CLIMBING OUT OF THE HOLE OR DIGGING DEEPER: A MODEL OF CUSTOMER REACTIONS TO PRODUCT RECALLS AND RECALLING FIRM RESPONSES

Despite an increased focus on product recalls in the business press in recent years, management research examining product recalls and ensuing strategic outcomes has been relatively narrow in scope. Specifically, the process... [ view full abstract ]

Despite an increased focus on product recalls in the business press in recent years, management research examining product recalls and ensuing strategic outcomes has been relatively narrow in scope. Specifically, the process by which firms and their managers navigate their way through recall events has largely been left unexplored despite the importance of such management efforts in limiting the overall negative effect of the recall on performance outcomes. In this study, we leverage insights from related literatures in organizational perception management and crisis management to develop a model detailing how the manner in which firms respond to their product recalls influences customers’ reactions. Specifically, firms can respond in the media utilizing apologies, denials, excuses, and justifications, and these response strategies are likely to influence customers’ perceptions of and reactions to the focal recall. Thus, we develop and test a model of the effectiveness of firm responses in limiting or, in some circumstances, exacerbating the potential negative backlash from customers to product recalls using a sample of product recalls overseen by the Food and Drug Administration.