The impact of value-related crises on price and product-performance elasticities

Raoul V. Kübler (), Michael Langmaack (), Sönke Albers and Wayne D. Hoyer ()
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Raoul V. Kübler: Marketing Center Münster
Michael Langmaack: Kühne Logistics University
Wayne D. Hoyer: The University of Texas at Austin

Journal of the Academy of Marketing Science, 2020, vol. 48, issue 4, No 9, 776-794

Abstract: Abstract Previous research on the impact of corporate crises on customers’ elasticity has largely focused on performance-related crises (e.g., product recalls) and found an increasing price elasticity under these conditions. We investigate whether this result differs for value-related crises that are due to ethical violations, such as the use of child labor or environmental pollution. In line with moral foundation theory (MFT), we propose that value-related crises lead to stronger moral outrage and increased boycott intentions, thereby decreasing price and product-performance elasticities. We first analyze more than 360,000 Facebook user comments in relation to four value-related and four performance-related crises and show that the different outcomes for value- and performance-related crises can be explained according to MFT. Then, through discrete choice experiments, we demonstrate that, in contrast to performance-related crises, price elasticity decreases substantially for a value-related crisis that affects both violating and nonviolating companies. We also show for the first time the impact on product-performance elasticities with similar negative effects as for price. The results are stable even for different product categories, causes of ethical violations, and measurement conditions. As a result, it is more difficult for companies to recover from value- than performance-related crises.

Keywords: Value-related crisis; Performance-related crisis; Product-harm crisis; Corporate unethical behavior; Moral foundation theory; Price elasticity; Product-performance elasticity (search for similar items in EconPapers)
Date: 2020
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Citations: View citations in EconPapers (5)

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DOI: 10.1007/s11747-019-00702-5

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