Effect of different food recall strategies on consumers' reaction to different recall norms: A comparative study

Purpose Using the combined theoretical umbrella of organizational legitimacy theory, service-dominant logic, fairness heuristic theory and two-factor theory, the purpose of this paper is to investigate the effectiveness of different food recall strategies (recall proactiveness and compensation) in terms of both how consumers react (perceived organizational legitimacy and purchase intention) and how recall norms would influence the effectiveness in three countries. In addition to the reporting of important results, this paper provides implications for food companies to handle effectively the recalls, especially when the recalls are cross-country. Design/methodology/approach A 2 compensation (high vs low) ×2 recall strategy (proactive vs passive) scenario experiment was conducted in Hong Kong, the USA and Mainland China. After checking the effectiveness of manipulation, the paper tested the main effect and interaction effect of recall proactiveness and compensation on perceived organizational legitimacy and purchase intention. In addition, the mediating effect of perceived organizational legitimacy between recall strategies and purchase intention was also tested. Findings Significant main effect, interaction and mediation effect were found across the three countries with a different pattern. For the USA and Mainland China which have strong recall norms, the interaction found followed the predictions of the two-factory theory. However, the pattern found in Hong Kong, which has weak recall norms, followed the predictions of the fairness heuristic theory. Full mediation effect of perceived organizational legitimacy between compensation and purchase intention was found in the USA and Mainland China, while it was only partial in Hong Kong. For the mediation between proactiveness and purchase intention, full mediation was found in Hong Kong and the USA, while it was only partial in Mainland China. Originality/value First, this study differentiated food recall strategy into two dimensions – recall proactiveness and compensation. Second, this study tested the applicability of two-factor theory and fairness heuristic theory in recalls by testing the competing hypotheses proposed according to the two theories. Finally, this study can further help our understanding of the recall effectiveness across different recall norms.

[1]  Ray Y. Zhong,et al.  Data-driven food supply chain management and systems , 2017, Ind. Manag. Data Syst..

[2]  Yingfeng Zhang,et al.  A big data analytics architecture for cleaner manufacturing and maintenance processes of complex products , 2017 .

[3]  Barbara B. Flynn,et al.  The effect of a toy industry product recall announcement on shareholder wealth , 2016 .

[4]  Adams B. Steven,et al.  Emerging market presence, inventory, and product recall linkages , 2016 .

[5]  Jiuchang Wei,et al.  The effects of firm actions on customers’ responses to product recall crises: analyzing an automobile recall in China , 2016 .

[6]  Scott R. Swanson,et al.  The Impact of Perceived Service Fairness and Quality on the Behavioral Intentions of Chinese Hotel Guests: the Mediating Role of Consumption Emotions , 2016 .

[7]  Xuan Wu,et al.  DO THE COMPENSATORY EFFECTS OF OUTCOME AND PROCEDURE ON POLICY ACCEPTANCE DEPEND ON TRUST IN AUTHORITY , 2015 .

[8]  Emily C. Bianchi,et al.  Trust in Decision-Making Authorities Dictates the Form of the Interactive Relationship Between Outcome Fairness and Procedural Fairness , 2015, Personality & social psychology bulletin.

[9]  Jack Shih-Chieh Hsu,et al.  Understanding the Impact of Service Failure and Recovery Justice on Consumers' Satisfaction and Repurchase Intention , 2015, PACIS.

[10]  B. Edvardsson,et al.  Show you care: initiating co-creation in service recovery , 2014 .

[11]  Beomjoon Choi,et al.  The effects of perceived service recovery justice on customer affection, loyalty, and word-of-mouth , 2014 .

[12]  William T. Ross,et al.  Product recalls and the moderating role of brand commitment , 2014 .

[13]  Tingting Zhao,et al.  Product Recalls as Service Failure: Revisiting Consumer Reactions , 2014, 2014 International Conference on Service Sciences.

[14]  Verolien Cauberghe,et al.  What makes crisis response strategies work? The impact of crisis involvement and message framing , 2014 .

[15]  Barbara B. Flynn,et al.  Impact of Product Recall Announcements on Shareholder Wealth in China , 2014 .

[16]  Ioannis Assiouras,et al.  The impact of corporate social responsibility in food industry in product‐harm crises , 2013 .

[17]  Y. Liu.  Sustainable competitive advantage in turbulent business environments , 2013 .

[18]  Harald J. van Heerde,et al.  Rising from the Ashes: How Brands and Categories Can Overcome Product-Harm Crises , 2013 .

[19]  Xiande Zhao,et al.  The financial impact of product recall announcements in China , 2013 .

[20]  H. J. Cnossen,et al.  Consumer perceptions of risks of chemical and microbiological contaminants associated with food chains: a cross-national study , 2013 .

[21]  Chieh-Peng Lin,et al.  Modeling IT product recall intention based on the theory of reasoned action and information asymmetry: a qualitative aspect , 2011, Quality & Quantity.

[22]  Tarun Kushwaha,et al.  The Impact of Product Recalls on Future Product Reliability and Future Accidents: Evidence from the Automobile Industry , 2012 .

[23]  Patricio Del Sol,et al.  Analogical foundation of the scope of organizational change , 2012 .

[24]  Paul H. Zipkin,et al.  Design of traceability systems for product recall , 2011 .

[25]  Aleda V. Roth,et al.  Safety hazard and time to recall: The role of recall strategy, product defect type, and supply chain player in the U.S. toy industry , 2011 .

[26]  J. Takala,et al.  Competitiveness development of Chinese manufacturing enterprises in global context for crisis management , 2010 .

[27]  A. Ian Glendon,et al.  Stakeholder reactions to company crisis communication and causes , 2010 .

[28]  Jean-Philippe Vergne.  Toward a New Measure of Organizational Legitimacy: Method, Validation, and Illustration , 2010 .

[29]  Angelos Pantouvakis,et al.  Product-harm crisis management: Time heals all wounds? , 2009 .

[30]  Yong Liu,et al.  Does a Firm's Product-Recall Strategy Affect Its Financial Value? An Examination of Strategic Alternatives during Product-Harm Crises , 2009 .

[31]  Barbara B. Flynn,et al.  All Supply Chains Don't Flow Through: Understanding Supply Chain Issues in Product Recalls , 2008, Management and Organization Review.

[32]  Adamantios Diamantopoulos,et al.  The Role of Emotions in Translating Perceptions of (In)Justice into Postcomplaint Behavioral Responses , 2008 .

[33]  D. D. Steiner,et al.  Test‐Taker Reactions to the Selection Process: Effects of Outcome Favorability, Explanations, and Voice on Fairness Perceptions , 2007 .

[34]  W. T. Coombs,et al.  Protecting Organization Reputations During a Crisis: The Development and Application of Situational Crisis Communication Theory , 2007 .

[35]  C. L. Chieng,et al.  The Corporate Social Responsibility of Pharmaceutical Product Recalls: An Empirical Examination of U.S. and U.K. Markets , 2007 .

[36]  Eng-Tuck Cheah,et al.  The Corporate Social Responsibility , 2007 .

[37]  Stephen L. Vargo,et al.  Competing through service: Insights from service-dominant logic , 2007 .

[38]  M. Dekimpe,et al.  The Impact of a Product-Harm Crisis on Marketing Effectiveness , 2007 .

[39]  Stephen L. Vargo,et al.  Service-dominant logic: reactions, reflections and refinements , 2006 .

[40]  S. Ogden,et al.  Customer disclosures, impression management and the construction of legitimacy: Corporate reports in the UK privatised water industry , 2005 .

[41]  Xiande Zhao,et al.  When Does the Service Process Matter? A Test of Two Competing Theories , 2004 .

[42]  D. H. Dean.  Consumer Reaction to Negative Publicity , 2004 .

[43]  Stephen L. Vargo,et al.  Evolving to a New Dominant Logic for Marketing , 2004 .

[44]  Beverley Sparks,et al.  Application of Fairness Theory to Service Failures and Service Recovery , 2003 .

[45]  E. Lind.  Fairness heuristic theory: Justice judgments as pivotal cognitions in organizational relations. , 2001 .

[46]  A. Palmer,et al.  Equity and repurchase intention following service failure , 2000 .

[47]  M. Pillutla,et al.  Impact of Product-Harm Crises on Brand Equity: The Moderating Role of Consumer Expectations , 2000 .

[48]  J. Quelch,et al.  A Strategic Approach to Managing Product Recalls , 1996 .

[49]  Henk A. M. Wilke,et al.  The consistency rule and the voice effect : The influence of expectations on procedural fairness judgements and performance , 1996 .

[50]  R. Johnston.  The determinants of service quality: satisfiers and dissatisfiers , 1995 .

[51]  Mark C. Suchman.  Managing Legitimacy: Strategic and Institutional Approaches , 1995 .

[52]  G. Siomkos,et al.  The Hidden Crisis in Product‐harm Crisis Management , 1994 .

[53]  W. Davidson,et al.  Research notes and communications: The effect of product recall announcements on shareholder wealth , 1992 .

[54]  Blake E. Ashforth,et al.  The Double-Edge of Organizational Legitimation , 1990 .

[55]  R. B. Woodruff,et al.  Expectations and norms in models of consumer satisfaction. , 1987 .

[56]  D. A. Kenny,et al.  The moderator-mediator variable distinction in social psychological research: conceptual, strategic, and statistical considerations. , 1986, Journal of personality and social psychology.

[57]  J. Mowen.  Further Information on Consumer Perceptions of Product Recalls , 1980 .

[58]  John W. Meyer,et al.  Institutionalized Organizations: Formal Structure as Myth and Ceremony , 1977, American Journal of Sociology.

[59]  J. Pfeffer,et al.  Organizational Legitimacy , 1975 .

[60]  C. Perrow.  Organizational Analysis: A Sociological View , 1970 .