Abstract
Product harm crisis involving multiple products increasingly leads to an industry crisis. Yet previous researches have usually focused on the effectiveness of repair strategies under a single-company product harm crisis. Moreover, less is known about the effectiveness of repair strategies under an industry product harm crisis. This paper explores how firms should respond to an industry product harm crisis to make the industry sustainable. We used experimental methodology to examine the above effects. Across three experiments, this research finds that a consumer’s sense of control is a key variable that is found to mediate the effectiveness of a firm’s repair strategy. Results show that in general functional and informational repair strategies are more effective in restoring a consumer’s sense of control when compared with an affective repair strategy. The more control consumers feel they have, the higher their brand attitudes, and the more positive they rate a firm’s response appropriateness for an industry product harm crisis. However, for consumers who score high on an emotion-focused coping style, an affective repair strategy is more effective. The findings generate practical suggestions for firms in an industry product harm crisis to restore consumers’ sense of control to keep industry sustainability.
Highlights
It is not rare that a product harm crisis involves more than one brand
We suggest that a consumer’s sense of control, defined as the perception that one can have control over outcomes in the life [7,8], may be playing a key role during an industry crisis when compared with a single-firm crisis
Considering the abovementioned gaps in the literature, this research aims to examine the role of a sense of control during an industry crisis, and uncover the influence of a firm’s repair strategies in restoring a consumer’s sense of control and prompting the perceptions of the appropriateness of a firm’s response during an industry product harm crisis
Summary
It is not rare that a product harm crisis involves more than one brand. For example, the melamine contamination crisis in China involved 22 dairy brands in 2008. Topaloglu and Gokalp [1] explored the impact of product recalls on firm performance outcomes from the perspective of branding strategy by analyzing the data from the auto industry of the United States during the period from 2003 to 2014. It is much less clear how consumers react to an industry product harm crisis. Mechanisms through which a firm’s repair strategy can influence a consumer’s evaluation of the brand in the context of an industry product harm crisis are still not known
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