The Multifaceted Impact of Foreign Product Recalls on Consumer Brand Evaluations in the Local Market: A Study of 26 Auto Brands

초록

This study analyzes the multifaceted impact of foreign product recalls on local market consumers’ brand reliability evaluations. By examining recall and consumer brand rating data for 26 auto brands held by 13 companies of various nationalities sold in the US market between 2006 and 2016, six hypotheses were tested to understand the complex effects of recalls. The results show that a brand’s own recalls generally decrease consumer brand trust, with more negative effects for foreign brands. Unexpectedly, for foreign brands, recalls from other brands from their home country positively impacted reliability perception in that brand, although this positive spillover effect only occurred when brand visibility or market share were low. For companies with already high brand visibility or market dominance, negative spillover effects were detected. As foreign brands can be impacted by country-of-origin effects, understanding the multifaceted implications of not only their own recalls but recalls from domestic sister brands is important.

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