Business Horizons (2006) 49, 379 385

www.elsevier.com/locate/bushor

How should a company respond to a product harm

crisis? The role of corporate reputation and
consumer-based cues
Daniel Laufer a,*, W. Timothy Coombs b
a

College of Business, University of Cincinnati, 428 Carl H. Lindner Hall, Cincinnati, OH 45221-0145, USA
Department of Communications, Eastern Illinois University, 600 Lincoln Ave., Charleston,
IL 61920-3099, USA

KEYWORDS
Product harm crises;
Attributions of blame;
Corporate reputation;
Consumer segments

Abstract Product harm crises such as Vioxx and Firestone can be devastating
events for companies. Although lawsuits by victims tend to draw most of the
attention, observers, who typically learn of product harm crises through media
outlets, can also cause extensive damage to the companies involved, as they
represent current and potential customers of the product.
This article provides guidance to practitioners in choosing the appropriate strategy
to effectively deal with a product harm crisis. The authors recommend that
corporate reputation and consumer-based cues, such as gender and nationality, be
incorporated in the decision-making process regarding the choice of a corporate
response.
D 2006 Kelley School of Business, Indiana University. All rights reserved.

1. Product harm crises: A major threat to

companies
Contaminated Coca-Cola cans in Belgium, poisoned
Tylenol capsules in the United States, defective
Firestone tires in the United States, Venezuela, and
Saudi Arabia, and, most recently, patients becom* Corresponding author. Present address: Sy Syms School of
Business, Yeshiva University, 500 West 185th Street, Belfer Hall,
New York, NY 10033, USA.
E-mail addresses: danlaufer@aol.com (D. Laufer)8
cfwtc@eiu.edu (W.T. Coombs).

ing ill after using Vioxx: these are but a few

examples of product harm crises. Defined as
bdiscrete, well publicized occurrences wherein
products are found to be defective or dangerousQ
(Dawar & Pillutla, 2000, p. 215), product harm
crises present particular challenges in this age of
mass media.
According to a government website (www.recalls.
gov), over 75 products were recalled in August of
2005, involving a combination of consumer products,
food, drugs, motor vehicles, and car seats. This
statistic supports Bermans (1999, p. 69) claim that
bit is probably only a matter of time for any product

0007-6813/$ - see front matter D 2006 Kelley School of Business, Indiana University. All rights reserved.
doi:10.1016/j.bushor.2006.01.002

380
manufacturer to have one or more products recalled.Q While product recalls can result from both
product harm and product tampering incidents, the
former is more common than the latter.
Companies should not underestimate the importance of properly handling product harm crises, as
they have been documented to have negative
effects on market share, sales of recalled products,
stock prices, purchase intentions, and sales of
other company products (Pruitt & Peterson, 1986;
Siomkos & Kurzbard, 1994). Moreover, product
harm crises and product recalls are threatening to
a companys reputation (Berman, 1999; Davies,
Chun, da Silva, & Roper, 2003; Mowen, 1980). While
an intangible asset, corporate reputation does
have financial implications for an organization;
for example, Davies et al. (2003) reported that
reputation can influence attracting consumers,
generating investment interest, attracting top
employee talent, motivating workers, increasing
job satisfaction, generating more positive media
coverage, and garnering positive comments from
financial analysts.
With so much at stake, managers should be
concerned with trying to minimize the negative
effects of a product harm crisis. An evolving
literature details how managers can use a crisis
response to minimize the harm inflicted by crises
(including product harm), with recommendations
centering on understanding how the consumer is
likely to perceive the product harm crisis and the
companys response to it (Coombs & Holladay,
2004; Siomkos & Kurzbard, 1994). This article
organizes and extends our understanding of how
to evaluate a product harm crisis and select crisis
responses designed to minimize the harm generated by the crisis.

2. Ambiguous product harm crises: Who

is to blame?
Often, the culpable party for a product harm crisis
is not clear to observers, many of whom are users or
potential users of the product. This is especially
prevalent when the product harm crisis is initially
reported in the media. Two recent examples
illustrate this point. Last year, an article in the
New York Times (Peters, 2005) suggested that Ford
trucks with faulty cruise control switches, parked in
garages, could be the cause of a number of house
fires; however, the article also pointed out that
Ford denies any such problems, suggesting the fires
could have started in areas other than the garage.
Although a federal investigation is underway to

D. Laufer, W.T. Coombs

determine whether a product recall is warranted,
due to the complexity of the issues involved, it
could take a year for a decision to be reached.
Another newspaper article (Maher, 2005) described
a university students claim that a bacteria-contaminated taco purchased from a Chipotle restaurant gave him food poisoning. Also mentioned was
Chipotles response to the allegation, which suggests that other factors may have been involved in
the students illness, and the company spokespersons observations that Chipotle has never failed
a health inspection and that the norovirus can be
spread in other ways in addition to food handling.
Despite the ambiguity inherent in these types of
situations, observers still draw conclusions regarding who is to blame. Attribution theory has
established itself as an effective tool for predicting
stakeholder responses to crises. Weiner (1986), a
well known scholar in the area of attribution
theory, found that people need to assign responsibility for events, especially sudden, negative
events; as product harm crises match both these
criteria, they fit perfectly with attribution theory.
Therefore, a key issue for companies to assess is
how consumers attribute blame in these ambiguous
situations. Should the consumer blame the company for the product harm crisis, this can negatively
impact their future purchase intentions. Consumers
do not want to buy a product that could potentially
cause harm, and if they believe that the company is
at fault for the product harm crisis, they will avoid
purchasing the product. This being the case,
managers must learn to read ambiguous product
harm crises and select the appropriate responses.
Two factors that influence how consumers perceive
an ambiguous product harm crisis are the companys reputation and consumer traits such as gender
and nationality.

3. Role of corporate reputation in

forming blame attributions
Corporate reputation can be defined as an overall
evaluation that reflects the extent to which people
see the firm as bgoodQ or bbad.Q Various external
sources measure corporate reputation, the most
popular being Fortune magazines Most Admired
Companies rankings.
Corporate reputation has been shown to impact
consumers reactions to product harm crises. In a
pioneering study, Siomkos and Kurzbard (1994)
presented consumers with scenarios depicting two
separate product harm crises, each based on actual
incidents of product harm. The first scenario

How should a company respond to a product harm crisis?

involved people receiving electrical shocks after
using hairdryers; the second involved apple juice
made with ingredients that could potentially be
harmful to consumers. In both of these experiments, the authors found that consumers likelihood to purchase the product after a product harm
crisis increased in relation to the companys favorability of reputation, and that consumers felt the
products involved were less dangerous when sold by
a company with a better reputation. Unfortunately,
Siomkos and Kurzbard did not directly examine
consumers attributions of blame for the crisis;
however, a subsequent study by Laczniak, DeCarlo,
and Ramaswami (2001) found a link between
company reputation and blame attributions to the
company for a product failure. In this study,
participants were divided into two groups, both of
which learned about problems associated with
using a particular brand of personal computer.
The first group received information about a wellknown brand, Compaq, while the second group
received the identical information for a relatively
unknown brand, Everex. The authors found that
participants in the well-known brand condition
(Compaq) attributed more blame to the users for
the computer problems; in contrast, participants in
the relatively unknown brand condition (Everex)
attributed more blame to the company for the
problems. From these studies, managers can learn
how consumers react differently to a product harm
crisis based on the reputation of the company
involved. If a company or brand has a favorable
reputation, less crisis responsibility will be attributed to the company or brand; on the other hand, if
the company has a negative reputation or is
relatively unknown, consumers will attribute more
blame to the company for the product harm crisis.
In addition to a companys reputation, it is
important to integrate consumer traits into the
equation. Consumer traits further our understanding of the factors that can shape attributions of
crisis responsibility/blame.

4. How consumer traits shape

perceptions of product harm crises:
The role of perceived severity
A consumer segment represents a group of consumers who share a similar set of needs. In order to
capitalize on potential profits, companies develop
products that fit the needs of these segments.
According to Kotler (2005), one of the most popular
means of segmentation is based on demographics
such as gender, nationality, and age.

381

In addition to understanding the different needs

of consumer segments in order to develop new
products, it is also important for companies to
understand whether these segments differ in their
reactions to product harm crises. Should companies expect different consumer segments to react
in a similar manner in terms of assessing culpability
for a product harm crisis? Or will these segments
react differently, thereby requiring different corporate responses to the crisis depending on the
segment of interest? The challenge is to identify
traits that should relate to perceptions of product
harm, especially to ambiguous product harm
situations.
One factor that has been shown to impact blame
attributions is the perceived severity of events.
This research is based on psychologys defensive
attribution hypothesis, which predicts that when an
incident results in a more severe outcome, more
blame will be attributed to a potentially responsible party by an observer to the incident. Robbennolt (2000) reviewed studies examining the
defensive attribution hypothesis and found strong
support for its predictions.
The defensive attribution hypothesis is also
relevant in marketing contexts, in which events
can vary in terms of severity. For example,
relatively minor problems, such as certain types
of product failure, involve mild inconvenience to
the consumer. The damage associated with these
types of events is typically limited to the product
not working as advertised by the company (e.g., a
cell phone temporarily not working in the cell
phone operators area of coverage). In contrast,
product harm crises involve more serious problems
that can result in injuries and even deaths. In
addition to differences in the severity of product
failures and product harm crises, different consumer segments may perceive an identical event as
more or less severe, which could also impact their
blame attributions. Hence, there is a connection
between consumer traits and perceptions of crisis
responsibility/blame.
The defensive attribution hypothesis is based on
the premise that observers are concerned about
their own well-being. Blaming a company for a
serious event, such as a product harm crisis, serves
as a coping mechanism for observers, who are
interested in minimizing potential harm to themselves. Fiske and Taylor (1991, p. 85) describe the
impact of the perceived severity of outcomes and
blame attributions in the following way:
bAs the consequences of an action become more
severe, they become more unpleasant, and the
notion that they might be accidental becomes less

382
tolerable: The fear that the same thing might involve
the self becomes a realistic possibility. Seeing the
actions as avoidable and blaming a person for their
occurrence makes the actions more predictable and
hence avoidable by the self.Q
Based on Fiske and Taylors explanation, one
could conclude that blaming another party, other
than the company, could also serve to make bthe
actions more predictable and hence avoidable by
the self.Q Why would an observer blame the
company for a product harm crisis, as opposed to
blaming the consumer, who could be using the
product improperly? Tires, for example, can fail as
a result of a manufacturing defect or due to
improper treatment by consumers (e.g., not checking the tire pressure as recommended by the
manufacturer). Fortunately, the defensive attribution hypothesis also addresses the question of who
to blame, the perpetrator or the victim. Shaw and
McMartin (1977) identify two different possible
attribution tendencies: harm avoidance and blame
avoidance. Chaiken and Darley (1973) stated that
an observer who is similar to the perpetrator will be
more likely to blame the victim, in order to avoid
blame (bblame avoidanceQ). Conversely, an observer who is more similar to the victim will be more
likely to blame the perpetrator, in order to avoid
harm (bharm avoidanceQ). Observers to a product
harm crisis are more likely to view themselves as
more similar to the victims (other consumers) than
the perpetrator (a company), especially if they also
use the product involved in the crisis. As such,
observers to a product harm crisis are more
motivated to avoid harm than to avoid blame; as
a result, they will blame the company. Two
promising individual traits for identifying differences in the perceptions of the severity of product
harm crises are gender and tolerance for ambiguity. Since tolerance for ambiguity is closely related
to uncertainty avoidance, this has important
implications for possible differences in how consumers will react to a product harm crisis across
countries.

D. Laufer, W.T. Coombs

Laufer and Gillespie (2004) examined this issue
in the context of an ambiguous product harm crisis
by conducting two experiments involving different
scenarios. The first product harm crisis experiment
involved people becoming ill after drinking orange
juice; the second related to car accidents involving
Michelin tires. In both experiments, the authors
found that women, more than men, blamed the
companies for the product harm crises. The second
experiment, however, is of principle interest in that
it examines the reasons underlying the differences
between men and women in their attributions of
blame. In this experiment, the authors presented a
product harm crisis via newspaper article format, a
typical way many people first learn about a crisis.
The product harm crisis in the experiment depicted
people injured in car accidents involving Michelin
tires. In order to create an ambiguous situation
(similar to the actual Ford and Chipotle examples
presented previously), the fictitious article described a number of factors that could have caused
the accidents, including company, driver, and
situational variables. At the end of the article,
experiment participants were informed that an
investigation by the consumer protection agency
was underway to determine the cause of the
accidents.
Laufer and Gillespie (2004) found that, after
reading about the product harm crisis, women felt
more vulnerable to harm than men; in other words,
women were more concerned that a similar accident could occur to them. This, in turn, caused
women, more than men, to perceive the product
harm crisis to be more severe. The authors findings
support studies in psychology, which found that
women view threatening events as more severe
than men, due to biological and socialization
factors (Harris & Miller, 2000). Laufer and Gillespies article is the first to suggest that this is also
occurring in the context of a product harm crisis, as
well. As predicted by the defensive attribution
hypothesis, the increased perceptions of severity
generated more blame to the company by women
through defensive attributions.

4.1. How gender shapes perceptions of

product harm crises

4.2. How consumers overseas may differ in

their perceptions of product harm crises

Gender is an important segmentation variable used

by companies, a fact evidenced by brands in many
product categories that are sold separately to men
and women. As a result, determining whether men
and women differ in their reactions to product
harm crises is an important issue for these companies to examine.

In a landmark study of over 100,000 IBM workers in

40 countries, Hofstede (1997) identified four
dimensions by which countries could be differentiated in terms of cultural differences: power
distance, uncertainty avoidance, individualism
collectivism, and masculinityfemininity. Unfortunately, studies have not directly examined how

How should a company respond to a product harm crisis?

consumers across cultures may differ in their
reactions to product harm crises as a result of
differences in these cultural dimensions; however,
Laufer, Gillespie, McBride, and Gonzalezs (2005)
study regarding defensive attributions in product
harm crises in Mexico provides preliminary evidence for a link between uncertainty avoidance
and consumer blame attributions.
Hofstede (1997, p. 263) defines uncertainty
avoidance as bthe extent to which the members
of a culture feel threatened by uncertain or
unknown situations.Q Taylor (2000) suggests that
countries that rank high in uncertainty avoidance
react more strongly to product harm crises than
countries that rank lower on this cultural dimension. Basing this observation on the reaction of
various countries to the Coca-Cola product harm
crisis in Belgium (whereby school children became
ill after drinking the product), Taylor noted that
Belgium, France, and Spain banned Coke products,
whereas Denmark, Norway, and Sweden did not.
These countries differ on the uncertainty avoidance
dimension, and Taylor speculates that high uncertainty avoidance might affect crisis response by
leading people to make stronger attributions of
responsibility to the company for product harm
crises such as the Coca-Cola incident in Belgium.
In a subsequent study conducted in Mexico,
Laufer et al. (2005) provided further insight into
the possible connection between uncertainty
avoidance and blame attributions by examining a
related construct, tolerance for ambiguity. Tolerance for ambiguity brefers to the way an individual
perceives and processes information about ambiguous situations or stimuli when confronted by an
array of unfamiliar, complex, or incongruent cluesQ
(Furnham & Ribchester, 1995, p. 179). In a review
of the literature on tolerance for ambiguity, Furnham and Ribchester (1995) suggest that the cultural
dimension of uncertainty avoidance (Hofstede,
1997) is strongly related to tolerance for ambiguity.
In their research on tolerance for ambiguity,
Laufer et al. (2005) presented study participants
with a fictitious product harm crisis, which was
relayed through a newspaper article that depicted
people injured in car accidents involving Michelin
tires (similar to the stimulus used in Laufer and
Gillespies (2004) study). The authors found that
tolerance for ambiguity is an important factor
impacting perceptions of severity in a product
harm crisis; in other words, participants that scored
low on tolerance for ambiguity were threatened
more by the ambiguous product harm crisis than
those who scored high on this personality trait. As a
result, participants scoring low on tolerance for
ambiguity perceived the product harm crisis as

383

being more severe, and, as predicted by the

defensive attribution hypothesis, assessed more
blame to the company for the product harm crisis.
The findings of Laufer et al. (2005) provide
preliminary evidence that consumers who live in
countries that rank high on the uncertainty avoidance cultural dimension may be more threatened by
an ambiguous product harm crisis and, as a result,
blame a company more for the product harm crisis
than consumers from a country that ranks low on
this cultural dimension. Although additional research is needed in directly comparing consumer
reactions to product harm crises across countries,
the findings of Laufer et al. seem to support Taylors
assertion that uncertainty avoidance played a role
in the differences in country responses to Cokes
product harm crisis in Belgium.

5. Crisis response strategies: Super effort

or voluntary compliance?
After gaining an understanding of how consumers
react to a product harm crisis, managers can begin
to consider how best to respond and formulate a
response strategy (i.e., what management says and
does after a crisis hits). Siomkos and Kurzbard
(1994) proposed four strategies for dealing with
product harm crises: denial, forced compliance,
voluntary compliance, and super effort. Denial
involves the company claiming there is no threat
from their product, forced compliance occurs when
the government forces a product recall or other
remediation efforts, voluntary compliance entails a
company recalling a product or taking remediation
efforts on its own accord, and super efforts involve
voluntary compliance plus compensation and an
extensive communications campaign to promote
the effort.
The first strategy, denial, should only be used to
correct a misunderstanding regarding culpability,
and company management must prove that using
the product causes no actual harm. When employing this tactic, a common response is to attack the
companys accusers, who, in many instances, are
the victims. An example of this is the product harm
crisis Audi faced in the 1980s involving acceleration
problems. For years, the company denied responsibility for sudden acceleration problems, claiming
drivers (their own customers) were the problem,
not Audi engines.
In addition to denial, forced compliance is
another crisis response strategy that usually further
erodes a companys reputation. Consumers become
justifiably upset when the government forces a

384

D. Laufer, W.T. Coombs

company to take actions to protect consumer

safety, as the bforcedQ aspect leads consumers to
believe the company doesnt care about them.
Voluntary recalls, a common response to product
harm crises, remove risks to and demonstrate
concern for consumers. An even more vigorous
response, the super effort, signals additional concern to the public by providing compensation and
increasing communication efforts beyond what is
required by law. Legally, a company only has to
send press releases about recalls to major media
outlets, although it may also choose to post
information on its website and send alerts to major
distributors. By opting to offer compensation and
advertise recalls, companies escalate voluntary
recalls into super efforts. For example, when faced
with a product harm crisis involving their Poke
mon
ball giveaway, Burger King employed the super
effort strategy by offering compensation for
returned toys, advertising on network television,
and distributing safety information to pediatricians offices. It is important to note, however,
that, despite being an effective strategy in certain
situations, a super effort can harm a company when
it is viewed as an overreaction.
An important issue facing companies involved in
a product harm crisis is choosing the most effective
response. Siomkos and Kurzbard (1994) suggest that
both denial and forced compliance strategies are
not particularly effective for companies as a
response to a product harm crisis; therefore, in
most instances, companies must choose between a
voluntary recall and a super effort. It is worth
pointing out that this is not a trivial decision. Not
only is a super effort strategy significantly more
expensive than a voluntary recall, but the company
involved also runs the risk of unnecessarily alarming
the public if a super effort is not justified.
There is limited theoretical research that maps
how consumers will react to product harm crises, a
deficiency thats not to be taken lightly. Managers
need theoretically developed and tested knowledge when facing a crisis, especially a crisis as
common as product harm. Periods of crisis are not

the time to rely on speculation and hunches. In this

article, we have drawn together research from a
variety of sources to develop a set of guidelines
(see Table 1) managers can use when choosing a
response to a product harm crisis.
The guidelines integrate reputational and consumer-based cues to predict how consumers will
react to ambiguous product harm crises, cues that
are fairly easy for companies to identify and
interpret. Corporate and brand reputations can be
assessed relatively quickly from external sources
such as Fortunes Most Admired Companies rankings, JD Power and Associates, Consumer Reports,
and the Better Business Bureau, to name a few.
Consumer-based cues can also be rapidly assessed
based on whether the product is sold primarily to
men or women, and whether the product is sold in a
country that ranks high or low on the cultural
dimension of uncertainty avoidance, based on
Hofstedes (1997) rankings.
The reputational and consumer-based cues are
valuable to companies dealing with a product harm
crisis because they indicate the degree to which
consumers will attribute blame to the company for
the crisis. After analyzing these cues, the company
can choose the response that best fits the level of
blame attributed to the company. If any of the
three cues indicate a high level of blame (prior
reputation poor or unknown, predominantly female
consumers, or consumers from a country ranking
high on uncertainty avoidance), managers should
utilize a super effort. This is necessary because,
under these conditions, consumers are more likely
to believe that the company is responsible for the
crisis; as a result, they will expect a powerful
response. If, on the other hand, the three cues all
indicate a low level of blame being attributed to
the company (strong and positive prior reputation,
predominantly male consumers, and consumers
from a country ranking low on uncertainty avoidance), managers can employ a voluntary recall
strategy. In such a situation, this is an optimal
response because consumers believe the company
is minimally responsible for the product harm crisis;

Table 1 Cues for predicting attributions of blame to the company (and appropriate corporate responses) for
ambiguous product harm crises
Attributions of blame to the company
Prior reputation
Gender of consumers
Uncertainty avoidancea

Strong (super effort strategy)

Weak (voluntary recall strategy)

Unknown/weak or negative
Predominately female
High

Well known/strong and positive

Predominately male
Low

a
Hofstede (1997, p. 263) defines uncertainty avoidance as bthe extent to which the members of a culture feel threatened by
uncertain or unknown situations.Q In addition to Hofstede (1997), a number of sources make available country rankings on this
dimension.

How should a company respond to a product harm crisis?

therefore, they will be satisfied with a voluntary
recall.
Given the statistics regarding product harm
crises, the ambiguous product harm scenario is more
a question of bwhenQ than bifQ for managers. This
being the case, the choosing of a proper response to
a product harm crisis is of great importance, as an
incorrect response can be expensive and damaging
to the company. By understanding the reputational
and consumer-based cues, managers are better
prepared to handle an ambiguous product harm
crisis and avoid making mistakes that can further
damage the reputation of the company.

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