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08-11-2019 | Original Empirical Research | Issue 4/2020

Journal of the Academy of Marketing Science 4/2020

The impact of value-related crises on price and product-performance elasticities

Journal:
Journal of the Academy of Marketing Science > Issue 4/2020
Authors:
Raoul V. Kübler, Michael Langmaack, Sönke Albers, Wayne D. Hoyer
Important notes

Electronic supplementary material

The online version of this article (https://​doi.​org/​10.​1007/​s11747-019-00702-5) contains supplementary material, which is available to authorized users.
Rajkumar Venkatesan served as Area Editor for this article.

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Abstract

Previous research on the impact of corporate crises on customers’ elasticity has largely focused on performance-related crises (e.g., product recalls) and found an increasing price elasticity under these conditions. We investigate whether this result differs for value-related crises that are due to ethical violations, such as the use of child labor or environmental pollution. In line with moral foundation theory (MFT), we propose that value-related crises lead to stronger moral outrage and increased boycott intentions, thereby decreasing price and product-performance elasticities. We first analyze more than 360,000 Facebook user comments in relation to four value-related and four performance-related crises and show that the different outcomes for value- and performance-related crises can be explained according to MFT. Then, through discrete choice experiments, we demonstrate that, in contrast to performance-related crises, price elasticity decreases substantially for a value-related crisis that affects both violating and nonviolating companies. We also show for the first time the impact on product-performance elasticities with similar negative effects as for price. The results are stable even for different product categories, causes of ethical violations, and measurement conditions. As a result, it is more difficult for companies to recover from value- than performance-related crises.

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