Managing product recalls: The non-linear effects of innovation capability and industry competitiveness on the likelihood of product recalls

Abstract

This study explores the complex interplay of internal and external factors driving the likelihood of product recalls for an organization. Initially, it examines the impact of innovation capability on product recall likelihood. Contrary to the prevailing wisdom, it posits a U-shaped relationship, suggesting that while heightened innovation capability generally benefits firms, it can lead to detrimental management challenges beyond a certain threshold. Furthermore, this research examines how firms handle product recalls in fiercely competitive industries. Recognizing the significance of external factors, this study asserts that industry competition amplifies the likelihood of product recalls. However, an intriguing twist emerges when the competition reaches an extreme level; the likelihood of product recalls diminishes, forming an inverted U-shaped pattern. In essence, this study empirically tests these theoretical constructs, shedding light on the complex dynamics governing the likelihood of product recalls for an organization, considering both an internal force and an external one.