Buffering Effect of CSR Reputation During Product Recalls: Evidence from Global Automakers Across Institutional Contexts
Multinational corporations (MNCs) face significant reputational and performance risks from product recalls, yet the severity of these consequences varies across national markets. While prior research suggests that corporate social responsibility (CSR) can buffer against such crises, limited attentio...
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| Main Authors: | , , |
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| Format: | Article |
| Language: | English |
| Published: |
MDPI AG
2025-05-01
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| Series: | Systems |
| Subjects: | |
| Online Access: | https://www.mdpi.com/2079-8954/13/6/402 |
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| Summary: | Multinational corporations (MNCs) face significant reputational and performance risks from product recalls, yet the severity of these consequences varies across national markets. While prior research suggests that corporate social responsibility (CSR) can buffer against such crises, limited attention has been paid to how country-level institutions shape this effect. This study examines whether—and under what institutional conditions—CSR reputation mitigates the negative market consequences of product recalls. We focus on how the insurance-like effect of CSR varies with the level of corruption in a country’s institutional environment. Using panel regression analysis and hand-collected data from 14 global automotive manufacturers across eight countries (2007–2015), we find that firms with stronger CSR reputations experience significantly smaller declines in market share after recall announcements. Furthermore, this buffering effect is amplified in countries with higher corruption levels, suggesting that when formal institutional trust is weak, CSR signals play a greater role in stakeholder perceptions. These findings advance CSR literature by showing that its reputational benefits are contingent on institutional context and contribute to international business scholarship by revealing how national-level corruption interacts with firm-level reputational assets during crises. |
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| ISSN: | 2079-8954 |