Corporate Crisis Research Articles

The Effects of CEO Celebrity and Charisma on Firm Response Strategy at the Onset of Corporate Crises

We study how Chief Executive Officer (CEO) celebrity and charisma affect a firm’s communication strategies at the onset of a crisis. By analyzing 162 corporate crises befalling publicly listed firm...

The effects of CSR communication in corporate crises: Examining the role of dispositional and situational CSR skepticism in context

Although consumer skepticism about corporate social responsibility (CSR) is on the rise, research is sparse on the psychological dynamics of this skepticism, particularly when CSR communication serves as a company’s crisis response strategy. Employing two between-subjects design experiments, this study aims to fill this gap by looking at the role consumer CSR skepticism plays in consumer reactions to CSR communications in different types of crises. The study 1 results show that dispositional CSR skepticism did not moderate the effect of crisis type on attitudes and intentions when CSR was used as a post-crisis response strategy. The study 2 findings, however, indicated that situational CSR skepticism significantly mediated the impact of crisis type and CSR motives on purchase intentions only when the crisis stemmed from some accidental rather than preventable circumstance. Theoretical and practical implications are discussed.

Surviving a Crisis: How Crisis Type and Psychological Distance Can Inform Corporate Crisis Responses

This research examines how one’s construal level of a crisis differs by crisis type, and how the interplay of crisis type (self-threatening vs. society-threatening) and apology appeal type (emotional vs. informational) impacts the effectiveness of apology messages in a corporate crisis context. Findings indicate that one’s mental construal toward a crisis varies by crisis type, with a self-threatening crisis leading to a lower level of construal than a society-threatening one. Findings further suggest that in a society-threatening crisis condition, an informational apology was more effective than an emotional one. However, in a self-threatening crisis condition, there was no significant difference between two different message types. These findings offer valuable guidelines for developing effective crisis response strategy.

Quality Accounting Service a Panacea to Effective Corporate Governance

The separation of ownership and controllership was the foundation of the agency theory, which was popularized by Foma and Jensen in 1983. The current result of metamorphosis of the agency theory is corporate governance. Corporate governance became an issue for the first time when the East Asia crises started in 1997, which led to the collapse of the Thais, Indonesian, South Korean, Malaysian and Philippines economies. The problems of corporate governance became magnified when the well celebrated American corporate crises occurred in 2001-2002. This led to the collapse of two big and world-class companies: Enron and World Com., which invariably led to the collapse of firms like Author Andersen and Global Crossing. The effectiveness of corporate governance of an establishment often depends on the effectiveness and efficiency of its control mechanisms, reliability of its financial reports and disclosure, the compliance with relevant regulations and the integrity of the Board. In view of this, the role of professional accountants is comprehensively examined in anchoring these elements. This paper concludes by making recommendations that can enhance the effectiveness of corporate governance in Nigeria.

The Effect of the Profitability on the Valuation Models: Evidence from Italian Acquisitions

The aim of this study is to analyse the behaviour of the book-to-market index, B/MV, on a sample of Italian listed companies that completed a M&A operation in the span 2008-2016, the decade of the economic-financial crisis. Moreover the authors' interest in investigating the relationship between the market index and the income and non-earnings performance index. The study has verified whether the listed Italian companies sampled have book-to-market indices in line with corporate performance in terms of profitability, and therefore of general economic, patrimonial and financial equilibrium. The intention is to consider if the market manages to "capitalise" corporate trends regularly and with what intensity. The hypothesis concerns the possibility that the B/MV may be more affected by financial market externalities than by the specific economic and financial outlook in terms of market capitalisation. The profound geopolitical and macroeconomic changes of the last few decades and the consequent multiple corporate crises, have undoubtedly called into question the validity and reliability of certain valuation assumptions.

Reviewing Corporate Crises: A Strategic Management Perspective

How can be crises classified? What does the term “corporate crisis” mean? Corporate crises have always been a topic of tremendous interest for both the research in and practice of strategic management at an international level. Attention has been given to elaborating appropriate interpretative conceptualizations, together with implementing effective and efficient predicting and countervailing models. To date, scholars have seemingly reached consensus as to the meaning of crises. Conversely, identifying determinants and temporal dynamics still seems to be a lively question to address. This is why in this article we critically review the state of the art on the topic, from which we derive some important implications for the present and future research and practice in the strategic management field.

Does the perception of incongruence hurt more? Customers’ responses to CSR crises affecting the main reputation dimension of a company

ABSTRACTCorporate social responsibility (CSR) generates benefits for companies and society. However, CSR exposes a company to potential damage when a critical event, such as a crisis, disconfirms the CSR of a corporate reputation. The present article introduces to the crisis management literature the notion of consumer-perceived incongruence (CPI) between corporate reputation and crises. Our first experimental study demonstrates that a high CPI – compared to a low CPI – worsens consumer responses in terms of attitude towards the corporation (ATC), word of mouth (WOM) and purchase intention (PI). The second study shows that these effects are mediated by the perception of a state of discomfort on the part of the consumer. The third study suggests that, in cases of high CPI, the corporate crisis response strategy of apology outperforms that of compensation in reducing the negative effects of discomfort on consumer responses. Theoretical and managerial implications are discussed.

Value-based Consumer Disidentification and its Impact on Consumers’ Reactions to Corporate Crisis

The threat of a corporate crisis depends strongly on stakeholders’ perception of crisis responsibility, which can be influenced by individual factors. Whereas former research has highlighted the buffering effects of good public-organization relationships, this research focuses on disidentified consumers, who see a company as misrepresentative of their selves and rejection of the company is part of their identity construction. Disidentified consumers are in no steady relationship with a company, but a crisis of a rejected company should be a welcome situation for self-verification and bring them as opponents to the scene. In an exploratory experiment it can be demonstrated that perceived value incongruity is a driver of consumer disidentification. Furthermore, disidentified consumers tend to attribute responsibility to the company also in a victim crisis and are generally eager to spread negative word of mouth about a company during a crisis. Beyond this, the notion that disidentified consumers actually enjoy a crisis, receives some support by the finding that consumer disidentification triggers schadenfreude.

Employees as advocates or adversaries during a corporate crisis. The role of perceived authenticity and employee empowerment

Purpose of the paper: this study investigates the impact of organization perceived authentic behaviors, employee empowerment and quality of organization-employee relationship on employees’ positive megaphoning during crisis situations, i.e. the voluntary information forwarded regarding organizational accomplishments. Methodology: a survey was administered on 306 current employees who are working full-time in a semiconductor company in Italy (LFoundry, Avezzano, AQ-Italy), where a corporate crisis was ongoing by the time the research was conducted. Results: results suggest that both organizations’ authentic behavior and employee empowerment increased the likelihood of positive megaphoning and reduced intentions of negative megaphoning regarding a corporate crisis. Furthermore, it was found a significant mediation impact of the organization-employee relationship on employee behaviors regarding an organizational crisis. Research limitations: the study is a single organization one, therefore further research is required to confirm findings in different countries and companies. Practical implications: companies should invest on the levers of interpersonal relationships, empowerment and the authenticity of the organization not only because they allow to improve the organizational climate in a moment of ordinary organizational life, but especially because they encourage the employees’ active alliance in the event of crises. In a crisis situation, organizations’ authentic actions are likely to be more powerful than their words, or even individuals’ intrinsic motivation. Originality of the paper: this paper contributes to theory development in the field of internal crisis communication, showing that during crisis situations, organizational effort and perceived organizational authenticity are a better predictor of positive megaphoning than employee empowerment and intrinsic motivation.

Book Review: Law & Capitalism: What Corporate Crises Reveal About Legal Systems

Book Review: Law & Capitalism: What Corporate Crises Reveal About Legal Systems

Social Media Posts on Samsung Galaxy Note 7 Explosion: A Comparative Analysis of Crisis Framing and Sentiments in Three Nations

This study explores the Samsung Galaxy Note 7 explosion crisis by analyzing posts on Twitter in three nations: the United States, Australia, and South Korea. Using the perspectives of generic frames, issue-specific frames, cross-national frames, and user sentiment on Twitter, this study analyzes 600 posts (200 from each nation). Results reveal that Twitter posts frequently framed the crisis using attribution, morality, and conflict frames. Posts about the explosion were more professional frame oriented than national frame oriented. Negative sentiment was dominant in Twitter posts about the explosion. Morality, corporate breakdown, and customer concerns were highly associated with negative sentiment. The results demonstrate how global users respond to a corporate crisis. Study implications and suggestions are discussed.

기업위기가 기업명성 및 기업이미지 그리고 이용의도에 미치는 영향

The purpose of this study is to investigate the effect of a series of corporate honesty crises in Korea on corporate reputation, corporate image and intention to use.BR The results showed that corporate crisis had a negative effect on corporate reputation, image, and intention to use, and corporate reputation and image had a positive effect on intention to use.BR This result suggests the importance of correct corporate management by demonstrating hypothesis that the company reputation and image that are well recognized by customers can lead to utilization, but negatively affect reputation, image and utilization intention at the time of corporate crisis.BR Especially, airline companies are global service companies, and business executives want to point out that they should take the lead in practicing strong ethical management without forgetting that their figure is a public figure that can have a significant effect on other people.

Never easy to say “sorry”: Exploring the interplay of crisis involvement, brand image, and message appeal in developing effective corporate apologies

This study examines how the interplay among crisis involvement, brand image, and message appeal impacts the effectiveness of an apology in the context of a corporate crisis. To determine apology effectiveness, a 2 (crisis involvement: high vs. low) × 2 (brand image: symbolic vs. functional) × 2 (message appeal type: emotional vs. informational) experimental design was employed. The results demonstrate that the three-way interaction is significant, especially in the low-crisis involvement condition. The study concludes with a discussion of theoretical and practical implications and directions for future research.

Post-Truth Döneminde Kriz İletişimini Yeniden Yorumlamak

As we enter a new era marked by changing values, driven by disruptive technologies and leading to the erosion of trust, organizations today are facing crises at greater frequency than in the past. Transformation is a phenomenon that appears to have taken place in each and every period of history, but it has never been as rapid, comprehensive, and unpredictable as we observe it today. There are an increasing number of people who name the era that we currently live in as the post-truth era where the focus is on narratives, their significance, and their abilities of persuasion, rather than focusing on presenting knowledge or the truth. Causality, or the rational paradigm, that was defended by modernism, does not seem to have enough prowess to interpret today’s complexity and phenomena. This perspective and transformation are also valid for at organizations that encounter crises. This article gives a theoretical framework for scrutinising how organizations deal with obstacles within post-truth times. It suggests that the value-based and emotionally-driven framework of the narrative paradigm might be the most powerful communication approach adopted by an organization during a corporate crisis in this new era.

THE ROLE OF HUMAN RESOURCE MANAGEMENT IN CORPORATE CRISES: HOW HR CAN SUCCESSFULLY MAKE A CONTRIBUTION TO TURNAROUND MANAGEMENT

ABSTRACT Researchers have demonstrated that strategic human resource management (HRM) explains differences in organizational performance. However, there is still a lack of understanding as to which role strategic human resource management plays in corporate crises. Can HR make a significant strategic contribution to the success of turnarounds besides cost cutting and downsizing? The authors have conducted an exploratory qualitative research study by interviewing ten reorganization and insolvency consultants to work out problems and solutions that occur in corporate crises within the field of Human Resources. The results show that companies have to deal with various problems such as a lack of communication between top management and the workforce, a lack of strategic orientation of HR, inadequate employee development measures and employee motivation, and an increase in voluntary employee turnover. Based on their findings, the authors propose solutions such as intensive communication with and involvement of employees in the process of problem analysis to maintain motivation and provide prospects. Finally, HR has to strategically advance the process of reorganizing the workforce, in other words to retain strategic human capital, dismiss those who were responsible for the crisis, and fight for the possibility to hire new employees where necessary. Keywords Strategic Human Resource Management, Corporate Crisis, Strategic Human Capital Management, Change Management, Turnaround Management, Reorganization

The Effects of Corporate Crisis Perception on Comsumer Responses: The Focusing on the Psychological Mechanism

The Effects of Corporate Crisis Perception on Comsumer Responses: The Focusing on the Psychological Mechanism

Exploratory Study of 3 Cases of Corporate Crisis and Stock Market Reaction

The topic of overreaction, and reactions in the stock-market is highly important to understand foranybody with a financial background, or with a general interest in the stock-market. To this extend it seemed as authors would agree that overreactions in the stock-market is a common concept, however there is a great deal of uncertainty about how, and when it would happen. Therefore, this paper will have a quantitative exploratory case-study approach, with the purpose of providing more insights in how the market reacts to certain situations. It was chosen to use legitimacy as the criteria for the crisis events, meaning all the cases presented in the paper will have experienced legitimacy issues in relations to the crisis. A theoretical framework will be used for the analysis that highlights some of the important aspects from the crisis situations, which will in the end be used for a combined comparison.What was found in this paper was that the level of uncertainty information and uncertainty risk that a crisis created could play a significant role when it comes to reactions from the market. It was seen that the importance of having a proper response strategy to legitimacy crisis situations was fairly minimal. The case-studies showed that the company who seemed to have the worst response to the event, was also the company that experienced the least impact from the crisis, in terms of stock-market reaction.

갑질로 인한 기업 위기와 CSR의 효과에 관한 연구

본 연구에서는 갑질 사건으로 인한 기업의 위기 시 CSR의 효과에 대해 조사하였다. 연구에 이용된 갑질 사건은 실제 발생했던 대한항공의 “땅콩 회항” 사건이었다. 연구 결과, 피험자들은 해당 사건에 대한 인지도가 높을수록 대한항공의 CSR 활동을 부정적으로 평가했다. 또한 최근의 갑질 사건들을 접한 프라이밍 조건의 사람들은 프라이밍되지 않은 조건의 사람들보다 대한항공의 CSR 활동을 부정적으로 평가했다. 반면, 땅콩 회항 사건에 대한 관여도나 CSR 활동 분야에 대한 관여도는 대한항공의 CSR활동을 긍정적으로 평가하게 하는 요인이었다. CSR 분야에 대한 관여도는 땅콩 회항 사건에 대한 관여도와 결합하여 독특한 상호작용효과를 보여주었다. 대학생 피험자들은 땅콩 회항 사건에 대한 관여도가 낮을 때에는, 관여도 낮은 CSR 활동(노년 복지)을 접했을 때와 비교하여 관여도 높은 CSR 활동(청년실업)을 접했을 때 훨씬 더 긍정적인 기업 태도를 보였다. 반면, 땅콩 회항 사건에 대한 관여도가 높을 때에는, CSR 활동 분야에 대한 관여도의 차이가 기업 태도에 미치는 영향이 크지 않았다. 마지막으로, 본 연구 결과가 갖는 실무적 함의에 대해 논의하였다.

A good company gone bad

PurposeThe purpose of this paper is to demonstrate whether or not public relations efforts in corporate social responsibility (CSR) influence the news media in corporate crisis situations.Design/methodology/approachThe study conducted a content analysis of press releases and news media based on traditional human-coded cross-lag analyses and a machine learning technique, a novel method of big data analysis to test hypotheses.FindingsResults indicate that CSR press releases indeed influenced the news media. During the crisis point, however, agenda-building was not observed.Practical implicationsCorporations need to continue CSR activities and provide public relations materials consistently even after a crisis, as an agenda-building role could be recovered.Originality/valueThe study examines the relationship between CSR and crisis situations in an agenda-building theoretical framework. The authors introduce agenda-building in the corporate sector with machine learning techniques.

Evolution of corporate reputation during an evolving controversy

PurposeThe purpose of this paper is to investigate the evolution of online sentiments toward a company (i.e. Chipotle) during a crisis, and the effects of corporate apology on those sentiments.Design/methodology/approachUsing a very large data set of tweets (i.e. over 2.6m) about Company A’s food poisoning case (2015–2016). This case was selected because it is widely known, drew attention from various stakeholders and had many dynamics (e.g. multiple outbreaks, and across different locations). This study employed a supervised machine learning approach. Its sentiment polarity classification and relevance classification consisted of five steps: sampling, labeling, tokenization, augmentation of semantic representation, and the training of supervised classifiers for relevance and sentiment prediction.FindingsThe findings show that: the overall sentiment of tweets specific to the crisis was neutral; promotions and marketing communication may not be effective in converting negative sentiments to positive sentiments; a corporate crisis drew public attention and sparked public discussion on social media; while corporate apologies had a positive effect on sentiments, the effect did not last long, as the apologies did not remove public concerns about food safety; and some Twitter users exerted a significant influence on online sentiments through their popular tweets, which were heavily retweeted among Twitter users.Research limitations/implicationsEven with multiple training sessions and the use of a voting procedure (i.e. when there was a discrepancy in the coding of a tweet), there were some tweets that could not be accurately coded for sentiment. Aspect-based sentiment analysis and deep learning algorithms can be used to address this limitation in future research. This analysis of the impact of Chipotle’s apologies on sentiment did not test for a direct relationship. Future research could use manual coding to include only specific responses to the corporate apology. There was a delay between the time social media users received the news and the time they responded to it. Time delay poses a challenge to the sentiment analysis of Twitter data, as it is difficult to interpret which peak corresponds with which incident/s. This study focused solely on Twitter, which is just one of several social media sites that had content about the crisis.Practical implicationsFirst, companies should use social media as official corporate news channels and frequently update them with any developments about the crisis, and use them proactively. Second, companies in crisis should refrain from marketing efforts. Instead, they should focus on resolving the issue at hand and not attempt to regain a favorable relationship with stakeholders right away. Third, companies can leverage video, images and humor, as well as individuals with large online social networks to increase the reach and diffusion of their messages.Originality/valueThis study is among the first to empirically investigate the dynamics of corporate reputation as it evolves during a crisis as well as the effects of corporate apology on online sentiments. It is also one of the few studies that employs sentiment analysis using a supervised machine learning method in the area of corporate reputation and communication management. In addition, it offers valuable insights to both researchers and practitioners who wish to utilize big data to understand the online perceptions and behaviors of stakeholders during a corporate crisis.