Dissertation
Three essays on crisis management: investigating strategic remedies following product recall and their impact on corporate performance
Washington State University
Doctor of Philosophy (PhD), Washington State University
2023
DOI:
https://doi.org/10.7273/000005071
Abstract
This dissertation investigates the topic of crisis management and remedy strategy of product recall. The first essay examines how substantive changes in a firm’s governance structure after a major crisis may help it regain legitimacy, and how such actions may subsequently affect market reaction and firm performance. The main argument is that following an organizational crisis such as a product recall in the pharmaceutical industry that can affect a firm’s returns, reputation, and legitimacy, substantive changes in the upper echelon are needed to regain firm performance. My findings show that when the market reacts to a product recall negatively, firms are more likely to replace their CEO since governance change after a product recall announcement often leads to a positive market reaction and better long-term performance. The second essay examines the impact of public action on the market performance of firms following a product recall. I aim to provide insights into refining communication strategies and maintaining stakeholder trust through public actions. My study also highlights the role of media coverage and sentiment in shaping stakeholder perceptions. The results show that firms that take proactive public action experience less negative impacts on their stock market performance after a product recall. The positive impact of public action is amplified when media sentiment is high, and the media coverage has a positive tone.
The third essay explores the use of product recalls as a learning mechanism to improve innovation performance in firms. I argue that firms can leverage their recall experience to build knowledge and capabilities that can be applied to future products. The results of this study suggest that recall experience can help firms avoid future product failures and recall, while also enhancing their innovation performance. Moreover, the study demonstrates that the impact of recall experience may vary depending on the level of market diversification and R&D intensity within the organization. Highly diversified firms with recall experience are better equipped to identify and capitalize on new opportunities for innovation. Firms with high levels of R&D intensity have a greater capacity for organizational learning and avoid future recall.
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Details
- Title
- Three essays on crisis management
- Creators
- Huizhi Yu
- Contributors
- Arvin Sahaym (Advisor)Amrita Lahiri (Committee Member)Benjamin Warnick (Committee Member)
- Awarding Institution
- Washington State University
- Academic Unit
- Carson College of Business
- Theses and Dissertations
- Doctor of Philosophy (PhD), Washington State University
- Publisher
- Washington State University
- Number of pages
- 134
- Identifiers
- 99901019634001842
- Language
- English
- Resource Type
- Dissertation