In this era of globalization and digital communication, consumers now have a wider access to information regarding competing products and services from around the world. Since consumers may not always be able to compare information related to various attributes of the products, the country of origin of the product is becoming an increasingly important decision variable in inferring the quality of products and services. Past research has mostly focused on performance equity, which is formed on the basis of the historical performance of the products originating in that country. However, consumers also associate positive and negative emotions with countries that may be based on macro factors such as history, culture and politics or based on personal experiences. Interestingly, these emotions, while extraneous to the product have been shown to influence product evaluations along with performance equity. The concept of “Nation Equity” that extends “Country of Origin Effect” beyond the traditional associations with product quality to include direct emotional associations to countries. We discuss the various components of Nation Equity and outline how Nation Equity can be leveraged to build favorable image of a country.

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