Oops! I Did It Again: Are Some Firms Less Likely to Encounter a Product-Harm Crisis?

Product-harm crises are ubiquitous in today’s marketplace. Prior research has explored the negative consequences associated with these crises (e.g., Ahluwalia et al. 2000; Dawar and Pillutla 2000; van Heerde et al. 2007), and highlighted effective crisis management strategies (e.g., Chen et al. 2009; Siomkos and Kurzbard 1994; Cleeren et al. 2013). Very limited attention, however, has been devoted to exploring the antecedents of such crises. Addressing this limitation, the authors explore corporate governance and top management team (TMT) characteristics related to firms’ likelihood of experiencing a product-harm crisis. Analyses of 116 S&P 500 firms across the years 2006–2011 reveal that family firms, firms with high levels of managerial ownership, and firms in which the marketing function has a high degree of influence in the TMT, are less likely to encounter a product-harm crisis. The lower propensity of such firms to encounter a product-harm crisis is partially mediated by their higher strategic emphasis on product quality. These results have important implications for practitioners and for scholars working in the areas of innovation, family business, corporate governance, and the role of marketing in organizations.