculinity, uncertainty avoidance, and Confucian dynamic. This would mean that both countries hold individual values stronger than collective values, encourage democratic participation, emphasize people and quality of life, are tolerant of various behaviors, and are interested in preserving tradition, structures, dignity, relationship, and face. These cultural similarities between the US and Canada influence consumer behavior such as beliefs and attitudes, values and norms, mental processes and learning, in a similar direction. Based on this analysis, it is likely that US and Canada share more similarities than dissimilarities in economic, political, and cultural factors. Since existing comparative research presents a compelling case for great similarities between the US and Canada, we start our cross-cultural analysis with an etic approach.

Methodology

Product Category and Sample

Personal computer made in Mexico was selected as the product category for our study. The choice of a personal computer was based on the fact that the Mexican government has prioritized computer and semiconductor industry as an important strategic cluster similar to the competitive petroleum and automotive clusters (Hodgetts 1993). Given the modular architecture of the personal computers, high value components such as Intel microprocessors and Microsoft software are increasingly assembled in Mexico with a number of Mexican-made commodity pieces such as motherboards, memory chips, and disc drives, among others (Forsyth 1999). This is in keeping with the Mexican government's implementation of the "Computer Decree" that strives for national technological development by locally supplying 70 % of all computer parts (Weiss 1990). Mexico is in the process of effectively linking its computer industry into the North American market. Since NAFTA, there has been an influx of new computer plants from local partners targeting small and medium size companies and private consumers (Williamson 1999).

The rationale for using personal computers made in Mexico also seemed to fit well with our sample--student consumers. Increasingly more business students are becoming frequent buyers and users of personal computers in their course of study, especially with significant decline in price. In some universities, students are expected to buy and own computers as an admission requirement due to their tremendous use and application in the educational curriculum. While this was a mandate in one university (US sample), computer ownership was very high in the other university (Canadian sample) as well. The model was tested using two separate samples of advanced level business students in both the US and Canada. These students were marketing majors and had taken at least one course in international business. Thus, both samples were knowledgeable about NAFTA and international business issues related to it. The US sample of 142 students came from a major southeastern US university, while the Canadian sample of 204 students was taken from a similar-sized major university in Western Canada. In both samples, 52 percent of the respondents were males and 48 percent were females. The average age in both samples was about 24 years and both groups were English speaking. Ratings were first taken on all the perceptual variables including purchase intention followed by attitude toward NAFTA. The logic for this particular order was to reduce any bias attitude toward NAFTA might have on country image.

Measures

The exogenous constructs in the model were economic benefits of NAFTA and economic costs of NAFTA. The endogenous constructs were attitude toward NAFTA, confidence in Mexican-made products, attitude toward Mexican-made products, and purchase intention. All items were measured using a 6-point rating scale.

Economic benefit was operationalized using the items: (1) NAFTA will meet its stated objective of increased investment and trade, greater market access, etc., in the next ten years and (2) NAFTA will enable North America (US, Canada, and Mexico) to compete economically in the global market. Economic cost was measured by using the measures: (1) Mexican imports are and will be hurting American/Canadian industry as a result of NAFTA and (2) Mexican imports are and will be replacing American/Canadian jobs as a result of NAFTA.

Attitude toward NAFTA was measured using the indicators: (1) overall satisfaction with the US/Canada's decision to sign a free trade agreement with Mexico and (2) overall perception of NAFTA in terms of its impact on the American/Canadian economy.

The following measures of confidence in Mexican-made products were used: (1) overall degree of certainty about evaluative judgment, (2) confidence in evaluative judgment based on whether or not performance will match expectation, and (3) confidence that the right purchase decision would be made as a result of confidence in judgment. Some researchers have also used degree of accuracy as a measure of confidence, which is reflected in the expectation-performance match (Laroche/Sadokierski 1994).

Overall attitude toward products made in Mexico was measured using the items: (1) favorable-unfavorable attitude and (2) unsatisfactory-satisfactory attitude. This construct captures the global evaluation of Mexican products. Finally, purchase intention was measured using the items: (1) intention of buying Mexican-made products soon and (2) intention of buying Mexican-made products later (Han 1988).

Analysis and Results

Measurement Model

Confirmatory factor analysis (CFA) using LISREL 8 (Joreskog/Sorbom 1996) was used to assess unidimensionality. Diagnostic information generated by CFA revealed that all standardized residuals were less than 3.0. Thus, no modifications were necessary to the hypothesized model (MacCallum/Roznowski/Necowitz 1992). Results confirm the hypothesized constructs as indicated by the goodness-of-fit indices. Both samples yielded acceptable model fit. For the US sample, these were [chi-square = [75.80.sub.(50 df)] (p=0.01); RMSEA =0.05; GFI=0.93; CFI = 0.98; NNFI = 0.96], (Brown/Cudeck 1992). For the Canadian sample these were [chi-square = [44.84.sub.(50 df)] (P =0.68); RMSEA =0.00; GFI =0.97; CFI = 1.00; NNFI = 1.00].

Reliability and Validity Assessment

Table 2 presents Cronbach's alpha and CFA-based composite reliability for each construct together with the standardized loadings and associated t-values for both samples. Cronbach's alpha was calculated for each construct and found to be equal to or greater than 0.70 except for one construct which was 0.69. All constructs also indicate CFA-based composite reliability measures well above the 0.60 suggested level for both samples (Bagozzi/Yi 1988). It has been demonstrated that the same scales may have different reliabilities in different cultures (Davis/ Douglas/Silk 1981). The average domain composite reliability across constructs in both samples was very similar (0.82 for the US sample and 0.83 for the Canadian sample). Further, ANOVA was conducted with the factor sample (2 samples) crossed with the factor replication (2 replications using sub-samples within each sample) and a log transformation of the reliabilities (Cronbach's alpha) of each construct as the dependent variable (Parameswaran/Yaprak 1987). Results showed no significant main effects (F = 0.13, p < 0.72 and F = 0.10, p < 0.76 for the sample and replications factors respectively) thereby indicating equivalence in reliabilities both across and within samples. The samples, therefore, have a high degree of comparability (Lee/Green 1991). Furthermore, diagnosing metric equivalence also tests for reliability and validity across cultures (discussed and statistically tested later in the section on measurement equivalence).

Given acceptable levels of reliability for both samples, convergent and discriminant validity were examined. Convergent validity is implied by the strength of the loadings of each observed measure on its proposed latent variable. The metric for each scale was established by fixing the coefficient for one indicator to 1.00 for each construct. For both the US sample and Canadian sample, each item (other than the fixed loadings) evidenced significant t-value with most t-values greater than 9.00. All constructs indicated that the shared variance measures were above the suggested 0.50 level for both samples. Taken together, results indicate that an acceptable convergent validity was achieved. Comparing the shared variance for each construct with the squared correlation between constructs also establishes the discriminant validity. The shared variance was larger than the squared correlation between the pair of constructs under consideration. Thus the measures have acceptable reliability and convergent and discriminant validity in each sample.

Establishing Measurement Equivalence

It is very important to conduct tests and provide evidence of measurement equivalence in cross-cultural research (Steenkamp/Baumgartner 1998). Measurement equivalence helps identify whether the same models hold across different populations. Multiple Group LISREL was used for comparing measurement models from multiple groups (Bollen 1989, Joreskog/Sorbom 1996, Mullen 1995). The overall hypothesis for measurement equivalence is that the measurement models are invariant across groups. A series of nested models was tested to establish the hierarchy of invariance. With a measurement model of the form x = [[DELTA].sub.x][xi] + [delta] the measurement properties are the same in the two groups if the following hypotheses are not rejected:

Model (1) [H.sub.form] : same form (Factorial Similarity)

Model (2) [H.sub.[lambda]x] : [H.sub.form] and [[DELTA].sub.x] (1) = ... [[DELTA].sub.x] (2) = ... [[DELTA].sub.x] (G) (Factorial Equivalence)

Model (3) [H.sub.[lambda]x[theta][delta]] : [H.sub.[lambda]x] and [[THETA].sub.[delta]] (1) = [[THETA].sub.[delta]] (2) = ... [[THETA].sub.[delta]] (G) (Equality of Measurement Error)

Model (4) [H.sub.[lambda]x[theta][delta][PHI]] : [H.sub.[lambda]x[theta][delta]] and = [PHI] (1) = [PHI] (2) = ... [PHI] (G) (Equality of Variance-Covariance)

Measurement invariance across samples is evaluated with chi-square difference test applied to a series of increasingly constrained nested models. [H.sub.form], (model 1) was tested by freely estimating the factor loadings, measurement error, and variance-covariance matrices. The fit generated by the model was acceptable [chi-square = [120.64.sub.(100 df)]; P < 0.08; RMSEA = 0.03; GFI = 0.93; CFI = 0.99; NNFI = 0.99]. The results provide evidence supporting the hypothesis of equivalent model form (factorial similarity).

In the second test (model 2), [H.sub.[lambda]x], factor loadings were constrained to be invariant across samples. Results indicate acceptable fit [chi-square = [125.00.sub.(107 df)]; p < 0.11; RMSEA = 0.03; GFI = 0.92; CFI = 0.99; NNFI = 0.99]. A chi-square difference test (between model 2 and model 1) revealed no significant difference in factor loadings [chi-square difference = [4.36.sub.(7 df)]; P < 0.75]. This supports the hypothesis of invariant loadings (factorial equivalence). Results empirically confirm that the items measured the same latent constructs across samples.

In the third test (model 3), [H.sub.[lambda]x[theta][delta]], equal measurement error variances were added to the previous constraints of factor loading invariance. Results indicate acceptable fit [chi-square = [143.90.sub.(120 df)]; p < 0.07; RMSEA = 0.03; GFI = 0.92; CFI = 0.99; NNFI = 0.99]. A chi-square difference test (between model 3 and model 2) revealed no significant difference in measurement error variance [chi-square difference = [18.90.sub.(13 df)]; P < 0.13]. The assumption of equal measurement errors (both random and systematic) across samples is also supported thus establishing metric equivalence.

Finally, the fourth test (model 4), [H.sub.[lambda]x[theta][delta][PHI]], to establish variance-covariance equivalence also had acceptable model fit [chi-square = [168.23.sub.(141 df)]; P < 0.06; RMSEA = 0.03; GFI = 0.90; CFI = 0.99; NNFI = 0.99]. A chi-square difference test (between model 4 and model 3) revealed no significant difference in the variance-covariance matrices [chi-square difference = [24.33.sub.(21 df)]; P < 0.25] thus establishing variance-covariance equivalence. Taken together, the preceding results establish measurement equivalence between the two samples.

Structural Model Equivalence

Using multi-group analysis, the fully unrestricted structural model (1) (all parameter matrices had same pattern and starting values) yielded acceptable model fit [chi-square = [131.17.sub.(112 df)]; p < 0.10; RMSEA = 0.03; GFI = 0.92, CFI = 0.99; NNFI-0.99]. The fully restricted model (invariance condition imposed on all parameter matrices) had comparable statistics [chi-square = [173.25.sub.(147 df)]; p < 0.07; RMSEA = 0.03; GFI = 0.90; CFI = 0.99; NNFI = 0.99]. A chi-square difference test revealed no significant difference [chi-square difference = [42.08.sub.(35 df)]; P < 0.20]. This implies that the two samples exhibit model equivalence (Singh 1995). Figure 2 reveals that all links are statistically significant (at p < 0.05) except for [[beta].sub.31] for the US sample and [[beta].sub.41] for the Canadian sample and [[beta].sub.42] for both samples.

[FIGURE 2 OMITTED]

However, to assess the magnitude of the statistical significance and practical significance of the difference in each structural link, we tested for individual path coefficients even though the global test showed no statistical difference. For each hypothesized path, two models were compared--an unrestricted model in which the path coefficient was allowed to vary and a partially restricted model in which the path coefficient was fixed equal between the samples (Singh 1995). Table 3 summarizes the chi-square difference and the p-value for each link in the model. These individual tests reconfirm our earlier global test result of structural model equivalence between the two samples and non-significant differences between links.

Discussion and Conclusion

It is evident that attitude toward NAFTA, in general, does influence confidence, attitude, and purchase intention of Mexican-made products. Attitude toward NAFTA is in turn influenced by both perceived economic benefits and perceived economic costs associated with NAFTA. These findings are important because this is the first study to empirically investigate the antecedents and consequences of attitude toward a regional trading block in a consumer decision making context, thus extending the country-of-origin paradigm. With the drive toward greater market access and harmonization of quality standards across member countries, the "country of origin" effect is moderated by the "bloc of origin" effect. The enforcement of common technical standards makes longer and more efficient production runs of standardized products resulting in lower costs of higher quality components (De Meyer 1991, Hufbauer/Schott 1993). In the case of Mexico, NAFTA significantly influences its country image given poor perceptions in the past (Hung 1989, Cordell 1992). As part of future research agenda, it may be worthwhile to investigate whether or not effect size of "bloc of origin" effect is dependent upon the level of disparity among member countries. One may postulate that the greater the economic/political disparity of the focal country (i.e. lower the country image), the greater the upward shift of its country image by attaining bloc membership status. The "bloc of origin" effect may become more pronounced within the European Union, which is characterized by a high degree of heterogeneity (Kale 1995, Wierenga/Pruyn/Waarts 1996). There are strong indications that the twenty-first century will be characterized as an era of regional trading blocks (Bettis/Hitt 1995, Dunning 1998). Our study presents a theoretical framework and a rigorous methodology for incorporating the role of a bloc in consumers' consideration of products made in one of the block-countries.

In general, NAFTA bolsters consumer confidence in and attitude toward Mexican-made products. NAFTA acts as a powerful vehicle to augment the strength of their confidence and attitudes toward Mexican-made products. Attitude conditioning and stimulus generalization from attitude toward NAFTA to attitude toward and confidence in Mexican-made products is significant. Product image of Mexico is significantly influenced by attitude toward NAFTA. Our findings are consistent with Nebenzahl, Jaffe, and Lampert's (1997) position that with political and economic changes comes social attitude change, which triggers different perceptions of value. The interesting finding is that attitude toward NAFTA influences attitude toward Mexican-made products both directly and indirectly through confidence. Thus, confidence acts as a mediating variable in attitude building in both samples. When consumers perceive higher value and relative satisfaction for a product made in a developing country, there is an escalation in the image of country of manufacture.

Confidence in Mexican-made products significantly influences attitude toward Mexican-made products. Nebenzahl, Jaffe, and Lampert (1997) argue that a consistent and long-term sustained experience is the key driver to positive product-country image changes. Building sustained confidence over a long-term period will lead to positive attitude change and is best reflected when a country's products are introduced with low variability in attributes. With consumer experience and confidence, change occurs over a sustained period of time from the specific (i.e., firm products and product lines) to the general (industries and overall country image). NAFTA provides a mechanism whereby sustainable long-term confidence in Mexican-made products can be fostered. The postwar changes in the image of Japan took decades before its image as a manufacturer of consumer goods superseded the USA and other Western countries (Johansson/Nebenzahl 1986, Han/Terpstra 1988). Thus, Mexicans (firms, industries, and the government) should undertake systematic effort to change the confidence and attitude of American and Canadian consumers in a more favorable direction. For example, the Mexican government is in the process of effectively linking its computer industry into the North American market under its "Computer Decree" that strives for national technological development. Similarly, providing information that emphasizes on the one hand the benefits of NAFTA and, on the other hand, that costs have been less than expected will prove helpful toward this end. Such information emanating from a credible source and supporting evidence will change the beliefs and ultimately the attitudes toward NAFTA.

Overall, our results lend strong support to the etic approach (similarities) adopted in this study. Between samples there is no significant difference in the impact of perceived economic benefits on attitude toward NAFTA. The same is true for perceived economic costs. It should also be noted that the impact of perceived economic benefits is significantly greater than that of perceived economic costs. This means that both Americans and Canadians believe that economic benefits will outweigh economic costs, which is consistent with current and past economic studies and trade creation theory (Burfisher/Robinson/Thierfelder 2001, Weintraub 1993). Further, this study reconfirms the findings of existing sociological and cross-cultural studies comparing the US and Canada (Baer et al. 1990, Grabb/Curtis 1988). The similarity of the consumer decision model in two countries implies that marketing strategies derived from this model may be similar. Despite some differences (Lipset 1986, 1990), the two economies have been increasingly integrated and the cultures have converged significantly in the last two decades. The role of broadcast and electronic media, telecommunication and information technology, increased cross-border travel, strong bi-lateral trade relations and globalization, have ushered in an era of growing convergence of consumer preference and choice (Douglas/Craig 1996). While there are regional differences in both countries, Mexican exporters should examine the aggregate markets, first, from an etic perspective before making emic customizations. Emic adjustments may have to be made on account of sub-cultural differences in both countries (such as Hispanics, African-American, etc. in the US and English and French speaking population in Canada). Therefore, marketing strategies may have to be implemented differently in the two countries, thus giving new meaning to the "think globally; act locally" paradigm.

Limitations and Future Research

As with any research, this study is not without limitations. First, this research was conducted using only two samples: US and Canada. A three-sample study, including Mexico, would have given a complete picture by incorporating the other side of NAFTA. Second, it would also be interesting to study Mexico's image changes as perceived by consumers outside the trading bloc. Trade flow patterns indicate that while intra-bloc trade is on the rise as a result of trading blocs, inter-bloc trade has also risen (Frankel 1991). Future research should also examine the "country of origin" and "bloc of origin" within the context of European Union given greater degree of heterogeneity among the member countries.

Despite these limitations, we believe that this is the first conceptual and empirical study that extends the country-of-origin paradigm by taking into account the impact of a regional trading bloc on that country's product image. At the methodological level, we discuss and adequately address equivalence issues. With a few exceptions recently, methodological issues in cross-cultural research have been grossly overlooked in the past (Steenkamp/Baumgartner 1998). This study is also unique in that it provides a rare application of Howard's model, especially the role of confidence, in a cross-cultural and country-product image context (Baughn/Yaprak 1993). It is hoped that this study will stimulate other researchers to extend this framework by examining other trading blocs and conducting cross-cultural analysis with other countries.

Table 1. Selective Literature Review on
Country-of-Origin Research: 1982-2001

Study           Topic and Context                    Methodology

Kaynak and,     Studied how quality perceptions of   Descriptive
Cavusgil        consumers varied across product      Statistics
(1983)          categories. These were electronic
                items, food products, fashion
                merchandise and household goods
                in twenty five countries

Wang and Lamb   COO effect, economic and political   ANOVA
(1983)          factors are studied in terms of      Randomized
                American consumers' willingness to   Complete
                buy European-made products           Block Design

Erickson,       Estimated the effects of image and   Simultaneous
Johannson       COO variables on beliefs and         Equations
Chao (1984)     attitude using the multi-attribute   Regression
                model framework. U.S., German and
                Japanese automobile models used

Johannson,      A multi-attribute approach was       Simultaneous
Douglas and     used to study COO along with other   Equations
Nonaka (1985)   factors such as familiarity,         Model
                nationality and demographic
                factors, Respondents from U. S.
                and Japan evaluated automobiles
                from U. S., Japan and Germany

Shimp and       Formulated and validated the         Exploratory
Sharma          Consumer Ethnocentric Tendencies     and
(1987)          Scale (CETSCALE)                     Confirmatory
                                                     Factor Analysis

Han and         Effects of COO (sourcing country)    Within-subjects
Terpstra        and brand name cues on evaluation    ANOVA/MANOVA
(1988)          of uni-national and bi-national
                products. Color TVs/automobiles
                used

Han (1988)      Examined role of patriotism on       Structural
                purchase intention and cognitive     Equations
                attitude toward foreign products     Modeling
                                                     (LISREL)

Ettenson,       Evaluating the Effect of COO using   Conjoint
Wagner, and     a patriotic promotional campaign     Analysis
Gaeth (1988)    design                               Pre-test/
                                                     post-test

Chao (1989)     Examined the impact of country       MANOVA
                affiliation on the credibility
                of product attribute claims.
                Three consumer electronics
                products using U. S./Korea

Thorelli, Lim   Investigated whether the negative    ANOVA
and Ye (1989)   effect of COO can be reduced by
                warranty and store image. Stereo
                cassette recorder was used with
                Japan Taiwan as the two countries

Hong and Wyer   Examined four hypotheses with        Latin Square
(1989)          respect to the underlying cognitive  Design
                processes that explain the
                influence of COO and specific
                attributes on product evaluation.
                PC/VCR used.

Han (1989)      Country image as a halo or a         Structural
                summary construct. Color TV sets/    Equations Model
                compact automobiles used using       (LISREL)
                three countries: U. S., Japan and
                Korea

Wall, Liefeld   Determined the effect of COO,        ANCOVA
and Heslop      brand name, and price on consumer
(1991)          ratings of quality, purchase risk,
                value and purchase likelihood

Roth and        COO is examined in terms of the      Survey Design
Romeo (1992)    fit between countries & product      Confirmatory
                categories. Data collected in        Factor
                Ireland, Mexico and U.S on ten       Analysis
                countries and six product
                categories

Cordell (1992)  Examined COO perceptions of twelve   MANOVA
                countries and eight products using
                both perceived quality and choice
                measures. Investigated the
                consistency of perceptions within
                country class diminishes the value
                of the country cue. Performance
                risk and the moderator effects of
                branding and Performance risk
                and the moderator effects of
                branding and Performance risk

Lee, Kim and    Examined the relative effect of      Conjoint
Miller (1992)   COO, price, and warranty. Consumer   Analysis
                ethnocentric and Nationalistic       (MONANOVA) and
                characteristics were also linked.    Regression
                PC/wall clock used as products
                categories.

Chao (1993)     Studied two aspects of COO--country  ANOVA
                of assembly (COA) and country of
                design (COD) using TV set

Chao and        Examined consumer feelings toward    ANOVA
Rajendran       COO by evaluating individuals
(1993)          (occupational status) who were
                presumed to own foreign products.
                Samples included U. S., Japan and
                Germany

Ulgado and      Consumer evaluations of bi-national  ANOVA
Lee (1993)      products with and without specific
                attribute information--TV sets and
                athletic shoes were used

Martin and      Measured the multi-dimensional       Factor Analysis
Eroglu (1993)   nature of COO construct--COO
                defined as the total of all
                descriptive, inferential and
                informational beliefs about the
                country (samples from Germany/
                India)

Tse and Gorn    Examined the salience of COO and     MANOVA
(1993)          global brand name both before and
                after product experience

Maheswaran      Studied the moderating role of       ANOVA
(1994)          consumer expertise and type of
                attribute information between
                COO and product evaluations

Parameswaran    Conducted a study to clarify         Structural
and Pisharodi   the underlying facets of COO         Equations Model
(1994)

Han, Lee        COO and purchase intention was       ANOVA
and Ro (1994)   studied in the context of different  and Regression
                survey modes: personal, telephone
                and self-administered surveys.
                Products: cars/cameras, Countries:
                U. S., Japan and Brazil

Ahmed and       Studied how consumers react to a     Conjoint and
d'Astous        multi-dimensional formulation of     ANOVA
(1996)          COO, namely COD and COA, in the
                presence of brand name & other
                product information. Also, studied
                the impact of a priori perceived
                differences between brands, CODs,
                and COAs on overall evaluation.

Kim and Chung   Examined how brand popularity and    Market Share
(1997)          marketing variables influenced       Analysis
                brand performance directly and       Multiplicative
                indirectly by interacting with       Competitive
                country image                        Interaction
                                                     (MCI) model

Iyer and        Empirically tested the impact of     MANOVA
Kalita (1997)   price, country of brand origin and
                country of manufacture on consumer
                evaluations of perceived quality,
                perceived value & willingness to
                buy using four product categories

Klein,          Constructs and tests an "animosity"  Structural
Ettenson, and   model of foreign product purchase.   Equation Model
Morris (1998)   Country: People's Republic of China
                (Nanjing) towards Japanese
                products.

Agbonifoh and   Examined Nigerian consumers COO      Descriptive
Elimimian       effect using three products made     Statistics
(1999)          in six countries that were either
                technologically more advanced or
                less advanced

Verlegh and     Conducted a review and               Meta-Analysis
Steenkamp       meta-analysis of COO effect. The
(1999)          magnitude of COO is assessed on
                perceived quality, attitude, and
                purchase intention. Tests the role
                of economic development/
                multinational production/
                consumer-industrial purchasers

Gurhan-Canli    Examines the influence of cultural   ANOVA
and Maheswaran  orientation on country of origin
(2000a)         effect in two countries: Japan and
                U.S.

Gurhan-Canli    Examines the effects of processing   ANOVA
and Maheswaran  motivation and information type as
(2000b)         determinants of country of origin
                effect

Granzin and     Developed and tested a model that    Structural
Painter (2001)  explains motivational influences     Equations Model
                on "buy domestic" purchasing. Model
                tested in two countries: U.S. and
                Portugal

Study           Conclusion

Kaynak and,     The U. S. was ranked the first place in categories
Cavusgil        except for food products. Consumer perception
(1983)          of quality tends to be more uniform among U.S,
                Canada and Western European countries.

Wang and Lamb   American consumers have a negative bias
(1983)          toward foreign countries. Both main-effects of
                respondents and respondent x environmental factors
                interaction was interaction was significant.

Erickson,       COO has a direct effect on beliefs and not on
Johannson       attitudes. There is reciprocal relationship
Chao (1984)     between beliefs and attitude.

Johannson,      Attributes affect overall evaluation and overall
Douglas and     evaluation affects attribute ratings (halo effect)
Nonaka (1985)   even when knowledge of attribute is accurate.
                Little evidence for nationality or home country
                products.

Shimp and       CETSCALE (17 item scale) was high on
Sharma          reliability, and convergent, discriminant, and
(1987)          nomological validity.

Han and         Sourcing country has greater effects on consumer
Terpstra        evaluation of product quality than does brand
(1988)          name. Both have significant effects, however.

Han (1988)      Choice of domestic over foreign products is
                influenced by consumer patriotism and not
                necessarily by cognitive attitude.

Ettenson,       Previous studies using surveys could be subject
Wagner, and     to demand artifacts. Conjoint also allows for
Gaeth (1988)    assessing COO from among an array of attributes.

Chao (1989)     Credibility of attribute claims for products
                exported to U.S. from an NIC country can be
                enhanced by manufacturing in U.S.

Thorelli, Lim   Significant 3-way interaction effect of warranty,
and Ye (1989)   store reputation and COO on perceived quality &
                overall attitude but not on purchase intention.

Hong and Wyer   Of the four hypotheses: encoding, heuristic,
(1989)          primacy-recency and cognitive elaboration
                hypothesis, the last hypothesis was the most
                viable.

Han (1989)      Country image serves as halo construct for
                consumers unfamiliar with country's product
                and as summary construct for consumers familiar.

Wall, Liefeld   COO was significant for quality assessment for
and Heslop      all three products. Price was significant for
(1991)          value in all three product categories. Brand name
                affected quality.

Roth and        Product-country match may be an indicator of
Romeo (1992)    willingness to buy foreign products.

Cordell (1992)  COO effects occurred in all conditions.
                Moreover, variances in perceived product
                quality were greater in industrialized countries
                than less developed countries. A well-known brand
                interacts with COO such that evaluation derogation
                rises as performance risk increases in less
                developed countries.

Lee, Kim and    Price had the highest relative importance followed
Miller (1992)   by warranty for both products. Ethnocentrism
                was significant as COO moderating variable for
                PC and rigidity and conservatism for wall clock.

Chao (1993)     A good design country location cannot be used
                to compensate poorly perceived country assembly
                location. A good COD circumvents the price-quality
                relationship.

Chao and        Attitudes toward people who own foreign products
Rajendran       are favorable more so for people with high
(1993)          occupational status.

Ulgado and      Main effects of both brand and COO were significant
Lee (1993)      when no Attribute information was given
                and only brand name was significant with attribute
                information.

Martin and      Examined the reliability and validity of the
Eroglu (1993)   multi-item scale with three dimensions: political,
                economic and technological.

Tse and Gorn    COO is a salient factor in product evaluation. As
(1993)          compared to global brand, COO is more enduring,
                influencing even after-product experience.

Maheswaran      When attribute information is unambiguous,
(1994)          experts based their evaluations on attribute
                strength whereas novices relied on COO. When
                attribute information is ambiguous, both experts
                and novices used COO in evaluations.

Parameswaran    General country attributes (GCA) were found to
and Pisharodi   consist of two dimensions--conation (the interaction
(1994)          facet) and cognition (the people facet).
                General product attributes (GPA) split into three
                parts: negative, positive promotional & positive
                product image.

Han, Lee        Personal interviews may be more susceptible to
and Ro (1994)   demand artifacts than social desirability bias.
                Self-administered surveys are quitesusceptible to
                haloing bias.

Ahmed and       COO cues perform stronger than brand cues
d'Astous        when COD and COA effects are considered together.
(1996)          Also, the magnitude of a priori perceived
                differences between brands, CODs, and COAs
                play a significant role in product evaluation.

Kim and Chung   Country image is strengthened over time by the
(1997)          performance of brands from that country and
                significantly interacts with marketing variables.

Iyer and        Brand effects should be partitioned into brand
Kalita (1997)   equity and country of brand origin so as to
                correctly assess the compensatory influence of
                brand equity on negative country of brand origin
                or country of manufacture. Purchase value rather
                than perceived quality may guide consumer
                evaluations of products from countries with less
                favorable images.

Klein,          Animosity has a significant negative impact on
Ettenson, and   buying decisions above and beyond the effect of
Morris (1998)   consumer ethnocentrism. Animosity and
                ethno-centrism are two distinct constructs.

Agbonifoh and   All products from developed countries were
Elimimian       rated superior to homemade product suggesting
(1999)          reverse ethnocentrism. The concept of "foreignness"
                contributing to superior perception may be
                attributed to denigrating colonial experience.

Verlegh and     It is found that COO has a larger effect on
Steenkamp       perceived quality than on attitude toward the
(1999)          product or purchase intention. It is also found
                that differences in economic development are
                important underlying the COO effect. Does not
                differ between industrial/consumer purchasing nor
                affected by multi-national production.

Gurhan-Canli    Japanese (collectivist culture) respondents
and Maheswaran  evaluated home product superior to US product
(2000a)         regardless of product superiority. In contrast,
                American (individualist culture) respondents
                Evaluated home product favorably only when
                product was superior to competition. Specifically,
                the vertical dimensions of individualism &
                collectivism explains country of origin effects.

Gurhan-Canli    When consumers use country of origin as a basis
and Maheswaran  for judgment under low motivation, or when the
(2000b)         processing goal is to evaluate the country of origin,
                they focus on the country of origin information.
                In contrast, under high motivation, or when
                processing goals direct away attention from
                country of origin information, country of origin
                is less likely to be utilized.

Granzin and     In both countries, supportive purchase-related
Painter (2001)  behaviors increases as purchasers feel competent
                to help, believe that the threat from imports is
                salient, perceive social influences that support
                helping, hold values that derogate foreigners but
                support domestic citizens, and for the U.S.
                only, perceive lower personal costs of helping.

Table 2. Cronbach's Alpha, Standardized Loadings and Composite
Reliability

                                 U.S. Sample

                              [alpha]  SL(t)         CR

Economic Benefits of NAFTA    0.70                   0.70
1. NAFTA will meet its                 0.75 (*)
stated objectives (i.e.,
increased investment and
trade greater market access,
etc.) (EB1)

2. NAFTA will enable North             0.72(7.52)
America (U. S., Canada and
Mexico) to be economically
competitive in the global
market (EB2)

Economic Costs of NAFTA       0.70                   0.70
3. Mexican Imports will hurt           0.78 (*)
American / Canadian Industry
as a result of NAFTA (EC1)

4. Mexican Imports will                0.68(5.34)
replace American / Canadian
Jobs as a result of NAFTA
(EC2)

Attitude Toward NAFTA         0.78                   0.79
5. Overall Satisfaction with           0.88(*)
U.S. / Canada's decision to
sign a free trade agreement
with Mexico (AttN1)

6. Overall Perception of               0.73(9.37)
NAFTA in terms of its impact
on U. S./Canadian economy
(AttN2)

Confidence in Mexican-Made    0.90                   0.90
Products
7. Overall degree of                   0.88 (*)
certainty about evaluative
judgment (Con1)

8. Confidence in judgment              0.88(13.82)
based on whether performance
will match expectation
(Con2)

9. Confidence that the right           0.85(13.11)
purchase decision would be
made as a result of
confidence in judgment
(Con3)

Attitude Toward Mexican-Made  0.93                   0.93
Products
10. Overall Attitude:                  0.95(*)
unfavorable-favorable
(AttM1)

11. Overall Attitude:                  0.90(15.83)
unsatisfactory-satisfactory
(AttM2)

Purchase Intention            0.89                   0.89
12. Intention to buy          0.88(*)  0.88(*)
Mexican-made product soon
(Int1)

13. Intention to buy                   0.91(10.51)
Mexican-made product later
(Int2)

                                           Canadian Sample

                              [alpha]                SL(t)        CR

Economic Benefits of NAFTA    0.69                   0.70
1. NAFTA will meet its                 0.82 (*)
stated objectives (i.e.,
increased investment and
trade greater market access,
etc.) (EB1)

2. NAFTA will enable North             0.64(8.22)
America (U. S., Canada and
Mexico) to be economically
competitive in the global
market (EB2)

Economic Costs of NAFTA       0.80                                0.81
3. Mexican Imports will hurt                         0.89 (*)
American / Canadian Industry
as a result of NAFTA (EC1)

4. Mexican Imports will                              0.75(9.50)
replace American / Canadian
Jobs as a result of NAFTA
(EC2)

Attitude Toward NAFTA                  0.77                       0.78
5. Overall Satisfaction with                         0.83(*)
U.S. / Canada's decision to
sign a free trade agreement
with Mexico (AttN1)

6. Overall Perception of                             0.77(12.05)
NAFTA in terms of its impact
on U. S./Canadian economy
(AttN2)

Confidence in Mexican-Made             0.89                       0.89
Products
7. Overall degree of                                 0.86(*)
certainty about evaluative
judgment (Con1)

8. Confidence in judgment                            0.92(17.29)
based on whether performance
will match expectation
(Con2)

9. Confidence that the right                         0.79(13.80)
purchase decision would be
made as a result of
confidence in judgment
(Con3)

Attitude Toward Mexican-Made           0.94                       0.94
Products
10. Overall Attitude:                                0.93(*)
unfavorable-favorable
(AttM1)

11. Overall Attitude:                                0.95(22.03)
unsatisfactory-satisfactory
(AttM2)

Purchase Intention                     0.85                       0.85
12. Intention to buy
Mexican-made product soon
(Int1)

13. Intention to buy                                 0.85(8.46)
Mexican-made product later
(Int2)

[alpha] = cronbach's alpha; SL(t) = standardized loading (t values);
CR = composite reliabilities

Table 3. Differences in Estimated Structural Coefficients

Model Links                      Unrestricted        Restricted
                                 Chi-Square          Chi-Square

[[gamma].sub.11]
The Impact of Economic Benefits  131.17              131.79
On Attitude toward NAFTA         (112 df; p < 0.10)  (113 df; p < 0.11)

[[gamma].sub.12]
The Impact of Economic Costs     131.17              132.75
On Attitude toward NAFTA         (112 df; p < 0.10)  (113 df; p < 0.10)

[[beta].sub.21]
The Impact of Attitude           131.17              133.25
Toward NAFTA on Confidence       (112 df; p < 0.10)  (113 df; p < 0.09)
In Mexican-made Products

[[beta].sub.31]
The Impact of Attitude           131.17              132.50
TowardNAFTA on Attitude          (112 df; p < 0.10)  (113 df; p < 0.10)
Toward Mexican-made Products

[[beta].sub.41]
The Impact of Attitude Toward    131.17              134.20
NAFTA on Purchase Intention      (112 df; p < 0.10)  (113 df; p < 0.09)
of Mexican-made Products

32
The Impact of Confidence         131.17              131.35
In Mexican-made Products on      (112 df; p < 0.10)  (113 df; p < 0.11)
Attitude toward Mexican-made
Products

42
The Impact of Confidence         131.17              131.17
In Mexican-made Products on      (112 df; p < 0.10)  (113 df; p < 0.10)
Purchase Intention

43
The Impact of Attitude           131.17              131.18
Toward Mexican-made Products     (112 df; p < 0.10)  (113 df, p < 0.12)
On Purchase Intention

Model Links                      Difference          Comments
                                 Chi-Square

[[gamma].sub.11]
The Impact of Economic Benefits  0.62                Not Significantly
On Attitude toward NAFTA         (1 df; p < 0.50)    Different

[[gamma].sub.12]
The Impact of Economic Costs     1.58                Not Significantly
On Attitude toward NAFTA         (1 df; p < 0.22)    Different

[[beta].sub.21]
The Impact of Attitude           2.08                Not Significantly
Toward NAFTA on Confidence       (1 df; p < 0.16)    Different
In Mexican-made Products

[[beta].sub.31]
The Impact of Attitude           1.33                Not Significantly
TowardNAFTA on Attitude          (1 df; p < 0.25)    Different
Toward Mexican-made Products

[[beta].sub.41]
The Impact of Attitude Toward    3.03                Not Significantly
NAFTA on Purchase Intention      (1 df; p < 0.08)    Different
of Mexican-made Products

32
The Impact of Confidence         0.18                Not Significantly
In Mexican-made Products on      (1 df; p < 0.70)    Different
Attitude toward Mexican-made
Products

42
The Impact of Confidence         0.00                Not Significantly
In Mexican-made Products on      (1 df; p < 0.97)    Different
Purchase Intention

43
The Impact of Attitude           0.01                Not Significantly
Toward Mexican-made Products     (1 df; p < 0.90)    Different
On Purchase Intention

Endnotes

(1) Based on single-group analysis, the structural model for the US sample has a good fit as indicated by the following measures: Chi-square of [81.10.sub.(56 df)]; p < 0.02; RMSEA = 0.05; GFI = 0.92; CFI = 0.98; NNFI = 0.97. The structural model for the Canadian sample indicates a better model fit as indicated by the following measures: Chi-square of [50.07.sub.(56 df)]; P < 0.70; RMSEA = 0.00; GFI- 0.96; CFI- 1.00; NNFI = 1.00.

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Terry Wu, Professor of Administration, Faculty of Administration, University of Regina, Regina, Saskatchewan, Canada.