Does denial drive distrust? --an analysis of responses to product-harm crises in New Zealand

Abstract

Product-harm crises are well-publicized events wherein products are found to be defective or even dangerous. These crises can strike any company at any time, regardless of company size, where in the world they operate, or even how careful the company is in trying to manage risk. Therefore, it is important for organizations to understand how to withstand such crises. Effective crisis management can control negative publicity and protect the company’s image.

The main aim of this study is to investigate whether and how different response strategies work on the recovery of consumers’ brand trust after a product harm crisis. More precisely, the central goal of the study is to test how a response of initially denying responsibility in a crisis affects how effective other strategies (such as recalls) are in aiding organizational success in handling a product-harm crisis.

A mailed questionnaire was designed to test consumers’ response to different crisis management strategies. Results indicate that, after the product-harm crisis happens, troubled companies should avoid denying their responsibility for the incident. When the denial strategy is adopted as the troubled company’s first reaction, the effect of other strategies (involuntary recall, voluntary recall and super effort) would likely be sharply devalued.