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The impact of value-related crises on price and product-performance elasticities

  • Raoul V. Kübler
  • Michael Langmaack
  • Sönke AlbersEmail author
  • Wayne D. Hoyer
Original Empirical Research

Abstract

Previous research on the impact of corporate crises on customers’ elasticity has largely focused on performance-related crises (e.g., product recalls) and found an increasing price elasticity under these conditions. We investigate whether this result differs for value-related crises that are due to ethical violations, such as the use of child labor or environmental pollution. In line with moral foundation theory (MFT), we propose that value-related crises lead to stronger moral outrage and increased boycott intentions, thereby decreasing price and product-performance elasticities. We first analyze more than 360,000 Facebook user comments in relation to four value-related and four performance-related crises and show that the different outcomes for value- and performance-related crises can be explained according to MFT. Then, through discrete choice experiments, we demonstrate that, in contrast to performance-related crises, price elasticity decreases substantially for a value-related crisis that affects both violating and nonviolating companies. We also show for the first time the impact on product-performance elasticities with similar negative effects as for price. The results are stable even for different product categories, causes of ethical violations, and measurement conditions. As a result, it is more difficult for companies to recover from value- than performance-related crises.

Keywords

Value-related crisis Performance-related crisis Product-harm crisis Corporate unethical behavior Moral foundation theory Price elasticity Product-performance elasticity 

Notes

Supplementary material

11747_2019_702_MOESM1_ESM.docx (108 kb)
ESM 1 (DOCX 108 kb)

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Copyright information

© Academy of Marketing Science 2019

Authors and Affiliations

  1. 1.Assistant Professor of MarketingMarketing Center MünsterMünsterGermany
  2. 2.Research AssociateKühne Logistics UniversityHamburgGermany
  3. 3.Professor of Marketing and InnovationKühne Logistics UniversityHamburgGermany
  4. 4.James L. Bayless/William S. Farish Fund Chair for Free Enterprise, McCombs School of BusinessThe University of Texas at AustinAustinUSA

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