Opportunities and threats for competitors in product‐harm crises

Abstract

PurposeProduct‐harm crises have become an almost familiar phenomenon in today's business environment as technology becomes more vulnerable. Even if a product‐harm crisis is associated with the company that manufactured the defective product, the entire industry may be affected. Not only consumers of the affected company, but also consumers of competitors are affected by the crisis. The paper seeks to deal mainly with the situation of competitors and examines the potential opportunities and threats that may arise when another company in the same industry faces a product‐harm crisis.Design/methodology/approachFor the purposes of this paper, an experiment was conducted that relied on four important influential factors of crisis management (i.e. corporate reputation, crisis scope, external effects, and organisational responses). The crisis was described through a hypothetical scenario. Consumer attitudes towards competitive products were used to determine impending prospects and threats.FindingsThe paper's results demonstrate that consumers are very receptive in buying competitor brands, especially when the extent of the crisis was medium or high and the company involved in the crisis had shown low levels of social responsibility.Originality/valuePrevious research studies on crisis management mainly focus on the affected company and how it confronted the crisis. The paper approaches crisis management from the competitor's perspective. Because a crisis may influence the entire sector, adequate preparation and effective crisis management skills are essential assets for competitors.