Influence of institutional profiles on time to recall

Abstract

Purpose – This paper aims to understand why firms expedite or delay product recall decisions involving international sourcing. Design/methodology/approach – This paper combines US toy recall data from the Consumer Products Safety Commission database for the period from 1988to 2011 with World Economic Forum data on institutional environments to predict the effect the host country conditions have on recall timing decisions. Findings – Firms tend to expedite decisions to recall defective products sourced from countries where the informal institutional profile is perceived to be unfavorable for quality manufacture. Research limitations/implications – The reported research is empirical in nature and uses pooled cross-country, single-industry data. Practical implications – Managers should be careful not to allow their biases to affect their product recall timing decisions. Originality/value – Whereas previous research has examined recall timing decisions, this study is the first to consider the institutional environment where products are sourced from as an explanatory variable.