Firm/product reputation and new-product recalls. Issue 5 (6th August 2018)

• Record Type: Journal Article
• Authors: Majid, Kashef; Rhee, Mooweon
• Is Part Of: Marketing intelligence & planning. Volume 36:Issue 5(2018)
• Page Start: 572
• Page End: 584
• Publication Date: 2018-08-06
• Subjects: New products -- Reputation -- Product recalls; 658.83
• DOI: 10.1108/MIP-11-2017-0309
• Languages: English
• ISSNs: 0263-4503

Abstract

Abstract : Purpose: The purpose of this paper is to identify the rate of recall for new products vs established products and to explore the simultaneous impact of a firm's reputation and a product's reputation on the market response to a product recall. Design/methodology/approach: The authors first use an accelerated hazard model to establish that new products are more vulnerable to damage than established products. Once this is established, the authors use a hierarchical linear model to explore the simultaneous impact of the firm and product reputation on the market response to a product recall. Findings: The findings indicate that new products have a greater probability of recall over time than existing products and after a product recall a positive firm reputation can negatively impact the firm and hence becomes a liability. However, when the product is first introduced, the product reputation can help offset any negative market response; the product reputation can therefore be an asset. Research limitations/implications: New products are more flawed than their established counterparts. A positive reputation can be a liability but a positive product reputation can offset the negative impact of the firm reputation and this is especially pertinent to new products. Originality/value: The majority of prior research has focused on the reputation and assumed that the firm represented the product as well; the findings of this study reveal that the reputation of the product can have contrasting effects to the reputation of the firm.