The Influence of Crisis Management on Customer Purchase Intention toward Cosmetic and Healthcare
Products
Shaizatulaqma Kamalul Ariffin*
Graduate School of Business, Universiti Sains Malaysia, 11800 Minden, Penang Email: shaizatulaqma@usm.my
Noor Nasir Kader Ali
Graduate School of Business, Universiti Sains Malaysia, 11800 Minden, Penang
Siti Nur Atiqah Kamsan
Graduate School of Business, Universiti Sains Malaysia, 11800 Minden, Penang
* Corresponding Author
Abstract
Purpose: The aim of this research is to assess customers’ views towards the elements of crisis management, such as time, responsible recall, opportunistic recall, blame attribution, and perceived responsibility of organizations in crisis on customer purchase intention after crisis, moderated by crisis communication.
Design/methodology/approach: A quantitative research was conducted utilizing an online survey by gathering individual responses in Malaysia. A total of 150 respondents participated in this study. The data was analyzed using the structural equation model (PLS-SEM).
Findings: The results indicate that blame attribution, responsible recall and perceived crisis responsibility have an insignificant influence on customer purchase intention post-crisis whereas crisis communication has a significant positive influence on customer purchase intention post- crisis. Likewise, crisis communication moderates negatively the relationship between time and customer purchase intention post-crisis. The results also demonstrate that time, responsible recall and crisis communication are the dormant variables with high importance and high performance.
Research limitations/implications: This study provides a valuable foundation for future research, highlighting the importance of focusing on how a crisis can be prevented or redirected by recognizing signals or trends that may lead to a crisis such as the variables studied in this research.
Practical implications: This study claims that an organization should prepare itslef with operative and effective crisis management and crisis communication plans that can support their execution of crisis management
Originality/value: Crisis management effects on purchase intention of healthcare and cosmetic products are among of the important areas that need to be studied. The findings of this study shows that crisis communication has to be done immediately after some crisis occurred.
Keywords: Time, Responsible Recall, Crisis Communication, Crisis Management, Purchase Intention
Introduction
Companies can be inflicted by a crisis at any moment. When crises arise, they affect not just a firm’s feasibility, but also the people involved in that organization, from employees to investors.
A crisis can be described broadly as a threat to any aspect of a firm’s operations. As noted by Coombs (2007) a crisis handled incorrectly can result in all manner of problems. Crises are also indifferent to a firm’s size or status. Avlon, for instance, went through a crisis arising from product tampering allegations that continue to impact the trust and confidence of their customers.
Another well-known large firm, Claire, was forced to recall their merchandise after claims of potential Pseudumonas aeruginosa contamination. These are, of course, prominent examples but there are countless others that do not attract the attention of the media or public at large.
A crisis that is mishandled by management can cause the firm huge losses (Arpan and Pompper, 2003). Coombs (2007) highlights three particular threats: consumer safety, financial loss, and reputational damage. Accidents and fatalities are undoubtedly the most damaging but businesses may also suffer from problematic operations, or even lost market share. Moreover, the damage may not be felt instantly as consumers may file lawsuits that pose longer-term financial problems. Dilenschneider (2000) cited that all crises ultimately threaten a firm’s reputation.
According to Davies and Walters (1998), an organization that fails to respond to a crisis immediately, will witness the evolution of the crisis into a full-blown disaster.
Mitroff and Alpaslan (2014) observed that uncontrollable reactions can also occur simultaneously with the crisis thus compelling organizations to maximize preparation. This preparation is referred to as ‘crisis management’. Crisis management is an organization’s advanced preparation and strategies in preparing themselves to respond to crises and incidents like severe storms, fires, earthquakes, acts of terrorism, workplace violence, flop threats, product contamination, and kidnappings (Lockwood, 2005).
Most previous studies undertaken in this area have concentrated on the factors influencing customer responses to a product-harm crisis (Vassilikopoulou et al., 2009; Magno, 2012).
Nevertheless, there is no clear indication of the moderating role of crisis communication on the relationship between crisis management and customer purchase intention post-crisis in previous studies. The present investigation is therefore an effort to broaden the scope of inquiry and to contribute to the literature on crisis communication and crisis management, by analyzing the moderating role of crisis communication on the relationship between crisis management and customer purchase intention post-crisis
Literature Review and Hypotheses Development
According to previous studies (Klein and Dawar, 2004, Laufer et al., 2005 and Vassilikopoulou et al., 2009), consumers’ perception towards crisis management will have an impact on consumers’ purchase intention post-crisis. Therefore, this study will include crisis communication in the theoretical model. This will act as an independent variable and a moderator to evaluate its significance on consumer purchase intention post-crisis and the relationship between crisis management and consumer purchase intention post-crisis. Consumers will be able to make informed judgment after observing the overall crisis management and crisis communication carried out by a company as the crisis takes place and possess more crisis
information. On top of it, past studies also evaluated consumer response post-crisis in their theoretical models. The theoretical framework is presented in Figure 1.
Figure 1: Theoretical Framework
Crisis Management
Crisis management is separated into three phases: (1) pre-crisis, (2) crisis response, and (3) post- crisis (Coombs, 2007). As its name implies, the first phase occurs before the crisis, with focus being on crisis prevention and preparation. The crisis response phase is associated with the event of an actual crisis and is concerned with management’s response to the crisis. The final stage, post-crisis, relates to management’s actions and evaluation of their crisis management, as well as their preparation for any potential forthcoming incident. At the same time, the company needs to ensure they are fulfilling their commitments or any promises done during the crisis. Follow up on crisis should be shared with related parties, like the public and the firm’s customers. Using constructive crisis management in handling crisis helps to protect a company’s reputation and control negative publicity, which is of course highly damaging for an organization (Stafford and Armoo, 2002). As noted by Regester (1989), crisis management fundamentals include anticipation, expectation, preparation, and training. Effective crisis management necessitates active communication with related parties such as shareholders, politicians, the financial teams, pressure groups, agencies related to government, and shareholders or anyone who has an interest in the achievement and catastrophe of respective company.
Purchase intention is defined as customer willingness to buy a particular service or product. It is also described as the possibility that a customer will buy a specific product; where the higher the purchase intention, the greater the purchase probability will be (Dodds et al. 1991: Schiffman and Kanuk, 2000). Therefore, customer purchase intention post-crisis can be described as customer willingness to buy the affected company’s products once the crisis is over. With this in mind, the following hypothesis is put forward:
H1: Crisis management has significant influence on customer purchase intention post-crisis.
Time
In this study times refers to the difference between the first signals of product danger and the withdrawal from the market, time taken to react promptly to the crisis issues and quick response to inquiries is most vital. It is an integral element of crisis management of an organization during
Crisis Management
Time
Responsible Recall
Opportunistic Recall
Blame Attribution
Perceived Crisis Responsibility
Consumer Purchase Intention Post-crisis Crisis
Communication
a product-harm crisis which fall to be the main focus of this study and aims to validate the results of previous studies that make use of similar definition of time (Mowen, 1980, Magno et al., 2010; Magno, 2012). These authors found that time has an important influence on post-recall vein of consumers, consumer perceptions towards the organization, and customer purchase intention after crisis.
There are many definitions used by scholars like the time period without the crisis, the year of the sale of the product and the utterance of its recall. Time is described as the difference between the first signals of product dangerousness and the time it’s been pulling out from the market, time taken to respond quickly to the crisis issues and fast response to consumer inquiries (Mowen, 1980, Standop, 2006, Roth et al., 2008, Hora et al., 2011 and Magno, 2012) and as the time period without the crisis (Vassilikopoulou et al., 2009), the year of the deal of the product and the statement of its recall (Roth et al., 2008 and Hora et al., 2011). Conversely, Johnson-hall (2012) termed and classified time into three stages which are Stage 1: end of production to time of defect detection, Stage 2: time of defect detection to public announcement, and Stage 3: public notification to the closure of recall activities which comprises reverse logistic processes by the recalling firm and recall monitoring by the regulatory and used the term time to recall by combining the first two stages. Therefore, the following hypothesis was formed:
H1a: Time has significant influence on customer purchase intention post-crisis.
Responsible Recall
Responsible recall or crisis response is one of the key factors, instrumental in defining the success of an organization in dealing with a crisis situation. A responsible recall is pinpoint as a product recall made by an organization before governmental intervention or also known as voluntary recall and super-effort. Product recall is describe as the process provided in law that which is adopted by suppliers in recalling consumers. This is due to faults or defects found in either products or services in the market (Consumer Defence Protection Foundation – PROCON, 2014). For instance, ease of recall process, wide recall advertisement and offering compensation (Jolly and Mowen, 1985, Siomkos, 1989, Shrivastava and Siomkos, 1989, Siomkos and Kurzbard, 1994 and Magno, 2012).
Products that have quality failure findings has been released for distribution and consumption and are well publicized will result in product recall (Johnson-hall, 2012). A usual product recall process normally involves repairing or withdrawing defective product. It comes with the objective to resolve reduce impact public safety issues (Carrol, 2016). Therefore, the hypothesis below was developed:
H1b: Responsible recall has significant influence on customer purchase intention post- crisis.
Opportunistic Recall
Opportunistic recall is also defined as product recall, which meant to be done with opportunistic attitude. By conducting product recall due to external pressures such as governmental intervention, it should be categorised as involuntary recall and falls under opportunistic recall.
This includes the company trying to take advantage from the crisis happen by making their customers used one of its other products, increase brand awareness not just to other products but also on affected products, hiding the actual product issues, and doing the recall only because of external pressures besides after being found out by external parties (Magno, 2012).
Whenever a company involuntarily recalls their defective product next after being required to do so by the government in order to protect consumer, the “forced” characteristic of the recall is considered by customers as the company is actually have no concerns on their safety and just following direction by government. By recalling involuntary, an organization’s reputation will be further damage (Laufer and Coombs, 2006). Moreover, earlier studies presented that involuntary recall (opportunistic recall) has important negative impact on the producer’s image, consumer loyalty, consumers’ post-recall brand attitude as well as consumer purchase intention (e.g., Souiden and Pons, 2009; Magno et al., 2010). Therefore, this research aims to validate the findings in prior studies, which point out that opportunistic recall has important influence on consumer response. Apart from that, this research also will look at the consumers’ perceptions on what they see as an opportunistic product recall. Therefore, the following hypothesis was formed:
H1c: Opportunistic recall has significant influence on customer purchase intention post-crisis.
Blame Attribution
Blame attribution is described as the process where evaluations are completed by individuals regarding the causality in response to observed, affect-based negative outcomes perceived by themselves or others (including social transgressions) as failures (Meier and Robinson, 2004, Harvey and Dasborough, 2006, Fast and Tiedens, 2010). In the context of consumer behavior, blame attribution is described as the process through which consumers spontaneously construct attributions of responsibility to harmful brand (Gupta, 2009, Regan et al., 2015).
In a product-harm crisis, when products are found to be hazardous and defective, the public interest and attention are suddenly creating destructive consequences for the business. For instance, financial losses, reduced consumer trust, legal issues, brand equity, decreases consumers’ willingness to buy recalled product alongside other future products marketed by the company, purchase the recalled product along with other products marketed by the organization in the future. Moreover, an organization in crisis that is found to be blameworthy in addition suffers from negative word of mouth, complain, anger, and reduced support by its customers.
Furthermore, a corporation in crisis found to be guilty also grieves from destructive complaints, anger, and less support by their consumers. Shaver (1985) stated that the blame attribution will only occurs when one of the causal fundamentals that points to the circumstances that demands for the assessment of accountability is “human action” and that an thing is only assigned to blame when the thing is found to be accountable by the observer. Once the entity is found to accountable for ethically objectionable manners, the entity will be expected to held responsible and then punished. In other words, if the customers blame the organization in crisis, the customers are more likely to penalize it (Gupta, 2009).Therefore, the hypothesis below was developed:
H1d: Blame attribution has significant influence on customer purchase intention post-crisis
Perceived Responsibility of Organization in Crisis
Based on Coombs (1998), crisis responsibility can be defined as “the stratum to which the stakeholders attack the organization during the crisis”. The stakeholders tend to identify a responsible party to shoulder the blame and at the same time reducing the harm caused during a crisis. Generally, , the significance of crisis responsibility related with an organization is grounded on the price of criticism set to the business which shows that customers search for
something to assign their criticism of the crisis. The reputational threat level faced by a company in crisis can be assessed through the level of crisis accountability engaged by the interested party, which can furthermore be interpreted as the fault value, placed on the company (Brown and Ki, 2013).
Bickerstaff et al. (2006) indicated that the opinion of accountability is grounded on whether the players or things are recognized as the contributors to the incidence. Consumers deem a business that takes its failure as causally accountable to the crisis events. Busby (2008) noted that business is seeming accountable by customers if it is supposed to be ‘complicit’ by things tangled in risks generation whose responsibility in some way that may contributes to the risks. Therefore, the following hypothesis was formed:
H1e: Perceived crisis responsibility has significant influence on customer purchase intention post-crisis.
Crisis Communication
Crisis communication is specified as the gathering, handling, and distribution of required information in order to write a situation of the crisis (Coombs, 2010). Fearn-Banks (2007) stated that crisis communication is the communication between the business and its public before, during, and after the destructive incidence whereby the conversation specifics plans and strategies which are intended to reduce punishment to the organization image. The meaning of crisis communication throughout a crisis can furthermore be pointed and identified as the distribution of info to the public by the affected business to transcribe the crisis situation during the incident (Coombs, 2010).
Coombs (2010) pointed out that communication is the principle of crisis management and that it is trigger through entire crisis management process. Public opinions of the business during and without the crisis is swayed by communication conclusions made by the business (Sapriel, 2003:
Hale et al., 2005). Crisis communication is extremely vital particularly throughout the crisis as it has important effect on the crisis consequences. For instance, the value of reputational punishment of the company, number of injuries (Coombs, 2010). The under structure of crisis communication who include the interested party response management (Coombs, 2009) deals with the effort the crisis management squad does to produce replies to the public during crisis. In precise, it includes the message efforts through words and manner to effect the opinions of interested party of the crisis, the business in crisis as well as the business’s crisis response. If communicating on time to reply to a crisis or remaining silent, other parties will take the chance to arrange for the crisis facts and therefore own how the crisis will be seen by stakeholders (Barton, 2001, Coombs, 2010). One of the most used theories in crisis communication Situational Crisis Communication Theory (SCCT) developed by Coombs and Holladay (2002) is unique theories used in crisis communication and is broadly used. SCCT is not only concentrating on the result aimed at crisis communication, but also imbricate the surprise and behavioral intentions for instance, purchase intention and negative opinion from stakeholders.
The vital rule for SCCT is crisis responsibility, which will in turn affect their behavioral and affective responses to that organization following a crisis.
Crisis communication and crisis management go hand in hand during a crisis as it was pointed out by Coombs (2010) that communication is the essence of crisis management and that it is critical throughout the entire crisis management process. Public perceptions of the organization during and after the crisis is influenced by communication decisions made by the organization
(Sapriel, 2003, Hale et al., 2005). Crisis communication is highly essential especially during the crisis as it has significant influence on the crisis outcomes. For instance, the amount of reputational damage of the organization and number of injuries (Coombs, 2010). The basis of crisis communication is the stakeholder reaction management (Coombs, 2009) deals with the work the crisis management team does in responding to the public during a crisis. In specific, it involves the communication efforts through words and actions to influence the perceptions of stakeholder, the organizations actions, as well as the organization’s crisis response. Therefore, the hypothesis below was developed:
H2: Crisis communication has significant influence on customer purchase intention post-crisis.
In order to study the moderating effect of crisis communication on the relationship between the elements of crisis management and customer purchase intention post-crisis, the following hypotheses were developed:
H3a: Crisis management has significant influence on customer purchase intention post-crisis, moderated by crisis communication.
H3b: Time has significant influence on customer purchase intention post-crisis, moderated by crisis communication.
H3c: Responsible recall has significant influence on customer purchase intention post-crisis, moderated by crisis communication.
H3d: Opportunistic recall has significant influence on customer purchase intention post-crisis, moderated by crisis communication.
H3e: Blame attribution has significant influence on customer purchase intention post-crisis, moderated by crisis communication.
H3f: Perceived crisis responsibility has significant influence on customer purchase intention post-crisis, moderated by crisis communication.
Method
Data collection was carried out by asking the respondents to fill in the online structured questionnaire which was created in Google Forms. Convenience sampling method was therefore used to gather the information on the web. E-mails as well as social media platforms such as WhatsApp containing the link to the structured questionnaire were in addition utilized. The self- administrated structured questionnaire has been adapted from previous studies was utilized as the survey instrument in this research. The sources of the items asked in the questionnaire were mentioned in the structured questionnaire to ensure that the respondents are clear about the validity of those questions. The structured questionnaire used in this research consisted of two main parts of which Part 1 collected the respondents’ demographic information though Part 2 was subdivided into three sections. In Section A, the respondents’ views on the elements of crisis management (time, responsible product recall, opportunistic product recall, blame attribution, and perceived crisis responsibility) were collected. In Sections B and C, the respondents’ views on crisis communication and purchase intention post-crisis were collected respectively. All the variables were rated on five point agreement-disagreement based on previous studies. Time ([brand] took too much time before starting the recall after they detected the defect, [Brand]
didn’t react promptly to the problem) Responsible recall (The letter of [ brand] is a signal of a responsible behavior, [ brand] takes care of their customers, The product recall is a signal of the focus of [ brand] on product quality), Opportunistic Recall ([brand] is trying to make me buy a
new battery for my , Through the product recall [brand] is trying to increase their brand awareness) Blame Attribution ([brand] is responsible for the product defect, The defect is due to a mistake by [brand]) (Klein and Dawar, 2004 and Magno, 2012).
A pilot test was conducted before sending out the final questionnaires to ensure the objective of this research could be achieved, in line with Thabane et al. (2010). Essentially, the pilot research was conducted to make sure the questionnaire had face validity and the constructs had internal consistency. The face validity of the questionnaire was assessed by acquiring the respondents’
opinions and feedback on the measurement items, case descriptions, and the overall questionnaire through face-to-face meetings and online correspondences. Modifications were made based on the opinions and feedback of the selected respondents. Reliability analysis was done to gather data in thru pilot research to evaluate the internal consistency of each construct used in the theoretical model by evaluating the values of Cronbach’s alpha and the composite reliability (CR). Results uncovered that the Cronbach’s alpha values are between 0.739 and 0.945 which are over the estimation of 0.6 as prescribed by Nunnaly and Berstein (1994) and the composite reliability values of each construct are between of 0.919 to 0.976 which are more prominent than the recommended least estimation of 0.708 as proposed by Hair et al. (2013).
Therefore, the constructs have internal stability and reliable.
Findings
In this study, the researchers used SPSS 23, SmartPLS 3 to analyze the gathered data. A total of 150 respondents participated in the study. Demographic profiles of respondents were classified by gender, age, marital status, educational level, monthly income, and profession, as shown in Table 1. The majority of the respondents (55.3%) were female and the rest (44.7%) were male.
Most of respondents (45.3%) were in age group between 26 and 30, followed by age group between 31 and 35 (24.7%). The respondents in age groups of 41 and above, between 20 and 25, and between 36 and 40 accounted for 10.7%, 10.0%, and 9.3% respectively. More than half of respondents’ marital status in the present study were married (58.0%). While there was 32.7%
and 9.3% of the respondents identified their marital status as ‘Single’ and ‘Others’ respectively.
More than half of the respondents (52%) had Bachelor’s degree, followed by a certificate/diploma (23.3%). Besides that, high-school graduates (11.3%), Master’s degree holders (9.3%), PhD/doctorate’s degree holders (3.3%) as well as the others with different educational backgrounds (0.7%) participated in the study.
Almost half of the respondents (49.3%) had monthly income between RM2,001 and RM3,500, followed by RM2,000 and below (19.3%), and between RM3,501and RM5,000 (18.7%). The respondents with high monthly income accounted for (5.5%), comprising between RM5,001 and RM6,500 (4.7%) and RM6,501 and above (0.8%). Most of respondents in this study worked as an executive (42.7%). Following this, the respondents had different occupations beyond choices of profession given in the questionnaire (20.7%). There was 13.3%, 10.7%, and 6.0% of the respondents working as a senior executive, clerk, and operator respectively. Additionally, minority of respondents were department heads (5.3%) and group managers (1.3%).
Reliability analysis was carried out by measuring the value of composite reliability (CR) which is a tool to test the internal consistency reliability. Results revealed that the composite reliability values of each construct are from of 0.919 to 0.990 which are greater than the suggested minimum value of 0.708 as proposed by Hair et al. (2013) and the Cronbach’s alpha values are
from 0.883 to 0.985 which are above the value of 0.6 as recommended by Nunnaly and Berstein (1994). Therefore, it was concluded that the measurement items are reliable.
Measurement of convergent validity was evaluated using (1) each item’s outer loading and (2) the average variance extracted (AVE) of the construct. Hair et al. (2014) stated that the items have convergent validity if their outer loadings are greater than 0.70 and the AVE of each construct is greater than 0.5. Results demonstrated that the outer loadings of the measurement items are between 0.826 and 0.987 and the AVE values are between 0.740 and 0.972 which are above the recommended values of 0.7 and 0.5 for the outer loading and the AVE respectively which indicate the measurement items and the constructs have convergent validity.
On the other hand, discriminant validity illustrates the extent to which the construct is empirically distinct from other construct, that is, the construct measures what it is intended to measure. Two methods were used to assess the discriminant validity of each construct which are (1) using the Fornell-Lacker criterion whereby the AVE of each construct should be greater than the highest squared correlation with any other construct and (2) examining the cross loadings of the measurement items whereby the loadings of each measurement items on their own construct are higher than the cross loadings on other constructs. Analysis demonstrated that the square roots of AVE of the constructs are higher than the squared correlations with any other constructs.
In addition, the loadings of each measurement items on their own construct are higher than the cross loadings on other constructs. Therefore, the constructs indeed have discriminant validity.
Goodness-of-fit (GoF) which is the geometric mean of the average variance extracted (AVE) and the average of R square of endogenous latent variables, represents an index for validating the overall fit of the model. GoF is formed between 0 and 1 of which a higher value represents better path model estimation (Tenenhaus et al., 2005). Global validation of PLS models use cut-off values to determine the entire model goodness-of-fit measure such as GoF smaller than 0.10 indicates a poor fit whereas GoF higher than 0.36 indicates that the model is a good-fit (Wetzels et al., 2009). Thus, the GoF index in this research which is 0.81 indicates that the model has acceptable predictive relevance and the overall fit of the model is a good-fit (GoF greater than 0.36).
The predictive relevance of the path model was measured using the blindfolding process in PLS.
For this research, the blinding process was run for the construct of customer purchase intention (PI) as endogenous latent variable. The value of Q2 of the construct customer purchase intention (PI) is 0.54 which is greater than zero, thus indicating that the model in this research has predictive relevance.
The associations between the independent variables and dependent variables were analyzed using the correlation analysis in SPSS 23. To test the strength and direction of relationship between variables, the Pearson correlation coefficients were evaluated. Pearson correlation coefficient of -1.0 indicates the strongest negative correlation even though +1.0 illustrates the strongest positive correlation. All the variables in this research have Pearson correlation coefficient values with other variables between -0.743 and 0.729 but none have zero correlation which indicate the existence of relationship between variables.
The model tested has showed a R2 estimation of 0.263, meaning that 26.3% of the variance in PI can be explained by the variances in independent variables (e.g. T, RR, OR, BA, PR, and CC) and the variances in moderating effects between CC and different variables (e.g. T*CC, RR*CC, OR*CC, BA*CC, and PR*CC). A criterion of the R2 suggested by Hair et al. (2014) indicate three levels of satisfaction in the R2; ‘Weak’ (0.190 – 0.349), ‘Moderate’ (0.350 – 0.399), and
‘Satisfactory’ (0.400 and above). Based on this criterion, the R2 of 0.263 in consumer purchase intention post-crisis (PI) considers weak. This means that only 26.3% of the variance in consumer purchase intention post-crisis (PI) can be explained by the six independent variables and the variances in moderating effects between CC and different variables.
Next, the results show opportunistic recall (OR) and crisis communication (CC) had statistically significant effects on consumer purchase intention (PI), t-value were greater than 1.96 (t=2.240, p<0.05 and 3.048, p<0.01) respectively. The other variables (e.g. T, RR, BA, and PR), in contrast, had no statistically significant effects on consumer purchase intention (PI), t-values were less than 1.96 (t=0.614, 0.359, 0.760, and 0.089 respectively), p>0.05. Furthermore, moderating effects of CC and other variables (e.g. T, RR, OR, BA, and PR) had no statistically significant effects on consumer purchase intention (PI), t-values were less than 1.96 (t=0.200, 0.066, 0.208, 0.014, and 0.529 respectively), p>0.05.
Table 1: Summary of PLS-SEM results
Figure 2: Result of t-values in the PLS-SEM (n = 150)
Using the Important-Performance Map Analysis (IPMA) is essential to find out the impacts of latent variables both relatively high and low importance and performance of constructs in explaining different constructs in a model (Hock et al., 2010). In other words, the IPMA is useful to managerial insights since it can identify possible areas that need an improvement, particularly to the areas with high importance and low performance (Hock et al., 2010; Schloderer et al., 2014; Shafaei & Razak, 2015). The IPMA results are summarized in Table 2 and illustrated in Figure 2 below.
The importance-performance map analysis (IPMA) results revealed that out of the six latent variables, three of them belong to the low importance-high performance group which are blame attribution, perceived crisis responsibility and opportunistic recall with the total effects (importance) of -0.078, -0.012, and -0.376 respectively and the index values (performance) of 72.63, 70.22 and 65.787 respectively, even though the remaining three which are crisis communication, time and responsible recall belong to the high importance–high performance group with the total effects (importance) of 0.372, 0.073 and 0.041 respectively, and the index values (performance) of 52.149, 63.386 and 70.886 respectively.
Table 2: Summary of importance-performance map analysis (IPMA) results
Figure 2: Importance-performance map analysis (IPMA) result
Discussion
Time was found insignificant to customer purchase intention post-crisis but was negatively related to customer purchase intention post-crisis at 5% importance level. This finding contradicts the results of earlier studies by Mowen (1980) and Magno (2012) but aligns with that of Li (2015). According to Dawar and Pillutla (2002), an organization in crisis which possesses high brand equity can afford to delay its product recall as it is “immune” to the negative publicity, thus can afford to make a better informed recall decision by taking more time.
Although the organization names in the case descriptions were not revealed in the questionnaire, the respondents could have made guesses on the companies involved as these crises were global and these companies may have high brand equity.
On the other hand, findings demonstrate that responsible recall has an insignificant relationship with customer purchase intention post-crisis. This finding is inconsistent with prior studies that demonstrated a significant positive relationship between responsible recall and customer response post-crisis (Vassilikopoulou et al., 2009, Magno, 2012). According to Vassilikopoulou et al. (2009), organisational response has the highest relative importance among all the other factors (CSR, external effect, time) and thus ranked first among all these factors. Other studies in addition emphasized the importance of organisational response to crisis and concluded that when a super effort response (responsible recall) is carried out by an organization in crisis, customers
are likely to form a positive opinion about the organization and thus would buy its product. In this case, respondents are not able to form an opinion about responsible recall.
In contrast, opportunistic recall was found to have negative significant relationship with customer purchase intention post-crisis. This finding is consistent with prior studies which concluded that opportunistic recall has a significant negative relationship with customer response post-crisis (for instance Mowen, 1980; Vassilikopoulou et al., 2009). This could imply that even though the characteristics of a responsible recall are more understood and well known and thus receive stronger customer response in term of purchase intention post-crisis, customers are not able to distinguish the characteristics of an opportunistic recall and thus remain neutral (unable to form judgment) about it.
Blame attribution was found to have insignificant relationship with customer purchase intention post-crisis. The finding is inconsistent with prior studies that emphasized the negative influence of blame attribution on customer response post-crisis (for instance Coombs, 2007; Coombs and Holladay, 2006; Magno, 2012). Shaver (1985) claimed that the blame attribution only occurs when one of the causal elements that lead to the situation that calls for the evaluation of blameworthiness is “human action” and that an entity is only assigned to blame when the entity is found to be responsible by the observer.
The minute the entity is found to be responsible for a morally objectionable behaviour, the entity will be likely blamed and subsequently penalised. In other words, if the customers blame the organization in crisis, the customers are more likely to punish it (Gupta, 2009). Moreover, according to Weiner et al. (1988), customers will attribute their blame on the organization in crisis if the locus is internal, the event is predictable, and the event is within the control of the firm. This research illustrates that when an organization recognizes its responsibility and faults for the product defects and takes the necessary measures, customers will respond positively by having good purchase intentions post-crisis.
Likewise, perceived crisis responsibility was found to have insignificant relationship with customer purchase intention post-crisis. The finding is inconsistent with prior studies that emphasized the negative influence of perceived crisis responsibility on customer response post- crisis (for instance Dean, 2004: Coombs and Holladay, 2014). In this research, the organization in crisis in the case descriptions were perceived as responsible for the crisis which evoked the emotions of anger and resulted in insignificant response on the intention to purchase after the crisis has ended. By running business practices ethically and responsibly, an organization in crisis would have built a strong prior reputation which will mitigate the damage to its reputation due to crisis and perhaps will reduce the perceptions of crisis responsibility by the customers.
Alike to responsible recall, crisis communication in addition has a significant positive relationship with customer purchase intention post-crisis. The finding is consistent with prior studies that emphasized the positive influence of crisis communication on customer response post-crisis (for instance Sapriel, 2003: Hale et al., 2005; Coombs and Holladay, 2014). The essential belief behind crisis communication is that crisis communication will have positive effects on crisis publics which will in turn benefit the organization in crisis (Coombs and Holladay, 2014). This shows that the better the crisis communication executed by the organization in crisis, the better the perceptions of the customers of the organization which will in turn increase their likelihood of buying the organization’s products post-crisis. Findings from this research in addition revealed that there is a significant moderation effect of crisis
communication on the relationship between opportunistic recall, crisis communication and customer purchase intention post-crisis.
Apart from that, the importance-performance map analysis (IPMA) results carried out in this research contribute to managerial insight in terms of areas to address and improve (latent variables in high importance-low performance group) and areas that require re-evaluation in terms of their priorities and allocation of resource (latent variables in low importance-high performance group) when handling a crisis. Based on the importance-performance matrix given in Figure 3 below, crisis communication and responsible recall require immediate attention for improvement by an organization in crisis as these are the major weaknesses of an organization in handling a crisis (Quadrant D). On the other hand, the matrix indicates that blame attribution, perceived crisis severity, opportunistic recall, and time have high performances but have low importance (Quadrant A). In other words, in general, an organization in crisis uses excessive resources in these areas when handling a crisis despite their relatively low importance.
Therefore, an organization in crisis should deploy its resources away from areas of relatively high performance and low importance (blame attribution, perceived crisis responsibility, and opportunistic recall) in its crisis communication and carry out a responsible recall and timely when dealing with crisis.
Figure 3: Important-performance matrix (adapted from Martilla and James, 1997, p. 78)
Conclusion
To summarize, this study provides support for the notion that crisis communication has a significant influence while opportunistic recall has negative significant influence on customer purchase intention post crisis. More specifically, opportunistic recall and crisis communication had strong influences on customer purchase intention. Moreover, it has in addition been demonstrated in this research that crisis communication was not a significant moderator on the relationship between crisis management and customer purchase intention. Apart from that, this research discovers that crisis communication, time and responsible recall are the areas which need to be improved when dealing with a crisis as these areas have high importance and high performances on customer purchase intention in IPMA analysis. Whereas other elements of crisis management like perceived crisis responsibility, blame attribution and opportunistic recall have low importance but high performances on customer purchase intention, indicating that these areas probably have received focus and resources which are excessive compared to its relative
importance in dealing with a crisis. As this research has few limitations, future researches are expected to contribute substantially to add on more understanding on other factors focusing on different industries like food products, medical products or services that have significant influence on customer purchase intention and the extent in moderating effects of crisis communication on customer purchase intention particularly in Malaysia.
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