Spillover effect in supplier related product recall: the impact of supplier COO on product evaluations

ABSTRACT

Research has shown that supplier quality can lead to brand quality failures. However, what is not clear is whether a supplier’s country of origin (COO) plays a role in the evaluations of manufacturer brands after a recall is initiated. In this paper, through the lens of resource advantage (R-A) theory, we empirically examine whether a supplier’s COO hurts or helps the vehicle brand when a supplier is blamed during a vehicle recall event. R-A theory suggests that high brand quality can enhance competitive advantage for a firm. Through an experimental study, we find that high brand quality can override the spillover effect of COO after a product recall. However, the severity of a recall can nullify the impact of high brand quality.