IDEAS home Printed from https://ideas.repec.org/a/eee/jbrese/v139y2022icp954-963.html
   My bibliography  Save this article

Hazard severity and time to recall: Evidence from the toy industry

Author

Listed:
  • Muralidharan, Etayankara
  • Hora, Manpreet
  • Bapuji, Hari

Abstract

The time a firm takes to recall products that pose severe hazards has serious implications for the firm and its stakeholders. We examine the role of hazard severity and investigate how it influences the impact of recall experience, type of product defect, and product price on time to recall. Operationalizing time-to-recall as the number of days that elapsed from the time a product was first sold in the market to the date it was recalled, we test our hypotheses using data on 833 toy recalls issued by 445 firms in the U.S. during 1988–2018. We find that, under conditions of high hazard severity, time to recall is longer for (i) firms with past recall experience, (ii) recalls of products involving design defects, and (iii) recalls of high-priced products. We discuss the implications of our findings for research and practice.

Suggested Citation

  • Muralidharan, Etayankara & Hora, Manpreet & Bapuji, Hari, 2022. "Hazard severity and time to recall: Evidence from the toy industry," Journal of Business Research, Elsevier, vol. 139(C), pages 954-963.
    • Handle: RePEc:eee:jbrese:v:139:y:2022:i:c:p:954-963
    DOI: 10.1016/j.jbusres.2021.10.035
    as

    Download full text from publisher

    File URL: http://www.sciencedirect.com/science/article/pii/S0148296321007621
    Download Restriction: Full text for ScienceDirect subscribers only
    File URL: https://libkey.io/10.1016/j.jbusres.2021.10.035?utm_source=ideas
    LibKey link: if access is restricted and if your library uses this service, LibKey will redirect you to where you can use your library subscription to access this item
    ---><---

    As the access to this document is restricted, you may want to search for a different version of it.

    References listed on IDEAS

    as
    1. Hari Bapuji & Paul W Beamish, 2019. "Impacting practice through IB scholarship: Toy recalls and the product safety crisis," Journal of International Business Studies, Palgrave Macmillan;Academy of International Business, vol. 50(9), pages 1636-1643, December.
    2. John Ni & Xiaowen Huang, 2018. "Discovery†to†Recall in the Automotive Industry: A Problem†Solving Perspective on Investigation of Quality Failures," Journal of Supply Chain Management, Institute for Supply Management, vol. 54(2), pages 71-95, April.
    3. Darby, Michael R & Karni, Edi, 1973. "Free Competition and the Optimal Amount of Fraud," Journal of Law and Economics, University of Chicago Press, vol. 16(1), pages 67-88, April.
    4. John Ni & Barbara B. Flynn & F. Robert Jacobs, 2016. "The effect of a toy industry product recall announcement on shareholder wealth," International Journal of Production Research, Taylor & Francis Journals, vol. 54(18), pages 5404-5415, September.
    5. Sriram Thirumalai & Kingshuk K. Sinha, 2011. "Product Recalls in the Medical Device Industry: An Empirical Exploration of the Sources and Financial Consequences," Management Science, INFORMS, vol. 57(2), pages 376-392, February.
    6. Reilly, Robert J & Hoffer, George E, 1983. "Will Retarding the Information Flow on Automobile Recalls Affect Consumer Demand?," Economic Inquiry, Western Economic Association International, vol. 21(3), pages 444-447, July.
    7. William H Starbuck & Philippe Baumard, 2005. "Learning From Failures: Why It May Not Happen," Post-Print hal-03228735, HAL.
    8. Wood, Lincoln C. & Wang, Jason X. & Olesen, Karin & Reiners, Torsten, 2017. "The effect of slack, diversification, and time to recall on stock market reaction to toy recalls," International Journal of Production Economics, Elsevier, vol. 193(C), pages 244-258.
    9. Sergio Carvalho & Etayankara Muralidharan & Hari Bapuji, 2015. "Corporate Social ‘Irresponsibility’: Are Consumers’ Biases in Attribution of Blame Helping Companies in Product–Harm Crises Involving Hybrid Products?," Journal of Business Ethics, Springer, vol. 130(3), pages 651-663, September.
    10. Claeys, An-Sofie & Cauberghe, Verolien, 2014. "What makes crisis response strategies work? The impact of crisis involvement and message framing," Journal of Business Research, Elsevier, vol. 67(2), pages 182-189.
    11. Dutta, Sujay & Pullig, Chris, 2011. "Effectiveness of corporate responses to brand crises: The role of crisis type and response strategies," Journal of Business Research, Elsevier, vol. 64(12), pages 1281-1287.
    12. Paul W. Beamish & Hari Bapuji, 2008. "Toy Recalls and China: Emotion vs. Evidence," Management and Organization Review, The International Association for Chinese Management Research, vol. 4(2), pages 197-209, July.
    13. Hartman, Raymond S, 1987. "Product Quality and Market Efficiency: The Effect of Product Recalls on Resale Prices and Firm Valuation," The Review of Economics and Statistics, MIT Press, vol. 69(2), pages 367-372, May.
    14. Etayankara Muralidharan & Hari Bapuji & André Laplume, 2015. "Influence of institutional profiles on time to recall," Management Research Review, Emerald Group Publishing Limited, vol. 38(6), pages 605-626, June.
    15. Pamela R. Haunschild & Mooweon Rhee, 2004. "The Role of Volition in Organizational Learning: The Case of Automotive Product Recalls," Management Science, INFORMS, vol. 50(11), pages 1545-1560, November.
    16. Jayaraman, Vaidyanathan & Patterson, Raymond A. & Rolland, Erik, 2003. "The design of reverse distribution networks: Models and solution procedures," European Journal of Operational Research, Elsevier, vol. 150(1), pages 128-149, October.
    17. Michael R. Thomsen & Andrew M. McKenzie, 2001. "Market Incentives for Safe Foods: An Examination of Shareholder Losses from Meat and Poultry Recalls," American Journal of Agricultural Economics, Agricultural and Applied Economics Association, vol. 83(3), pages 526-538.
    18. Beamish, Paul W. & Bapuji, Hari, 2008. "Toy Recalls and China: Emotion vs. Evidence," Management and Organization Review, Cambridge University Press, vol. 4(02), pages 197-209, July.
    19. Kashmiri, Saim & Brower, Jacob, 2016. "Oops! I did it again: Effect of corporate governance and top management team characteristics on the likelihood of product-harm crises," Journal of Business Research, Elsevier, vol. 69(2), pages 621-630.
    20. Dawar, Niraj & Lei, Jing, 2009. "Brand crises: The roles of brand familiarity and crisis relevance in determining the impact on brand evaluations," Journal of Business Research, Elsevier, vol. 62(4), pages 509-516, April.
    21. Mooweon Rhee & Pamela R. Haunschild, 2006. "The Liability of Good Reputation: A Study of Product Recalls in the U.S. Automobile Industry," Organization Science, INFORMS, vol. 17(1), pages 101-117, February.
    Full references (including those not matched with items on IDEAS)

    Citations

    Citations are extracted by the CitEc Project, subscribe to its RSS feed for this item.
    as


    Cited by:

    1. Cockrell, Seth & Friske, Wesley & Voorhees, Clay M. & Calantone, Roger J., 2024. "The effects of innovation on product recall likelihood," Journal of Business Research, Elsevier, vol. 173(C).
    2. Fang, Xiang & Wang, Xiaoyu & Shao, Yingying & Banerjee, Pramit, 2024. "Examining the effect of a firm’s product recall on financial values of its competitors," Journal of Business Research, Elsevier, vol. 176(C).
    3. 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).

    Most related items

    These are the items that most often cite the same works as this one and are cited by the same works as this one.
    1. 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).
    2. Hall, David C. & Johnson-Hall, Tracy D., 2021. "Recall effectiveness, strategy, and task complexity in the U.S. meat and poultry industry," International Journal of Production Economics, Elsevier, vol. 234(C).
    3. Wood, Lincoln C. & Wang, Jason X. & Olesen, Karin & Reiners, Torsten, 2017. "The effect of slack, diversification, and time to recall on stock market reaction to toy recalls," International Journal of Production Economics, Elsevier, vol. 193(C), pages 244-258.
    4. Yao, Liufang & Parlar, Mahmut, 2019. "Product recall timing optimization using dynamic programming," International Journal of Production Economics, Elsevier, vol. 210(C), pages 1-14.
    5. Shafu Zhang & Like Jiang & Michel Magnan & Lixin Nancy Su, 2021. "Dealing with Ethical Dilemmas: A Look at Financial Reporting by Firms Facing Product Harm Crises," Journal of Business Ethics, Springer, vol. 170(3), pages 497-518, May.
    6. 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).
    7. Yan Dong & Kefeng Xu & Sining Song, 2014. "Can Product Recalls Be Profitable? Insights from Behavior Economics Models and Empirical Studies," Working Papers 0189mss, College of Business, University of Texas at San Antonio.
    8. Zhang, Min & Hu, Haiju & Zhao, Xiande, 2020. "Developing product recall capability through supply chain quality management," International Journal of Production Economics, Elsevier, vol. 229(C).
    9. Ni, John Z. & Flynn, Barbara B. & Jacobs, F. Robert, 2014. "Impact of product recall announcements on retailers׳ financial value," International Journal of Production Economics, Elsevier, vol. 153(C), pages 309-322.
    10. Omer N. Gokalp & Sami Keskek & Abdullah Kumas & Marshall A. Geiger, 2020. "Insider trading around auto recalls: Does investor attention matter?," Review of Quantitative Finance and Accounting, Springer, vol. 55(3), pages 1003-1033, October.
    11. Zavala, Araceli & Ramirez-Marquez, Jose Emmanuel, 2019. "Visual analytics for identifying product disruptions and effects via social media," International Journal of Production Economics, Elsevier, vol. 208(C), pages 544-559.
    12. Unsal, Omer & Hassan, M. Kabir & Zirek, Duygu, 2017. "Product recalls and security prices: New evidence from the US market," Journal of Economics and Business, Elsevier, vol. 93(C), pages 62-79.
    13. Sergio Carvalho & Etayankara Muralidharan & Hari Bapuji, 2015. "Corporate Social ‘Irresponsibility’: Are Consumers’ Biases in Attribution of Blame Helping Companies in Product–Harm Crises Involving Hybrid Products?," Journal of Business Ethics, Springer, vol. 130(3), pages 651-663, September.
    14. Zhao, Xiande & Li, Yina & Flynn, Barbara B., 2013. "The financial impact of product recall announcements in China," International Journal of Production Economics, Elsevier, vol. 142(1), pages 115-123.
    15. Shi, Wen & Leng, Kaijun & Van Nieuwenhuyse, Inneke & Liu, Yucui & Chen, Xiaohong, 2020. "Vehicle recalls performance in an emerging market: Evidence from the comparison between China and U.S," Transportation Research Part A: Policy and Practice, Elsevier, vol. 132(C), pages 290-307.
    16. Topaloglu, Omer & Gokalp, Omer N., 2018. "How brand concept affects consumer response to product recalls: A longitudinal study in the U.S. auto industry," Journal of Business Research, Elsevier, vol. 88(C), pages 245-254.
    17. Miranda J. Welbourne Eleazar, 2022. "Immoral Entrenchment: How Crisis Reverses the Ethical Effects of Moral Intensity," Journal of Business Ethics, Springer, vol. 180(1), pages 71-89, September.
    18. Kathleen Cleeren & Marnik G. Dekimpe & Harald J. Heerde, 2017. "Marketing research on product-harm crises: a review, managerial implications, and an agenda for future research," Journal of the Academy of Marketing Science, Springer, vol. 45(5), pages 593-615, September.
    19. Alfred Z. Liu & Angela Xia Liu & Sangkil Moon & Donald Siegel, 2024. "Does Corporate Social Responsibility Always Result in More Ethical Decision-Making? Evidence from Product Recall Remediation," Journal of Business Ethics, Springer, vol. 191(3), pages 443-463, May.
    20. Hsu, Liwu & Lawrence, Benjamin, 2016. "The role of social media and brand equity during a product recall crisis: A shareholder value perspective," International Journal of Research in Marketing, Elsevier, vol. 33(1), pages 59-77.

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:eee:jbrese:v:139:y:2022:i:c:p:954-963. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a bibliographic reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: Catherine Liu (email available below). General contact details of provider: http://www.elsevier.com/locate/jbusres .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.