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Consumption convergence across countries: measurement, antecedents, and consequences

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Abstract

Are consumers across countries becoming more similar over time in terms of their spending across product categories? If so, what are the antecedents and consequences of convergence in consumption? These questions are of interest to scholars and managers alike. To examine them, we propose a novel empirical framework that encompasses: (1) a new measure of consumption convergence (budget allocation gap), and (2) an econometric model that links consumption convergence to its antecedents and consequences of convergence. Our empirical analyses – using data from 71 countries in 21 product categories between 1990 and 2017 – suggest that, overall, consumption patterns have been converging across countries. Yet, the speed of consumption convergence has been decelerating over time. We also show that consumption convergence is influenced by several previously unexplored antecedents, including technological advances, inward trade openness, and ethnic diversity. Of direct interest to managers and policymakers is the finding that the higher the level of consumption convergence, the higher the market concentration. These findings offer key implications for scholars, managers, and policymakers regarding global marketing strategy and audit, global demand forecasting, international market segmentation and penetration, and global competition.

Résumé

Les consommateurs d’un pays à l’autre se rapprochent-ils au fil du temps en termes de dépenses dans les différentes catégories de produits? Si oui, quels sont les antécédents et les conséquences de la convergence de la consommation? Ces questions intéressent aussi bien les chercheurs que les praticiens. Pour les examiner, nous proposons un nouveau cadre empirique qui englobe: (i) une nouvelle mesure de la convergence de la consommation (écart d’allocation budgétaire): et (ii) un modèle économétrique qui relie la convergence de la consommation à ses antécédents et conséquences. Nos analyses empiriques - utilisant des données de 71 pays pour 21 catégories de produits entre 1990 et 2017 - suggèrent que, dans l’ensemble, les modèles de consommation ont convergé entre les pays. Pourtant, la vitesse de convergence de la consommation s’est ralentie au fil du temps. Nous montrons également que la convergence de la consommation est influencée par plusieurs antécédents jusque-là inexplorés, notamment les progrès technologiques, l’ouverture au commerce intérieur et la diversité ethnique. Un intérêt direct pour les praticiens et les décideurs politiques est la constatation que plus le niveau de convergence de la consommation est élevé, plus la concentration du marché est forte. Ces résultats offrent des implications clés pour les chercheurs, les managers et les décideurs politiques en ce qui concerne la stratégie et l’audit du marketing mondial, la prévision de la demande mondiale, la segmentation et la pénétration du marché international et la concurrence mondiale.

Resumen

¿Están volviéndose con el tiempo cada vez más similares los consumidores de todos los países en términos de su gasto en todas las categorías de productos? De ser así, ¿cuáles son los antecedentes y las consecuencias de la convergencia en el consumo? Estas preguntas son de interés tanto para los académicos como para los gerentes. Para examinarlos, proponemos un nuevo marco empírico que engloba: i) una nueva medida de convergencia del consumo (brecha de asignación presupuestaria) y ii) un modelo econométrico que vincula la convergencia del consumo con sus antecedentes y consecuencias de la convergencia. Nuestros análisis empíricos, utilizando datos de 71 países en 21 categorías de productos entre 1990 y 2017, sugieren que, en general, los patrones de consumo han sido convergentes entre países. Sin embargo, la velocidad de la convergencia del consumo se ha desacelerado con el tiempo. También demostramos que la convergencia del consumo está influenciada por varios antecedentes inexplorados, incluidos los avances tecnológicos, la apertura del comercio interior y la diversidad étnica. De interés directo para los gerentes y los responsables de la formulación de políticas es el hallazgo de que cuanto mayor sea el nivel de convergencia del consumo, mayor será la concentración del mercado. Estos hallazgos ofrecen implicaciones clave para académicos, gerentes y responsables políticos con respecto a la estrategia y auditoría de marketing global, la previsión de la demanda global, la segmentación y penetración del mercado internacional y la competencia global.

Resumo

Consumidores em vários países estão se tornando mais semelhantes ao longo do tempo em termos de gastos em categorias de produtos? Caso afirmativo, quais são os antecedentes e as consequências da convergência no consumo? Essas questões são do interesse de acadêmicos e gestores de semelhante forma. Para examiná-los, propomos um novo modelo empírico que compreende: (i) uma nova medida de convergência de consumo (hiato de alocação de orçamento) e (ii) um modelo econométrico que vincula convergência de consumo a seus antecedentes e consequências de convergência. Nossas análises empíricas - usando dados de 71 países em 21 categorias de produtos entre 1990 e 2017 - sugerem que, em geral, padrões de consumo têm convergindo entre os países. No entanto, a velocidade da convergência de consumo tem desacelerado ao longo do tempo. Também mostramos que convergência de consumo é influenciada por vários antecedentes anteriormente inexplorados, incluindo avanços tecnológicos, abertura ao comércio interno e diversidade étnica. De direto interesse de gestores e formuladores de políticas é a constatação de que quanto maior o nível de convergência de consumo, maior a concentração de mercado. Essas descobertas oferecem implicações importantes para acadêmicos, gestores e formuladores de políticas em relação a estratégia e auditoria de marketing global, previsão de demanda global, segmentação e penetração do mercado internacional e concorrência global.

摘要

各国消费者在产品类别上的支出是否随着时间越来越相似?如果是的话, 消费趋同的前因后果是什么?这些问题是学者和管理者都感兴趣的。为了研究它们, 我们提出了一个新颖的实证框架, 其中包括:(i)消费趋同的新量表(预算分配缺口): 和(ii)将消费趋同与趋同的前因后果联系起来的计量经济学模型。我们的实证分析(使用了1990至2017年间来自71个国家的21个产品类别的数据)表明, 总体而言, 消费型态在各国之间趋于一致。然而, 随着时间的推移, 消费趋同的速度一直在下降。我们还表明, 消费趋同受到几个以前未曾研究过的前因的影响, 包括技术进步, 内向贸易开放性和种族多样性。对管理者和决策者有直接兴趣的发现是, 消费趋同程度越高, 市场集中度就越高。这些发现为学者、管理者和政策制定者在全球营销策略与审计、全球需求预测、国际市场细分和渗透, 以及全球竞争提供了重要启示。

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Correspondence to Ayse Ozturk.

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Accepted by Saeed Samiee, Area Editor, 1 March 2020. This article has been with the authors for five revisions.

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Appendix: Details of Measures

Appendix: Details of Measures

Construct

Measure

Unit

Definition

Source

Level

Antecedents:

Technological advances

R&D expenditure-to-GDP (expenditure on R&D as percentage of GDP)

Percentage (%)

Expenditure on R&D is total intramural expenditure on R&D performed on the national territory during a given period. It includes R&D performed within a country and funded from abroad but excludes payments made abroad for R&D

Euromonitor

Country-year level

Inward trade openness

Imports-to-GDP (value of imports as percentage of GDP)

Percentage (%)

An economy’s overall level of openness for importing from foreign countries

Euromonitor

Country-year level

Ethnic diversity

Ethnic fractionalization index

Percentage (%)

The probability that two individuals selected at random from a country will be from different ethnic groups (0 being perfectly homogenous, 1 being the most heterogenous)

NSD macro data guide

Country level

Income

Gross income

Per-capita in USD thousands, inflation-adjusted

Income before taxes and social security contributions from all sources including earnings from employment, investments, benefits, and other sources such as remittances

Euromonitor

Country-year level

Population

Total population

millions

Population is based on the de Jure definition of population. The de jure population is a concept under which individuals (or vital events) are recorded (or are attributed) to a geographical area on the basis of the place of residence

Euromonitor

Country-year level

Outward trade openness

Exports-to-GDP (value of exports as percentage of GDP)

Percentage (%)

An economy’s overall level of openness for exporting to foreign countries

Euromonitor

Country-year level

Convergence

Consumption convergence

Budget allocation gap (%)

Percentage (%)

The relative difference of a country’s typical budget allocation to a specific product category from the world’s average budget allocation to that product category

Computed using Euromonitor data

Product-country-year level

Consequence

Market concentration

Concentration ratio (%)

Percentage (%)

Sum of the market share of the leading four firms in a product category in a market

Computed using Euromonitor data

Product-country-year level

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Ozturk, A., Cavusgil, S.T. & Ozturk, O.C. Consumption convergence across countries: measurement, antecedents, and consequences. J Int Bus Stud 52, 105–120 (2021). https://doi.org/10.1057/s41267-020-00334-w

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