International Perspectives on Counterfeit Trade

Many executives may feel that they have a pretty good grasp of the reasons why people make or purchase counterfeit goods. In effect, these senior managers rely on their own values and their understanding of business models to form conclusions about counterfeiting and to develop strategies to combat it. However, Peggy Chaudhry, an associate professor of management and operations at Villanova University, and Stephen Stumpf, the Fred J. Springer Chair in Business Leadership at Villanova, argue in their January 2008 working paper, Executive Assessment of Counterfeit Trade in Five Countries: Examining the Multi-Faceted Motives of Piracy and Consumer Demand, that this approach could lead to mistakes when protecting intellectual property and valuable brands. It turns out that the motives executives ascribe to pirates and their customers can vary by country. If executives’ perceptions of the factors driving counterfeit trade in their respective countries are correct, global organizations need to realize that, when it comes to combating counterfeit trade, what works at home may not work as well in another market.

To test managerial perceptions regarding counterfeit goods, the authors examined executives’ views of both the supply and demand sides. They questioned more than 200 executives from five regions — the United States, New Zealand, South Africa, Tahiti and Australia — to determine if executive perceptions of the counterfeiting problem differed based on region. The researchers found that not only did the perceptions of the problem (motivating factors for pirating) differ by country, but so did the solutions (marketing, pricing, packaging features) that senior managers deemed most effective. While profit was most often seen as the top motivating factor for creating counterfeit products, executives’ views of the importance of other issues, such as strict enforcement of intellectual property laws, varied from region to region. For instance, South African executives saw the notion that intellectual property applies only to more developed economies as a more important factor contributing to counterfeit supply than executives in the other four countries did. Similarly, South African executives felt that a low level of income and/or education was a more important reason that consumers were willing to buy counterfeit goods than American executives did.

Given these differences in opinion as to the nature of the problem, it is not surprising that the poll also revealed a difference in the way executives believed counterfeiting problems should be handled. For example, U.S.