The impact of product variety on product recalls: an empirical study

Abstract

ABSTRACT Despite the abundance of articles on product recalls, surprisingly there have been few empirical studies. This paper investigates empirically the linkage between product recalls and the four types of product variety seen on the assembly shops of Indian automobile firms. A negative binomial fixed effects model was fitted on the panel data comprising product recalls by 12 firms in India over a period of 23 years (1997–2020). The results indicate that different types of product variety impact the product recalls differently. While product variety due to limited/special edition cars and petrol cars was found not to have a significant impact on recalls, product variety due to diesel cars was found to have a significant and positive impact. Further, different fuel types were found to have a significant and negative impact on recalls. The findings serve as a useful reference to practicing managers for understanding the trade-off between product variety and recalls.