RESPONDING TO PRODUCT LIABILITY CRISES

Environment, safety and health consequences of products and activities are becoming an important strategic concern for corporations. Product hazards can be a source of strategic threats and corporate crises. This paper presents a new model for measuring organizational success in dealing with product-harm crises. Consumer attitudes are used in assessing success. Three important factors that influence successful recovery from a product-harm crisis are identified. These include, company's reputation and image, external effects, and organizational responses to the crisis. The model is tested in two crisis situations through the use of scenarios. Sixteen combinations of factor levels are analysed. Specific recommendations are made regarding successful responses to crisis.