Responding to Reputational Crises: A Stakeholder Perspective

Abstract

In this article, we explore the management of corporate reputation crises caused by sudden and unexpected incidents like industrial accidents, scandals, and product failures. Drawing on the stakeholder and crisis management literatures, we develop a model of reputational crises useful in understanding what they are, how they develop over time, and how they can be managed. Based on our model, we present a number of propositions concerning the complex relationship among the initial triggering event, stakeholder reactions, and the managerial responses that characterize reputational crises. Throughout the paper, we use the examples of the Union Carbide disaster at Bhopal and the Exxon Valdez disaster in Alaska to illustrate our theoretical points. We conclude with a discussion of future directions for research in this area.