1. Product recalls are negative relationship events that can harm customer satisfaction and firms' financial performance. Recalls concern all industries and increasing regulatory demands highlight the importance of strategic decision-making in response to the recall.
2. When firms deal with product recalls, the way to respond is often determined by regulators. However, firms can also respond proactively by establishing effective quality control systems that identify product malfunctions before they incur harm to consumers.
3. Compensating consumers adequately is crucial to recover customer satisfaction after a recall. When deciding whether to provide full or partial compensation, firms need to take into account their reputation, the severity of the product failure, and their willingness to signal effort to consumers.
   
   

2022-05-12