An empirical study of the Volkswagen recall crisis in China: Customer's risk perceptions and behavior responses based on an information flow

Abstract

ABSTRACTProduct-harm crises usually lead to product recalls, which would attract extensive public concern on the issue of product defects, but it is not yet clear how product recalls influence customers' risk perceptions and behavior responses. In this study, guided by the protective action decision model (PADM) and the heuristic-systematic model (HSM), and through an empirical study involving 467 participants drawn from the customers of Volkswagen, a conceptual model of information flow was developed, which starts from individuals' product experience, strengthening or weakening through information seeking and processing, then directly acts on the risk perception, and ultimately influences protective actions. By using structural equation modeling to test the model, and the results shown that customers' information need, seeking, and processing are significantly related to risk perception, their behavioral intentions (loyalty or boycott) are also significantly influenced by risk perception and product experience. Next, multiple-group analysis is employed to compare the distinctions between two groups of customers (those whose cars belong to the recall, and those not belonging to the recall). Unexpectedly, the role of information processing in the recall group is weaker than that in the not recalled group. At last, theoretical and practical implications and suggestions for further research are also discussed.