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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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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.

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  1. Weber State University, 1337 Edvalson St, Ogden, UT, 84408, USA

    David Noack

  2. Virginia Commonwealth University, 301 W. Main Street, PO Box 844000, Richmond, VA, 23284, USA

    Douglas R. Miller

  3. Webster University, 470 E Lockwood Ave, Webster Groves, MO, 63119, USA

    Dustin Smith

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Noack, D., Miller, D.R. & Smith, D. Let Me Make It Up to You: Understanding the Mitigative Ability of Corporate Social Responsibility Following Product Recalls. J Bus Ethics 157, 431–446 (2019). https://doi.org/10.1007/s10551-017-3639-7

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