TOO MUCH OF A GOOD THING? THE BOOMERANG EFFECT OF FIRMS' INVESTMENTS ON CORPORATE SOCIAL RESPONSIBILITY DURING PRODUCT RECALLS
Keywords:
Abstract
This study examines the boomerang effect of firms' investments in corporate social responsibility (CSR) during product recalls. While previous research has shown that CSR investments can enhance a firm's reputation and mitigate negative perceptions during crises, we propose that excessive CSR investments during product recalls may lead to a boomerang effect, where stakeholders perceive these investments as insincere or strategic attempts to deflect attention from the recall itself. Drawing on the theory of attribution, we argue that stakeholders are more likely to attribute strategic motives to excessive CSR investments during product recalls, resulting in negative evaluations of the firm's sincerity and reputation. We test our hypotheses using a combination of survey data and experimental designs. The findings suggest that there is an inverted U-shaped relationship between firms' CSR investments during recalls and stakeholders' perceptions of the firm's sincerity and reputation. Moreover, this boomerang effect is moderated by the level of stakeholders' pre-existing trust in the firm. Overall, our study sheds light on the complex relationship between CSR investments and crisis management strategies, highlighting the need for firms to carefully calibrate their CSR efforts during product recalls.
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