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Article
Publication date: 1 August 1981

Rajan Chandran and Richard A. Lancioni

Product recalls are no longer in the realm of theoretical possibilities; it is a regular fact of business life among manufacturers of both industrial and consumer products

Abstract

Product recalls are no longer in the realm of theoretical possibilities; it is a regular fact of business life among manufacturers of both industrial and consumer products. Machine tools, automobiles, television sets, appliances, cosmetics, clothes — no product is immune and the list is virtually endless. The actual number of product units recalled every year among the various classes of products is mind‐boggling, and the cost of recalling them runs into millions of dollars. And as for the future, the prognostication from the evidence so far is that the number and types of products as well as the companies involved will continue to grow. The principal reasons for this prognostication are:

Details

International Journal of Physical Distribution & Materials Management, vol. 11 no. 8
Type: Research Article
ISSN: 0269-8218

Article
Publication date: 26 May 2022

Ljubomir Pupovac, François Anthony Carrillat and David Michayluk

The high prevalence of product-harm crises (PHC) represents a continuing challenge to which firms sometimes react by announcing several smaller recalls (i.e. slicing) but…

Abstract

Purpose

The high prevalence of product-harm crises (PHC) represents a continuing challenge to which firms sometimes react by announcing several smaller recalls (i.e. slicing) but at other times by announcing the recall of all faulty products at once (i.e. chunking). The slicing vs chunking phenomenon has not been identified by prior literature; this study aims to explore two research questions: Why do firms sometimes slice and other times chunk PHC? Do slicing and chunking affect firm performance differently?

Design/methodology/approach

The authors examined recall guidelines from the US National Highway Traffic Safety Administration (NHTSA) and conducted expert interviews as well as a quantitative analysis of 378 product recalls to determine the antecedents of slicing vs chunking. The authors further performed an event study to examine the impact of slicing vs chunking PHCs on firms’ financial performance.

Findings

The authors find that slicing vs chunking is not a deliberate strategy but rather the consequence of firms’ resource availability and constraints. Furthermore, the authors show that larger firms have a lower likelihood of slicing versus chunking. By contrast, larger R&D expenditures, and greater reputation, as well as larger recall sizes, increase the likelihood of slicing versus chunking. Finally, the results reveal that, compared to chunking, slicing PHC has a strong negative impact on firms’ stock value.

Research limitations/implications

The authors relied on recalls in the US automobile industry. A possible extension would be to study the same phenomenon in other industries or other geographical areas. In addition, the results need to be generalized to other types of negative news that can be either decoupled (slicing) or coupled (chunking), especially negative news for which firms have more discretion regarding the timing of their announcements than for product recalls.

Practical implications

As shown by prior research (Eilert et al., 2017), firms should aim to announce recalls quickly in the wake of a PHC. Importantly though, the results indicate that speed should not come at the expense of comprehensiveness in identifying all defective products, so that only one recall is needed. As suggested by our findings about PHC, investors may react negatively to the slicing of other types of negative news; thus, the results suggest how to best communicate to external stakeholders during crises in general.

Originality/value

To the best of the authors’ knowledge, this is the first study that examines why firms sometimes slice and at other times chunk PHC and identifies the performance implications of these two types of recalls in response to PHC.

Details

European Journal of Marketing, vol. ahead-of-print no. ahead-of-print
Type: Research Article
ISSN: 0309-0566

Keywords

Article
Publication date: 1 February 2021

Sascha Raithel, Alexander Mafael and Stefan J. Hock

There is limited insight concerning a firm’s remedy choice after a product recall. This study aims to propose that failure severity and brand equity are key antecedents of…

Abstract

Purpose

There is limited insight concerning a firm’s remedy choice after a product recall. This study aims to propose that failure severity and brand equity are key antecedents of remedy choice and provides empirical evidence for a non-linear relationship between pre-recall brand equity and the firm’s remedy offer that is moderated by severity.

Design/methodology/approach

This study uses field data for 159 product recalls from 60 brands between January 2008 to February 2020 to estimate a probit model of the effects of failure severity, pre-recall brand equity and remedy choice.

Findings

Firms with higher and lower pre-recall brand equity are less likely to offer full (vs partial) remedy compared to medium level pre-recall brand equity firms. Failure severity moderates this relationship positively, i.e. firms with low and high brand equity are more sensitive to failure severity and then select full instead of partial remedy.

Research limitations/implications

This research reconciles contradictory arguments and research results about failure severity as an antecedent of remedy choice by introducing brand equity as another key variable. Future research could examine the psychological process of managerial decision-making through experiments.

Practical implications

This study increases the awareness of the importance of remedy choice during product-harm crises and can help firms and regulators to better understand managerial decision-making mechanisms (and fallacies) during a product-harm crisis.

Originality/value

This study theoretically and empirically advances the limited literature on managerial decision-making in response to product recalls.

Article
Publication date: 13 May 2014

Syed Tariq Anwar

The aim of this study is to investigate and analyze product recalls and product-harm crises in the US toy industry, which is a major area in marketing and firms'…

2085

Abstract

Purpose

The aim of this study is to investigate and analyze product recalls and product-harm crises in the US toy industry, which is a major area in marketing and firms' competitiveness.

Design/methodology/approach

By using longitudinal data from the US Consumer Product Safety Commission (CPSC), the paper uses content analysis to compare and contrast toy recalls, product hazards and country of origin issues of 721 toy recalls in the US market between 1974 and 2008, covering 270 million recalled toys.

Findings

Findings of this work reveal that most of the recalled toys were manufactured in China, although a wide variety of toy brands were designed in the USA. Major hazards of toy recalls included choking, lead poisoning, aspiration, fire/burn and other injuries.

Research limitations/implications

The study relied on the CPSC's data that seemed representative of the toy industry in the US market, but missed other markets of Europe and Asia. Also, there was availability of detailed data in sub-categories of the toy industry.

Practical implications

The paper provides useful academic and managerial implications that can help us understand the issues of product recalls and product-harm crises.

Social implications

Toys are one of the most widely available products in the world; the industry is a $50 billion industry and has transformed itself from a small-scale business sector into a well-established industry.

Originality/value

This investigation is particularly important in the areas of firm-specific competitiveness, business ethics and regulatory and societal issues.

Details

Competitiveness Review, vol. 24 no. 3
Type: Research Article
ISSN: 1059-5422

Keywords

Article
Publication date: 1 December 2005

Călin Gurău and Adriana Serban

Product recall messages represent an essential communication tool in crisis situations. Their function is twofold: to provide information of a practical nature regarding…

1889

Abstract

Product recall messages represent an essential communication tool in crisis situations. Their function is twofold: to provide information of a practical nature regarding the defective product, and the operational process of recalling it, and to defend the reputation of the affected firm. This paper attempts to analyse the structure and the function of product recall messages published in the UK national press, using as points of reference best practice guides published by professional or governmental organisations.

Details

Journal of Communication Management, vol. 9 no. 4
Type: Research Article
ISSN: 1363-254X

Keywords

Article
Publication date: 11 September 2018

Blake Rayfield and Omer Unsal

The purpose of this paper is to use a unique, hand-collected data set of Food and Drug Administration (FDA)-approved products to understand the effect of lobbying on the…

Abstract

Purpose

The purpose of this paper is to use a unique, hand-collected data set of Food and Drug Administration (FDA)-approved products to understand the effect of lobbying on the product market. The authors gather total 86,462 FDA labels including drug patents, drugs, pre-market approvals and medical devices and test the relationship between lobbying and future firms’ product submissions.

Design/methodology/approach

Using a sample of 86,462 FDA labels including drug patents, drugs, pre-market approvals and medical devices, the authors test the effect of lobbying on a firm’s future product submissions using survival analysis, logit, difference-in-differences and propensity score matching techniques.

Findings

The authors find lobbying firms experience an increase in the number of medical products approved. However, increased number of FDA labeling comes at the cost of product failure. The authors document that lobbying increases product recalls when responsible firms are associated with higher market withdrawals.

Originality/value

This study contributes to both the management literature on corporate lobbying and product recalls. Additionally, the study reveals the connection between pharmaceutical lobbying and firm value.

Details

Management Decision, vol. 57 no. 3
Type: Research Article
ISSN: 0025-1747

Keywords

Article
Publication date: 19 June 2018

Kashef A. Majid and Hari Bapuji

The purpose of this paper is to examine how the location of a firm’s headquarters and component sourcing impact a firm’s responsiveness in a product-harm crisis in local market.

Abstract

Purpose

The purpose of this paper is to examine how the location of a firm’s headquarters and component sourcing impact a firm’s responsiveness in a product-harm crisis in local market.

Design/methodology/approach

The authors collected data on 1,251 vehicle recalls from 12 manufacturers, six in the USA, three in Germany, and three in Japan. All of the recalls occurred in the USA between 2002 and 2010. The time the product was first released into the marketplace was used as the starting point while the time the recall was initiated (if at all) was used to record the probability of the product recall over time. Specifically, a survival analysis with an accelerated failure time model was employed to examine the speed with which a product is recalled. The authors examined the impact of foreign composition using information provided by the American Automobile Labeling Act, which lists the proportion of each vehicle that is composed of domestic parts (USA/Canada) and foreign parts. Organizational characteristics (i.e. size, market share, assets, net income, and reputation) and recall size (i.e. number of affected vehicles) that might have an effect on time to recall were controlled for.

Findings

The authors found that firms headquartered outside the local market would take longer to issue a product recall than firms that were headquartered in the local market. Firm headquartered outside the local market can reduce the time taken to recall by sourcing parts from the local marketplace, rather than from abroad. Interestingly, even local firms are affected by the location of component sourcing, such that they take longer to issue a recall if they sourced parts from abroad.

Originality/value

Research in international marketing has examined the benefits of integration to firms, but has not studied the risks of integration. By highlighting the challenges of managing institutional differences and integration difficulties, the authors show that location of headquarters and the location from where components are sourced have an effect on firm responsiveness in product-harm crises. Further, the authors build on the global supply chain management literature that has shown the effect of upstream activities (i.e. foreign production) on downstream activities (i.e. product quality). Specifically, the authors show that upstream activities can not only affect product quality, but also the ability of firms to respond to those product qualities in a timely fashion.

Details

International Marketing Review, vol. 35 no. 5
Type: Research Article
ISSN: 0265-1335

Keywords

Article
Publication date: 12 January 2015

Kyung-Ah Byun and Mayukh Dass

– The purpose of this study is to examine how product recalls affect brand commitment and post-recall purchase intention.

4866

Abstract

Purpose

The purpose of this study is to examine how product recalls affect brand commitment and post-recall purchase intention.

Design/methodology/approach

The role of consumer and product recall characteristics based on attribution theory is tested using data collected through experiments and analyzed using a type of finite mixture model.

Findings

Results indicate varying effects of product recalls on commitment across these four customer groups and a strong effect of affective commitment on post-recall purchase behavior.

Originality/value

This paper proposes four types of consumers based on dichotomous levels of affective and calculative commitment, namely, Hard Cores, Don’t-Cares, Lovers and Rationalists, and shows how product recalls affect these consumer groups differently, and how this information assists brand managers in developing post-product recall consumer management strategies.

Details

Journal of Consumer Marketing, vol. 32 no. 1
Type: Research Article
ISSN: 0736-3761

Keywords

Article
Publication date: 12 January 2015

Sameer Kumar, Dawn Heustis and Jacqueline M Graham

The purpose of this paper is to analyze the US food industry supply chain based on a case study of a leading US global processed food manufacturer to determine areas for…

1664

Abstract

Purpose

The purpose of this paper is to analyze the US food industry supply chain based on a case study of a leading US global processed food manufacturer to determine areas for improvement in the recall process to reduce the possibility of harming consumers with unsafe products.

Design/methodology/approach

Current US Food and Drug Administration and US Department of Agriculture regulations were evaluated to understand the minimum requirements placed upon members of the supply chain within the US food industry. Thereafter, a situation analysis was conducted followed by a cause and effect analysis to illustrate weaknesses within typical recall procedures. Substantiation of the analysis was based on specific information provided by managers from various functional areas of the processed food manufacturer in their interviews and their perspective about the recall/traceability process and its complexities.

Findings

Improvement concepts considered were: the implementation of Radio Frequency Identification Technology (RFID); the Food Marketing Institute (FMI) Recall Portal; and standardized global regulations within the food industry. Various phases of RFID are being piloted within the US food industry, but are not yet being widely studied due to the lack of immediate implementation requirements. Specific results pertaining to the FMI Recall Portal are not available due to its recent launch. Research indicated various regulatory processes implemented in individual countries, but no global standards have been agreed upon and initiated.

Practical implications

The improvement ideas have implications for timely communication among supply chain partners, resulting in less contaminated product in the hands of consumers. The ability to make these improvements will require collaboration among global suppliers through global regulations and top management support.

Originality/value

Understanding the gaps within current regulations and emphasizing the global footprint of how the food industry truly transformed itself into a global marketplace. Future studies need to focus on the cost impact of full RFID implementation across the entire food industry, with an understanding of cost burden ownership and worldwide integration.

Details

International Journal of Productivity and Performance Management, vol. 64 no. 1
Type: Research Article
ISSN: 1741-0401

Keywords

Article
Publication date: 15 June 2015

Etayankara Muralidharan, Hari Bapuji and André Laplume

– This paper aims to understand why firms expedite or delay product recall decisions involving international sourcing.

Abstract

Purpose

This paper aims to understand why firms expedite or delay product recall decisions involving international sourcing.

Design/methodology/approach

This paper combines US toy recall data from the Consumer Products Safety Commission database for the period from 1988to 2011 with World Economic Forum data on institutional environments to predict the effect the host country conditions have on recall timing decisions.

Findings

Firms tend to expedite decisions to recall defective products sourced from countries where the informal institutional profile is perceived to be unfavorable for quality manufacture.

Research limitations/implications

The reported research is empirical in nature and uses pooled cross-country, single-industry data.

Practical implications

Managers should be careful not to allow their biases to affect their product recall timing decisions.

Originality/value

Whereas previous research has examined recall timing decisions, this study is the first to consider the institutional environment where products are sourced from as an explanatory variable.

Details

Management Research Review, vol. 38 no. 6
Type: Research Article
ISSN: 2040-8269

Keywords

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