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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:

The rising number of food recalls has raised concerns about complexity, globalization and weak governance in the food supply chain. This paper aims to investigate the recall of plant-based products with data from the US Food and Drug Administration.

Introducing the structural topic modeling method allowed us to test theories on recall in the context of sustainable food consumption, enhancing the understanding of food recall processes. This approach helps identify latent topics of product recalls and their interwoven relationships with various stakeholders.

The results answer a standing research call for empirical investigation in a nascent food industry to identify stakeholders’ engagements for food safety crisis management for corporate social responsibility practices. This finding provides novel insights on managing threats to food safety at an industry level to extend existing antecedents and consequences of product recall at a micro level.

For practitioners, this empirical finding may provide insights into stakeholder management and develop evidence-based strategies to prevent threats to food safety. For public policymakers, this analysis may help identify patterns of recalls and assist guidelines and alarm systems (e.g. EU’s Rapid Alert System for Food and Feed) on threats in the food supply chain.

Two detected clusters, such as opportunisms of market actors in the plant-based food system and food culture, from the analysis help understand corporate social responsibility and food safety in the plant-based food industry.

This study investigates whether a firm that has experienced an environmental accident (EA) is less likely to conduct a product recall. If true, it would indicate that EAs tempt firms to hide operational problems that need to be revealed. The logic is that both events are operational failures that damage a firm's reputation and share price. Following an EA, a firm may avoid a discretionary product recall to avoid providing additional evidence of operational incapability and social irresponsibility and thereby triggering amplified reputational and market penalties.

The dataset is compiled from several public and private sources and includes 4,355 product recalls, 153 EAs and 120 firms from the industries that often recall products, including automotive, pharma, medical device, food and consumer products. The study timeframe is 2002–2013. Empirical models are evaluated using hazard modeling.

Results show that EAs reduce the probability of a product recall by 32%, on average. Effect sizes are larger when accidents are more frequent or more severe and when recalls are less severe. Through post hoc analyses, the study finds support for the proposed mechanism that firms avoid recalls due to reputational concerns, provides evidence that EAs can have a lengthy impact on recall behavior, and shows that firms are more likely to avoid recalls managed by the CPSC and NHTSA than recalls managed by the FDA.

Prior studies in operations management (OM) have not examined the impact of one negative event on another. This study finds that EAs tempt firms to hide operational problems that need to be revealed. While recalling fewer defective products is of concern to consumers and regulators, should EAs influence a broader set of discretionary operational decisions, such as closing/relocating a production facility, outsourcing production or conducting a layoff, study implications increase significantly.

This study examines the effect of stable institutional investors on firms' product quality failures. Furthermore, the authors investigate the channels through which institutional ownership stability enhances product quality management.

This study uses probit, ordered probit and negative binomial regression frameworks to investigate the research questions. In addition, the authors utilize the three-stage least-squares to address the endogeneity issues.

Using a sample of product recall incidents from 2012 to 2021, the authors find that firms with more stable institutional ownership have a lower probability, frequency and severity of recall incidents and adopt a proactive product recall strategy. Institutional investors with significant and persistent holdings improve quality management by reducing overinvestment and the use of option-linked and relative performance executive compensations. Furthermore, the influence of stable institutional owners on product quality failures is more pronounced in firms with low managerial ability and specialist CEOs. Lastly, the empirical evidence demonstrates that stable holdings by active investors have a more substantial impact on reducing product recalls than passive and other stable institutional holdings.

This study is the first to examine the impact of institutional ownership stability on firms' product recalls. The authors contribute to the literature on the benefits of stable institutional ownership on firm outcomes and the determinants of product quality failures.

This study examines how firm product reputation functions as an internal and external expectations-setting mechanism shaping firm and external stakeholder behavior.

Longitudinal analysis of 17,879 recalls from 15 automobile manufacturers operating in the United States between 1967 and 2016.

Applying the behavioral theory of the firm (BTF) and signaling theory, this study’s findings suggest that product safety reputation creates variability in the likelihood of both voluntary and government-ordered recalls.

Performance expectations set by past product performance influence managerial decision-making such that products with a higher reputation for quality are more likely to be voluntarily recalled than are their less reputable counterparts. Similarly, regulators are more likely to order the recall of higher reputation products, suggesting that past product performance also influences enforcement behavior. Finally, the scope and severity of product defects are shown to interact with product reputation to influence the likelihood of government-ordered recall.

Firms and firm stakeholders make distinct decisions based on performance variations within firm product portfolios.

Overall firm reputation is important, but there are distinct dynamics that result in product performance variability within firm product portfolios that have important implications on issues such as product safety recalls.

This study's findings reveal that as an internal signal, managers' expectations of product performance can change their behavior following product safety defects. Specifically, voluntary product recalls are more likely for higher-reputation products than those with lower reputations for product safety. This suggests that firm behavior regarding product safety recalls is not consistent within their own product lines. Externally, this study’s findings suggest that product reputation also influences relationships with key stakeholders. Product reputation for quality was shown to be associated with an increased likelihood of government sanctions. Regulators will also be more likely to initiate punitive sanctions against higher-reputation products as the severity and scope of safety defects increase. Under such circumstances, higher-reputation products are more likely to face government sanctions than lower-reputation products. Hence, government regulatory behavior is subject to influence from performance signals such as product reputation.

This study explores whether the unique organizational form of family firms helps to mitigate the negative effects caused by the announcement of product recalls.

The authors use an event study, for a sample of 2,576 product recalls in the United States (US) automobile industry, between January 2010 and June 2021.

The authors found that stock market's reaction to a product recall announcement is less negative for family firms. This superior performance is partially driven by the family firms' long-term investment horizons and higher strategic emphasis on product quality. However, the relationship between family ownership and cumulative abnormal returns around product recall announcements is nonlinear as the impact of family ownership starts by being positive but becomes negative for higher levels of family ownership. The authors also find that family firm's chief executive officer (CEO) and managerial ownership influence positively the stock market reaction to product recall announcements.

This work has several implications for family firms' management as well as for investors and financial analysts. First, as higher managerial ownership is associated with a greater emphasis on product quality, decreasing stock market losses when a product recall occurs, family firms should consider increasing equity-based compensation. Second, as there seems to exist an optimal proportion of family ownership, family firms should consider the risks of increasing too much their ownership share. Third, investors and financial analysts can use the results in the study to help them in their investment and trading decisions in the stock market.

The authors extend the knowledge of product recalls by studying the under-researched role of the flexible, internally focused culture of family businesses on the stock market reaction to product recalls.

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.

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 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.

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.

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

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.

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

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.

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.

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.

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.

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.

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.

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.

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.

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.