Firm response, action visibility and consumers’ legitimacy judgment

Zhimei Yuan, Yi Guo and Xingdong Wang

American Journal of Business, 2019, vol. 34, issue 2, 75-92

Abstract: Purpose - The purpose of this paper is to examine the role of action visibility in moderating the relationship between firm response and individual legitimacy judgment. Since a firm may decouple its public commitment from its actual practice to cope with conflicting stakeholder interests, visibility is important for consumers to make judgment because it is difficult for them to observe a firm’s actual fulfillment of its public commitment to quality assurance after a product-harm crisis. Design/methodology/approach - Scenario-based mixed design experiments were employed and 718 valid responses were collected. Findings - The results indicated that, while acknowledging responsibility produced more favorable legitimacy judgment than denial, decoupling produced no better judgment than denial. However, higher visibility significantly amplified the effect size. Specifically, under the condition of high visibility, not only did acknowledging responsibility produce much more favorable judgment than denial, but so did decoupling. Research limitations/implications - This study provided empirical evidence that action visibility moderated the relationship between firm response and individual legitimacy judgment, thus complementing the literature on crisis management. Practical implications - This study provided executives or managers with optimal, suboptimal and least optimal response strategies under different levels of action visibility. Originality/value - Much of the extant research on response strategy for organizations to deal with product-harm crisis ignored the moderating role of action visibility. Past research on legitimacy judgment focused on organization. This paper combined firm response, action visibility and individual-level legitimacy judgment.

Keywords: Purchase intention; Product-harm crisis; Action visibility; Firm response; Legitimacy judgment (search for similar items in EconPapers)
Date: 2019
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Persistent link: https://EconPapers.repec.org/RePEc:eme:ajbpps:ajb-07-2018-0042

DOI: 10.1108/AJB-07-2018-0042

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