Me First? Behavioral Agency and CEO Opportunism in Faulty Product Recalls

Consumers’ responses to product recalls with language errors Consumers’ responses to product recalls with language errors Product recall notices not only warn consumers for faulty products, they also limit the damage which may be caused to the company. But what happens when the product recall notice itself contains errors? This study investigated the effects of three different types of language errors: typographical errors, verb errors and sentence errors. Four versions of a product recall were created. The control condition contained no errors. The other three versions contained either five typos, five grammatical conjugation errors or five poorly formed sentences. Participants (N = 710) were randomly assigned to one of the four conditions. Results indicate that participants who detected the errors, had lower attitudes towards the advertisement and the company than participants in the control condition and participants who failed to detect the errors. Poorly formed sentences also had a negative impact on consumers’ brand evaluations and their future product purchase intentions. Hence, language errors in product recall notices can have negative consequences for companies.

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Fear to lose? An analysis of CEO successors’ decision-making regarding R&D intensity based on behavioral agency theory

Asian Business & Management ◽

10.1057/s41291-021-00172-0 ◽

2021 ◽

Author(s):

Xin Liu

Keyword(s):

Decision Making ◽

Agency Theory ◽

Behavioral Agency

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The effects of brand equity and failure severity on remedy choice after a product recall

Journal of Product & Brand Management ◽

10.1108/jpbm-02-2020-2741 ◽

2021 ◽

Vol ahead-of-print (ahead-of-print) ◽

Author(s):

Sascha Raithel ◽

Alexander Mafael ◽

Stefan J. Hock

Keyword(s):

Decision Making ◽

Brand Equity ◽

Probit Model ◽

Future Research ◽

Product Recalls ◽

Product Recall ◽

Managerial Decision ◽

Managerial Decision Making ◽

Content Type ◽

Failure Severity

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.

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Labor Unions and Product Quality Failures

Management Science ◽

10.1287/mnsc.2021.4082 ◽

2021 ◽

Author(s):

Omesh Kini ◽

Mo Shen ◽

Jaideep Shenoy ◽

Venkat Subramaniam

Keyword(s):

Product Quality ◽

Labor Unions ◽

Product Recalls ◽

Employee Morale ◽

Product Recall ◽

Quality Outcomes ◽

Panel Regressions ◽

Broad Cross Section ◽

Operating Leverage ◽

The Impact

In this paper, we study the impact of labor unions on product quality failures. We use a product recall as our measure of quality failure because it is an objective metric that is applicable to a broad cross-section of industries. Our analysis employs a union panel setting and close union elections in a regression discontinuity design framework to overcome identification issues. In the panel regressions, we find that firms that are unionized and those that have higher unionization rates experience a greater frequency of quality failures. The results obtain even at a more granular establishment level in a subsample in which we can identify the manufacturing establishment associated with the recalled product. When comparing firms in close elections, we find that firms with close union wins are followed by significantly worse product quality outcomes than those with close union losses. These results are amplified in non–right-to-work states, where unions have a relatively greater influence on the workforce. We find that unionization increases firms’ costs and operating leverage and, consequently, crowds out investments that potentially impact quality. We also find some suggestive evidence that unions may compromise quality by hurting employee morale and by resisting technological upgrades in the firm. Overall, our results suggest that unions have an adverse impact on product recalls, and thus, product quality is an important dimension along which unions impact businesses. This paper was accepted by Gustavo Manso, finance.

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Open problems in traceability: from raw materials to finished food products

Journal of Agricultural Engineering ◽

10.4081/jae.2013.272 ◽

2013 ◽

Vol 44 (2s) ◽

Cited By ~ 1

Author(s):

Lorenzo Comba ◽

Fabrizio Dabbene ◽

Paolo Gay ◽

Cristina Tortia

Keyword(s):

Supply Chain ◽

Raw Materials ◽

Product Recalls ◽

Open Problems ◽

Food Traceability ◽

Clear Sign ◽

One Step ◽

Risk Notification ◽

Production Period ◽

The Impact

Even though the main EU regulations concerning food traceability have already entered to force since many years, we still remark very wide and impacting product recalls, which often involve simultaneously large territories and many countries. This is a clear sign that current traceability procedures and systems, when implemented with the only aim of respecting mandatory policies, are not effective, and that there are some aspects that are at present underestimated, and therefore should be attentively reconsidered. In particular, the sole adoption of the so-called “one step back-one step forward traceability” to comply the EC Regulation 178/2002, where every actor in the chain handles merely the data coming from his supplier and those sent to his client, is in fact not sufficient to control and to limit the impact of a recall action after a risk notification. Recent studies on lots dispersion and routing demonstrate that each stakeholder has to plan his activities (production, transformation or distribution) according to specific criteria that allow pre-emptively estimating and limiting the range action of a possible recall. Moreover, these new and very recently proposed techniques still present some limits; first of all the problem of traceability of bulk products (e.g. liquids, powders, grains, crystals) during production phases that involve mixing operations of several lots of different/same materials. In fact, current traceability practices are in most cases unable to deal efficiently with this kind of products, and, in order to compensate the lack of knowledge about lot composition, typically resort to the adoption of very large lots, based for instance on a considered production period. Aim of this paper is to present recent advances in the design of supply chain traceability systems, discussing problems that are still open and are nowadays subject of research.

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