Deal or deny: The effectiveness of crisis response strategies on brand equity of the focal brand in co-branding

Abstract

A brand alliance puts the focal brand at risk of being penalized for a crisis occurring at the partner brand. Such a crisis may weaken the focal brand’s equity unless it responds effectively. However, there is no consensus on the effectiveness of the response strategies at mitigating damage to brand equity. Building on attribution theory, this paper examines the effectiveness of the focal brand’s response strategy as a function of perceived brand integration between the brands in an alliance. The experiments, operationalized as (1) self-reported answers to intention measuring scales and (2) behavioral response in the form of written product reviews, reveal that the perceived integration is a significant moderator, determining the effectiveness of response strategies (deal vs. deny) on brand equity. Consequently, this paper has both theoretical and managerial implications for how to effectively respond to a crisis, while proposing an agenda for future research.