Product-harm Crisis Research Articles

Make it up to you or not: understanding the role of substantive versus symbolic CSR activities following product-harm crises

Product-harm crises are a global concern and corporate social responsibility (CSR) activities are applied to withstand such crises and mitigate financial risks. Recent studies have focused on ‘when’ CSR activities can or cannot mitigate financial penalties following product-harm crises; however, the focus is usually on developed countries, and little attention is given to transitional countries like China. Indeed, CSR activities may vary among countries because the leading forces of and motivations behind CSR activities differ across institutions. In China, a government-dominated market, CSR activities are often state-led and used to access government resources. Some Chinese firms adopt symbolic CSR campaigns (versus substantive CSR activities) to garner such resources, given the low scrutiny of CSR activities and the low costs of CSR claims. Considering the specificity of Chinese CSR, this study explores ‘when’ CSR activities can or cannot mitigate financial risks following product-harm crises. The results find that substantive CSR activities can buffer the financial penalties due to the crisis, whereas symbolic CSR campaigns burden its financial penalties. Moreover, institutional investors can discount the buffering and burdening effects. These findings offer insights for firms seeking CSR activities to mitigate financial risks in transitional countries.

The research on the impact of industry governance on trust after group product-harm crisis

The group product-harm crisis has much greater and longer negative impact, and its governance has become an important issue. To address this issue, this study proposed a new construct: industry governance. On the basis of clarifying the dimensions and measurements of industry governance, this study constructed a reflective–formative hierarchical model and collected data through a questionnaire. Utilizing convenience sampling, 329 valid samples at the University in Wuhan, China collected by survey were used to verify the hypotheses. With the help of Smart PLS 3.0, this study finds that the industry governance has a significant and positive impact on consumer's trust (enterprise trust, industry trust and government trust) after the group product-harm crisis. Industry governance plays an important role in the governance of group product-harm crisis. This study is the first time to explore the structure and measurement of industry governance, and verifies the impact of industry governance on group product-harm crisis, which enriches governance theory, and perfects product-harm crisis theory, providing a new direction and guidance for managers to better manage product-harm crisis.

How Causal Dimensions of Product Harm Crisis Shape Consumer Moral Reputation towards the Crisis Company and Brand Crisis: The Moderating Role of Perceived Societal Damage

Irrespective of many management strategies, product harm crises, discrete, well-publicized occurrences in which products are found to be defective and dangerous, are increasing at an accelerating rate throughout the globe with negative consequences for companies and brands. It alarms the importance of scrutinizing this worst nightmare from a new empirical angle while focusing on the ethical eye of consumers. Therefore, the present study attempts to explore how causal dimensions of product harm crisis related to two Attributional grounds (company accused and consumer accused) shape consumer moral reputation towards the crisis company and crisis brand in product harm crises. A self-administrated, questionnaire was used to examine how Sri Lankan (n= 492) and Chinese (n=492) young consumers see company and brand through their ethical eye that reflects their moral reputation. Results revealed that consumer morally views company and brand in an entirely different way under the two Attributional grounds that ultimately affects brand equity and purchase intention of the crisis brand. There exist significant negative and positive links between consumer moral reputations towards the crisis company and crisis brand respectively, under consumer accused crisis. Subsequently, consumer moral reputation towards the crisis company has a significant negative link with consumer brand equity, while consumer moral reputation toward the crisis brand has a positive link with consumer based brand equity under consumer-accused crisis. This study provides new insights for the companies to manage such crises, while safekeeping the brand equity in midst of product harm crisis.

What Is (and Isn’t) a Product Recall?

Safety in consumer goods is maintained by product safety laws and associated regulations. However, the legislation and regulations are specific to product categories and legal jurisdictions, thus impeding one's ability to understand what a recall is and isn’t, and how it differs from related phenomena (e.g., product-harm crisis). The authors aim to provide such an understanding. They reviewed 510 reports from academics, managers, governments, and regulators; conducted interviews with 25 practitioners; and used 10 recall data sets to identify seven fundaments of recall. They synthesize the fundaments to propose a definition and a decision tree of recall, which can help inform academics, journalists, managers, lawyers, and safety advocates regarding what term is appropriate in what context. The authors apply the fundaments to identify similarities and differences between a recall and a harm crisis, the term used frequently in marketing research in association with recall. The fundaments also enable the authors to make five recommendations each for lawmakers and regulators in an effort to guide the academic and practitioner discourse on product recall.

Double-edged sword of corporate social responsibility (CSR) halo: the role of CSR efforts and crisis type and severity

ABSTRACT In recent years, the restaurant industry has been struggling with a variety of brand crises, including both product and moral harm crises. To mitigate the negative impact of such crises on their brands, companies are actively engaging in corporate social responsibility (CSR) initiatives. While a number of previous studies have investigated the influence of CSR on consumers’ responses to a brand in a routine setting, few have incorporated crisis-related situational variables into their examination of the role of CSR in a brand crisis situation. In order to test the extent to which the CSR halo plays a role in consumers’ evaluation in a brand crisis event, this study used a scenario-based 2 CSR efforts (low/high) x 2 crisis type (product harm/moral harm crisis) x 2 crisis severity (low/high) experimental design. The findings suggest that a higher level of brand engagement in CSR can offset the negative consequences of brand crisis in the case of product harm and less severe brand crisis, compared to moral harm and severe brand crisis, respectively. Our results provide valuable insights for companies wishing to respond successfully to a brand crisis event based on predicted consumers’ responses and on their CSR reputation.

Shifting Standards in Consumer Evaluations of Global and Local Brands After Product-Harm Crises

Building on shifting standards theory from social psychology, the authors suggest global versus local branding as an important categorization that affects consumers’ reactions to product-harm crises in emerging markets. Specifically, the distinct associations attached to global and local brands create shifting standards and lead to differential consumer expectations and evaluations. In four main and two supplementary experiments, the authors demonstrate that consumers from emerging markets react more negatively toward a product-harm crisis by global (vs. local) brands. Higher initial expectations for global brands are the underlying cause of this more pronounced consumer response to failures. The authors demonstrate which specific expectations are driven by the shifting standards around global and local brands and identify product category as a relevant boundary condition. Finally, consumers with high ethnocentrism appreciate it directionally more when a local brand provides compensation after a product-harm crisis than when a global brand provides compensation. The results have important implications for brand management and crisis management strategies.

Mental readiness and travel choices in crisis recovery

ABSTRACT Although crisis communication and recovery strategies have been studied extensively, the coping mechanisms of consumers during the recovery phase of a product-harm crisis have been insufficiently examined. This paper aims to investigate the role of consumers’ health beliefs and mental readiness during travel in a health-related crisis, which constitutes a subset of product-harm crises. To achieve this, the Beliefs-Mental Readiness-Intention (BMRI) model was developed, and three analyses were conducted to validate this conceptual framework. The SEM established the general psychological mechanism of individuals’ intention to consume travel-related products during the crisis, introducing two newly developed measures: perceived benefits of protection and perceived stigma of consuming products. The second analysis identified a weak moderation effect of diagnosis status in the model. Finally, the theoretical and managerial implications of the research findings were comprehensively discussed.

Social class differences in attribution of stability and purchase intention following a product-harm crisis / Diferencias entre clases sociales en la atribución de estabilidad y la intención de compra tras una crisis de reputación de un producto

Middle-class contexts foster solipsism, a social cognitive tendency that focuses on one’s internal states, goals and motivations and favours dispositional attribution. By contrast, working-class contexts foster contextualism, a social cognitive tendency that focuses on uncontrollable situational forces and favours situational attribution. The current research investigates social class differences in attribution of stability and purchase intention following a product-harm crisis. Consistent with previous research on social class differences in social cognitive tendency, four studies ( N = 680) demonstrate that middle- (vs. working-) class individuals perceive themselves as having a higher social status in society (Studies 1A and 3), which leads to a stronger tendency to attribute stability to a product-harm crisis (Studies 1A, 1B, 2 and 3), believing to a greater extent that the problem is typical of the brand’s products and the brand will likely run into similar problems in the future. Moreover, this stability attribution has downstream consequences for purchase intention — middle- (vs. working-) class individuals are less likely to purchase products from the same brand following a product-harm crisis (Study 3).

Optimal Investment in Advertising and Quality to Mitigate a Possible Product-Harm Crisis

Optimal Investment in Advertising and Quality to Mitigate a Possible Product-Harm Crisis

SOFTWARE-RELATED PRODUCT HARM CRISIS: ANALYZING CODING SCHEMES TO DEVELOP MANAGEMENT FRAMEWORK (SR-PHC-MF)

Product harm crisis (PHC) involves cross section of multiple disciplines. It is a critical event for any business as it directly impacts end-consumers’ safety. Social media and online consumer platforms help to amplify the message. If not handled well, this has potential to negatively impact the brand reputation and financial viability of the firm which is in middle of such crisis. Understanding the role of software in causing and then managing the impact of such crisis is not much studied. Software solutions are critical components of product development across various stages including conceptualization, design and development, testing, distribution and after sales support. Software based solutions are also used by support teams to assess customer and channelize communications in case of Product harm crisis event. This paper covers the Software-Related PHC events and suggests a framework to handle those. The trend of increased utilization of software in product development process and increasing complexity of software systems including opaqueness caused due to software components modularity, artificial intelligence and machine learning algorithms.

Assessing the Impact of A Product-Harm Crisis on Brand Trust And Brand Image: A Focus on the Listeriosis Crisis

Brand crises endanger companies, and no organisation is immune from them; each has an equal risk of experiencing one. Existing research on crisis brands lists detrimental consequences on the focus brand and experiments with coping mechanisms. Research on the impact of the brand crisis on brand trust and brand image is sparse. This study examines the impact of a product-harm crisis on brand trust and image. A descriptive quantitative research method was used to collect data from 384 randomly selected food retail store shoppers. The findings revealed that consumers continue to trust open and honest brands during a crisis. The research was limited to uMhlathuze municipality; thus, it cannot be generalised. The brand crisis was limited to the Listeriosis case. The study contributes to the current body of knowledge on brand management by providing insight into how organisations can respond after a crisis to regain their consumers' trust. The research concludes that taking responsibility after a crisis outbreak and being open and honest about the crisis can result in consumers' forgiveness, and they end up overlooking the crisis and its negative impacts.

Impact of information processing on purchase intention in new energy vehicle product harm crises

AbstractWithin the increasingly complex and changeable market environment of new energy vehicles, consumers' attention to product safety has increased significantly, and higher, updated requirements are put forward at the level of product safety. Simultaneously, a product harm crisis, which often entails product recalls, can lead to consumer concerns regarding product specifications and security. Based on the heuristic‐systematic model, this study verified the effect of information processing on the vehicle purchase intention of consumers during crisis situations and conducted an empirical study through questionnaires and structural equation modelling. The data obtained in this study presents the following relationships: (1) risk perception has a significant and positive influence on information search and systematic processing but a negative influence on heuristic processing; (2) heuristic processing and systematic processing have a significant and positive influence on purchase intention; (3) information search has a significant and positive influence on heuristic processing and systematic processing. The study can offer a relevant basis and suggestions for risk communication of new energy vehicle enterprises, thereby fundamentally improving consumer loyalty.

Bilinear differential game for competitive advertising with stochastic disturbance and abrupt impact

The estimated spending on online advertising worldwide will reach $520 billion during 2023, almost double compared with that in 2019. Due to the conjunction of huge expenditure and latent inefficiencies, competitive advertising has always been occupying a front-and-center place in marketing, among which research modeled as bilinear differential game is one of the most important. However, by the intrinsic difficulties of mathematics, there is no extant research to augment the analysis with Markov jump process, which is of particular significance to abrupt product-harm crisis or promotion interactions. Motivated by this requirement, iterative algorithm with convergence proof is developed to approximate bilinearity. Kalman filter and nonlinear separation theorem, which enable noise-contaminated sales data for analysis in the partial observation, are also introduce to hone in more actionable and focused in real business. The Simulink modeling in this paper provides a straightforward tool for rapid prototyping of these complex, time-varying, multilayer systems. The simulation model proposed allows automatically exploring competitions and finding the most efficient strategies. Moreover, six application examples, resulting from the permutations of four encounters with different time durations and abrupt impacts, have discovered eight implications. They not only complement the existing work on crisis, but also generalize to promotion, which imply that managers should anticipate the sales bump and optimally increase ad spending ex ante. Most importantly, they have revealed a number of new legal, advertising, competition and partly counterintuitive insights for those struggling to develop successful advertising strategies.

Stock market reaction to product-harm crisis response strategies.

Product-harm crises have detrimental effects on firm's sales, reputation, and financial value, requiring crisis managers to promptly adopt appropriate response strategies to mitigate these impacts. Situational Crisis Communication Theory (SCCT) guides managers to align responsibility attribution with response strategies. Using Chinese listed firms' product-harm crises sample from 2015 to 2021, this study analyzes the stock market's reaction to different response strategies. The event study method reveals that a passive strategy is more effective during the disclosure stage, and accept+no recall and deny+recall are conforming strategies during the initial response stage. Additionally, firms with a crisis history should assume greater responsibility when developing response strategies for product-harm crises, as crisis history amplifies negative effects. The results provide recommendations to help managers formulate appropriate strategies.

How do new energy vehicle companies deal with ambiguous product harm crises? Scenario simulation based on three communication strategies

AbstractIn the face of some product harm crises of new energy vehicles, which are difficult to find out the real reasons, it is highly significant for new energy vehicle companies to choose appropriate communication strategies. This study examines the impact of three communication tactics on consumer trust and purchase willingness using two rounds of scenario simulation experiments based on stimulus–organism–response theory. The results show that, when compared with deny and rebuild method, the diminish strategy is the most effective in reducing the influence of ambiguous product harm crises on consumer behaviours. Simultaneously, brand reputation has a moderating effect. For new energy vehicle companies with high brand reputation, the communication effect of diminish strategy is the best. Only a higher‐cost rebuild strategy can be viable for automotive businesses with a poor brand reputation. Thus, when dealing with ambiguous product harm crises, new energy vehicle companies should focus on efficient and low‐cost diminish strategy. Meanwhile, to take the initiative in dealing with an ambiguous product harm crisis, we must improve the technical maturity of products as well as improve the after‐sales service system to continuously enhance the brand reputation.

The effects of crisis types on corporate warmth and competence perceptions: Interplay with post-crisis promotion types for corporate attitude recovery

ABSTRACT This research investigates the effects of crisis type and post-crisis promotion type on corporate perceptions and attitude. A 2 (crisis: moral-harm vs. product-harm) x 2 (post-crisis promotion: donation vs. discount) between-subjects experiment was conducted with a total of 360 participants recruited from Amazon MTurk. Results indicate that moral-harm crises have a more negative impact on perceived corporate warmth and attitude than product-harm crises. However, this negative effect can be better mitigated through post-crisis donations toward society than through post-crisis discounts for consumers. In contrast, product-harm crises have a more negative impact on perceived corporate competence than moral-harm crises. Nevertheless, post-crisis discounts are more effective than post-crisis donations in alleviating this negative effect. Further, moderated mediation models reveal that stakeholder perceptions of corporate warmth and competence mediate the matching effects of crisis type and post-crisis promotion type on attitude recovery. The findings highlight the dynamic effect of crisis communications through strategic compensation with post-crisis promotions in consideration of crisis types.

When injured product users may also stay satisfied: A macro-level analysis

Product-harm crises literature has mostly studied product user harm proxies i.e., risk of injury or fictitious crises. Our macro-level study is the first to determine the consequences of actual non-automobile product-related injuries on customer satisfaction. We leverage a dataset statistically representative of injuries reported at over 5,000 U.S. hospitals. Employing the expectation-disconfirmation paradigm, we study 800 product categories, 52 industries and 30 injury diagnoses to find that severe product-related injury (SPI), on average, hurts customer satisfaction. Our research reveals that varying types of consumers’ expectations can result in asymmetric effects. Consumer sentiment and future growth may set varying boundary conditions for product users’ expectations; while higher consumer sentiment is found to worsen the association between SPI and customer satisfaction, future economic growth attenuates that relationship. Also, the type of hospital may help account for consumers’ disconfirmation of product beliefs, as it is found to improve the negative effect of SPI.

Should a powerful manufacturer collaborate with a risky supplier? Pre-recall vs. post-recall strategies in product harm crisis management

Product recalls occurring due to quality failures can ravage a firm’s reputation. Product quality maintenance is often the responsibility of a manufacturer and its suppliers. Therefore, manufacturer–supplier contracts may lead to efficient quality management. However, numerous recent product recalls showed that a likelihood of a crisis remains despite such supply chain co-operations. Efficient crisis management strategies can mitigate the negative effect of a product recall on firms and consumers. We consider a one-supplier–one-manufacturer supply chain prone to a product recall. Considering a differential game framework, we develop two quality-based cost-sharing contractual models to analyze how, under uncertainty, pre-recall and post-recall strategies of advertising, quality, and pricing vary in the supply chain. Our results indicate that for a high-likelihood/-impact recall, the supplier and manufacturer focus more on their respective post-recall quality effort than on the pre-recall period. Interestingly, by gradual, incremental pre-recall advertising, the manufacturer raises its goodwill before a recall announcement to keep consumers’ higher confidence regarding the product’s quality even after the recall. Our cooperative contractual agreements benefit all the channel members and consumers. The manufacturer is always better off by sharing a greater quality effort with the supplier in the post-recall period than in the pre-recall period.

Understanding local consumers' reactions to perceived unfair product recalls of foreign brands: a relative deprivation perspective

PurposeGlobal product-harm crises increased in recent years. After such crises, firms' product-recall policies varied across countries, which might cause consumers in some countries to feel unfairly treated. Drawing on the relative deprivation theory, this study aims to examine how perceived unfairness of local consumers alters their attitudes toward unfairness-enacting foreign brands and competing domestic brands.Design/methodology/approachThis framework was tested by a netnography study on two product recalls from Samsung along with a consumer survey. While this netnography study provided preliminary support to the framework, survey data collected from 501 Samsung consumers after the Galaxy Note 7 crisis validated the theoretical model again.FindingsPerceived unfairness increases local consumers' avoidance of involved foreign brands and their intention to purchase domestic brands through evoking anger toward the foreign brands. Moreover, the detrimental impact of perceived unfairness is found to be stronger when consumers' prior relationship quality is high.Originality/valueTo the best of the authors’ knowledge, this is the first paper that investigates unfair product recalls across countries and aims to provide important insights into how consumers react to the unfair treatment of foreign brands in a global product-harm context. This study contributes to the product-harm crisis literature and provides important implications for global product-harm crisis management strategies.

Do products branded with handwritten scripts suffer more amid product-harm crises?

PurposeThis paper aims to explore whether products branded with handwritten scripts suffer more from the effects of product-harm crises than other brands. Most studies on handwritten scripts focus on their positive effects, such as humanizing a product or creating an emotional tie with consumers. However, seldom have researchers investigated the negative effects of handwritten scripts. This paper goes some way to filling this gap.Design/methodology/approachFive experimental studies were conducted to test three hypotheses. These experiments provide evidence of the negative effects of handwritten scripts. In addition, they reveal the mechanisms that lead to these outcomes and outline the boundary conditions of the negative effects.FindingsFramed by attribution theory, three conclusions can be drawn from the experiments: when a product-harm crisis occurs, consumers react with greater negativity toward the brand using handwritten scripts than to those using machine typefaces. The negative effect is explained by a serial mediation process that follows the pattern: typeface → perceived humanization → brand responsibility → brand attitude. The negative effect decreases when the crisis is perceived to be an accident.Originality/valueThis paper enriches the theory of marketing in terms of both handwritten scripts and product-harm crises, providing valuable guidance for enterprises that use handwritten scripts in their marketing activities.