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Let Me Make It Up to You: Understanding the Mitigative Ability of Corporate Social Responsibility Following Product Recalls

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  • David Noack

    (Weber State University)

  • Douglas R. Miller

    (Virginia Commonwealth University)

  • Dustin Smith

    (Webster University)

Abstract

The corporate social responsibility (CSR) literature recognizes that firms’ existing CSR reputation can serve as a safeguard from the impact of reputation-damaging events (e.g., product recalls) on a firm’s social legitimacy. However, the literature has yet to focus on the extent to which CSR activities can help mitigate such damage, post-event. This article examines how a firm’s social actions following a product recall facilitate the recovery of its diminished social legitimacy. We test our predictions using a sample of 197 product recalls involving 168 publicly traded corporations from 1999 to 2009 and demonstrate that the speed of the CSR response, the frequency of CSR activities, and the intensity of CSR activities have a significant effect on firm recovery following crisis. The effects were most pronounced in instances where the magnitude of the recall was most severe. The visibility of the recall has a limited impact on post-event recovery. We discuss our contributions to research on strategic CSR and recovery.

Suggested Citation

  • David Noack & Douglas R. Miller & Dustin Smith, 2019. "Let Me Make It Up to You: Understanding the Mitigative Ability of Corporate Social Responsibility Following Product Recalls," Journal of Business Ethics, Springer, vol. 157(2), pages 431-446, June.
    • Handle: RePEc:kap:jbuset:v:157:y:2019:i:2:d:10.1007_s10551-017-3639-7
    DOI: 10.1007/s10551-017-3639-7
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    2. Astvansh, Vivek & Eshghi, Kamran, 2023. "The effects of regulatory investigation, supplier defect, and product age on stock investors’ reaction to an automobile recall," Journal of Business Research, Elsevier, vol. 167(C).
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    4. Dustin Smith & Eric Rhiney, 2020. "CSR commitments, perceptions of hypocrisy, and recovery," International Journal of Corporate Social Responsibility, Springer, vol. 5(1), pages 1-12, December.
    5. Li, Huashan & Bapuji, Hari & Talluri, Srinivas & Singh, Prakash J., 2022. "A Cross-disciplinary review of product recall research: A stakeholder-stage framework," Transportation Research Part E: Logistics and Transportation Review, Elsevier, vol. 163(C).

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