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Congruence effects of corporate associations and crisis issue on crisis communication strategies.

Many corporations face crisis events. A crisis is defined as an unexpected event that threatens an organization's goals (Hermann, 1972), viability (Pearson & Clair, 1998), or social legitimacy (Cowden & Sellnow, 2002). Well-known corporate crisis episodes include Tylenol's poisoned capsules, Odwalla's contaminated juice, Mattel's defective toys, Toyota's product recalls, British Petroleum's Gulf of Mexico oil spill, and, more recently, Volkswagen's emissions scandal. Whether or not a corporation is at fault, negative public sentiment that may result from such a crisis must be overcome.

Coombs (2007) stated that skilled managers can minimize the reputational threat in a crisis by selecting the most appropriate and effective response strategy for each situation. Situational factors affecting crisis-related consumer behavior in corporate crises include media-related factors, for example, news frames (H. J. Kim & Cameron, 2011), corporation-related factors, such as corporate reputation (Helm & Tolsdorf, 2013), crisis-related factors, including crisis type (S. Kim & Choi, 2014), and consumer-related factors, for example, brand ownership (S. Kim & Atkinson, 2014). Although many context-oriented crisis communication variables have been identified, previous researchers have assessed only the individual impact of each situational factor on the effectiveness of crisis communication strategies. To our knowledge, few researchers have examined how the situational variables are related to jointly determine consumer response to corporations' crisis communication strategies. Therefore we explored the effectiveness of crisis communication strategies as a function of relationships among the key components (i.e., company and crisis). We specifically investigated how perceived fit between corporate associations and the crisis issue determined the effectiveness of two types of crisis communication strategies (excuse vs. apology) by evaluating consumer reactions to the strategies. We further examined the underlying mechanism of consumer response to the crisis communication strategies by testing the mediating role of feelings of betrayal in attitudes toward the company.

Although corporate associations are a central concept in corporate management and marketing, to our knowledge, researchers have made little effort to understand their roles in a corporate crisis context. Furthermore, the focus in crisis communication strategy literature has been mainly on the effects of crisis-related factors (e.g., crisis type and severity), and company-related factors (e.g., corporate associations) have been relatively neglected. The findings from our discussion on corporate associations and crisis issue congruence should fill the gap in the literature and yield theoretical and pragmatic implications.

Literature Review and Hypotheses Development

Crisis Communication Strategies

Crisis communicative strategies lie on a continuum from defensive to accommodative. At the defensive end, strategies are used as a means of seeking to defend an organization's position, and at the accommodative end, strategies are used as a means of seeking to protect victims (Coombs, 2007). The strategies relate to the level of the company management's acceptance of crisis responsibility, with four response options: deny, diminish, rebuild, and reinforce (Coombs, 2004, 2006). Deny strategies (i.e., denial, scapegoat) are those used when crisis managers deny that there is a crisis or refuse to acknowledge an organization's responsibility for it. Diminish strategies (i.e., excuse, justification) are those used when managers seek to reduce an organization's responsibility and the seriousness of the crisis. Rebuild strategies (i.e., compensation, apology) are those used when managers attempt to offset negative images by offering forms of aid and compensation to victims, thus offering an apology to restore organizational reputation. Lastly, crisis managers use reinforce strategies (i.e., ingratiation, bolstering) to develop reputational assets by praising stakeholders and reminding them of past good works by the organization (Coombs, 2007).

From our review of the literature, we established that the conclusion reached in many studies is that a more accommodative crisis communication strategy will be more effective. For example, researchers have found an apology to be more effective than denials, excuses, or justifications (Dean, 2004; Lyon & Cameron, 2004). However, in some circumstances, using a full accommodative strategy, such as making an apology, may actually backfire on a company. Accepting full responsibility and seeking forgiveness results in the greatest financial burden upon the company and leaves the impression that the company is totally responsible for the crisis (Coombs & Holladay, 2008). Therefore, the apology strategy should be exercised with caution. Coombs (2007) and Coombs and Holladay (2002) pointed out that a crisis communication strategy should be selected according to the specific crisis situation. For instance, when a company is embroiled in rumor mongering and has evidence to refute such rumors, denial is an effective response strategy, and when a company is involved in an accident crisis, excuse is an effective crisis communication strategy.

Corporate Associations in a Crisis Context

Corporate associations represent the total set of information that consumers have about a company, and include beliefs, attitudes, and feelings toward the company (Madrigal, 2000). Riahi-Belkaoui and Pavlik (1992) identified two types of corporate associations, corporate ability and corporate social responsibility, that dominate the literature on relationships between corporate associations and consumer responses. Corporate ability (CA) associations refer to consumer beliefs and feelings that pertain to the company's expertise or competence in producing and delivering its products and services. Corporate social responsibility (CSR) associations reflect the company's status and activities in regard to its perceived societal obligations (Dacin & Brown, 2002).

Findings reported in previous studies have supported the roles of corporate associations in a crisis. For example, Romeo (1991) explored the moderating effect of perceived fit between family brand and brand extensions in a brand crisis. Romeo found that when the similarity between the family brand and extensions product category was high, negative information was more detrimental to evaluations of brand extensions and the family brand's image. In general, when a product that is similar to a family brand's image is introduced, the corporate image can serve as useful information when judgments are formed about these extensions (Madrigal 2000). However, when a company faces a negative incident involving a product brand extension, perceived fit between the extension and the family brand image may backfire on the company by negatively affecting the brand image. This adverse effect resulting from the corporate image and the new product congruence in a crisis raises the important research question about the mechanism of how perceived fit between corporate associations and the crisis issue works in consumer response.

Corporate Associations and Crisis Issue Congruence and Crisis Communication Strategies

Dawar and Lei (2009) argued that the relevance of the issue that caused the crisis to the brand's key associations affects the effect of the crisis on brand evaluations. Dawar and Lei found that the effect of a brand crisis on the brand evaluation was more adverse when the crisis was closely related to the brand's key associations, and this was especially true for consumers who were familiar with the brand. This finding implies that a good fit between corporate associations and the crisis issue negatively affects consumer response in a corporate crisis.

This argument is further bolstered by the concept of betrayal, which is defined as a perceived violation of a psychological contract by another (Morrison & Robinson, 1997). Consumers feel betrayed when their expectations are not satisfied because of service failures or price policies (Tsai, Yang, & Cheng, 2014). The violation of positive expectations and trust relationships or the breaking of implicit and explicit promises lead to feelings of betrayal and precipitate a desire to punish the betrayer (Koehler & Gershoff, 2003). Consumers' positive expectations that are based on their perceptions of corporate associations formed in a routine or noncrisis situation may be threatened by a corporate crisis closely related to the corporate associations. That is, if the consumers' positive expectations about a company are violated by a crisis event, their feelings of betrayal would be just as strong as their positive feelings about the company had been in a noncrisis situation.

The expectancy violation theory is consistent with this logic and the theory can be used to help in understanding the role of perceived fit between corporate associations and the crisis issue. It is suggested in this theory that the violation of expectations generates negative consequences (Jackson, Sullivan & Hodge, 1993). S. Kim (2014) applied this theory to a corporate crisis context and found that positive CA associations prior to a crisis produced worse corporate evaluations than did positive CSR associations in a product-harm crisis. That is, the effect of a crisis depended on the prior associations that consumers had with a company. Consumers tended to expect product quality from a company with which they had positive CA associations, in comparison with one with which they had positive CSR associations. However, once their expectations were violated by a product-harm crisis, consumers were more likely to turn against the company with which they had CA associations than they were when the associations were the CSR type. Their sense of betrayal was as strong as their former expectation of the company had been high. It may thus be assumed that in a routine situation, companies will facilitate consumer trust through the corporate associations, such as CA or CSR, that are part of their corporate identity (Dacin & Brown, 2002). At the same time, when a crisis related to the key corporate associations occurs, congruence of the company and the crisis can also aggravate consumers' feelings of betrayal. In a similar manner to the adverse effect of a good fit between key brand associations and the crisis issue on brand evaluations, the relevance of a crisis to the company's key associations may influence the effectiveness of different crisis communication strategies.

We believe that the concept of betrayal offers a robust explanation to support the role of consumers' perception of the fit between corporate associations and the crisis issue in their response to the company's crisis communication strategies. For instance, consumers would feel more strongly that they had been betrayed when a company with CSR associations, rather than a company with CA associations, faced a charge of unethical behavior. Because of these stronger feelings of betrayal the consumers would attribute more crisis responsibility to, call for more punishment of, and generate more negative attitudes toward the company. Therefore, we expected that more accommodative communication strategies would be required when a corporate crisis is a violation of key corporate associations. Therefore, we proposed the following hypotheses: Hypothesis 1: When corporate associations are of the corporate ability type and are congruent with the crisis issue because it involves a product failure, the apology strategy will be more effective in (a) weakening consumers' feelings of betrayal and (b) inducing them to form favorable attitudes toward the company, compared to when the corporate associations are of the corporate ability type and are incongruent with a crisis issue because it involves an ethical violation. Hypothesis 2: When corporate associations are of the corporate ability type and are incongruent with the crisis issue because it involves an ethical violation, the excuse strategy will be more effective in (a) weakening consumers' feelings of betrayal and (b) inducing them to form favorable attitudes toward the company, compared to when the corporate associations are of the corporate ability type and are congruent with the crisis issue because it involved a product failure. Hypothesis 3: Consumers' feelings of betrayal will mediate the interaction effect of their perception of the fit between the company's corporate associations and the crisis issue, and the type of crisis communication strategy used on their attitudes toward the company.

Method

Procedure

Participants were 133 undergraduates at a major southwest university in the United States. They were recruited to participate in a web-based experiment in return for course credit. They were asked to read an informed consent form on the first page of the online survey and click the Proceed button if they agreed to participate in the study.

Of the two types of corporate associations, CSR has been studied more often, so we used a real company with CA associations for the experimental stimuli despite the potential confounding effects. The first pretest was conducted to develop lists of companies with CA or CSR associations. Because most companies have both CA and CSR associations, to achieve our purpose in the study it was important to select a company that was perceived as having more CA and fewer CSR associations. We selected Apple Inc. as the company with strong CA associations, on the basis of the first pretest results.

We developed newspaper articles in which the content consisted of exposure to negative information about a corporation and the company's response to the crisis. To satisfy the congruence condition, the description in the newspaper article was of a product failure: an Apple iPad2 had caught fire while being used by its owner, and this had been caused by the fact that the device had a lithium ion battery. To satisfy the incongruence condition, the description in the newspaper article was of an ethical violation: Apple had been caught employing child labor in its factories in China. Apple's response to both these crises, described as either an excuse or apology strategy, was also outlined in the newspaper articles. Thus, there were four versions of the newspaper article.

The second pretest results confirmed that the two types of corporate response (excuse vs. apology) were appropriately manipulated and that Apple was more likely to have more CA than CSR associations among consumers (Berens, van Riel, & van Bruggen, 2005). Finally, in the pretest we measured participants' perception of the fit between their perceptions of the company and the crisis as described in the newspaper article, on a three-item, 7-point Likert-type scale ranging from 1 = strongly disagree to 7 = strongly agree, as follows: "I think that the issue of product defects/child labor in general is related to Apple's expertise in producing and delivering its products and services," "I think that the issue of product defects/child labor in general is relevant to Apple's expertise in producing and delivering its products and services," and "I think that the issue of product defects/child labor in general tells something about Apple's expertise in producing and delivering its products and services." The results confirmed that perceived fit between the corporate associations and the crisis issue had been appropriately manipulated.

Measures

The effectiveness of the crisis communication strategy was assessed using the following two variables: feelings of betrayal and attitudes toward the company. Feelings of betrayal were measured for three items ("I felt cheated by the corporation," "I felt betrayed by the corporation," "I felt lied to by the corporation.") adapted from the measure developed by Gregoire and Fisher (2008). Items were rated on a 7-point Likert-type scale ranging from 1 = strongly disagree to 7 = strongly agree ([alpha] = .94). Attitudes toward the company were assessed on the five-item, 7-point semantic differential scale used in the studies conducted by MacKenzie and Lutz (1989) and Till and Busler (2000). Respondents rate the items on a scale anchored by the following adjectives: 1 = bad, 7 = good; 1 = unfavorable, 7 = favorable; 1 = unpleasant, 7 = pleasant; 1 = dislike, 7 = like; and 1 = negative, 7 = positive ([alpha] = .98).

The respondents' perception of the degree of severity of a crisis controls their different perceptions of its seriousness that stem from the issue, namely, a product failure or unethical behavior. This variable was assessed using Gregoire and Fisher's (2008) scale, with rating alternatives as follows: 1 = minor problems, 7 = major problems; 1 = small inconveniences, 7 = big inconveniences; 1 = minor aggravation, 7 = major aggravation. For manipulation checks, perceived fit between the corporate association and the crisis issue was measured on the same three-item, 7-point Likert scale used in the second pretest. The respondents' perceptions of the crisis communication strategies used were assessed with two questions, which were modified from Coombs and Holladay's (2008) manipulation check items for crisis response strategies.

Data Analysis

We used SPSS version 22.0 to perform reliability tests on all the measures, independent sample t tests for manipulation checks, and a series of two-way analysis of covariance (ANCOVAs) for hypotheses testing. In addition, we used the PROCESS macro in the SPSS program (Model 8) to test for a mediating effect of feelings of betrayal.

Results

Manipulation Checks

The results of the comparison between the excuse and apology strategies revealed that the excuse strategy was more likely to be perceived as being the excuse (M = 4.46, SD = 1.38) than was the apology strategy (M = 3.35, SD = 1.49); t(131) = 4.45, p < .001, and the apology strategy was more likely to be perceived as being the apology (M = 5.00, SD = 1.45) than was the excuse strategy (M = 3.04, SD = 1.40); t(131) = -0.93, p < .001. The result of another t test showed that a fire caused by a battery was more likely to be perceived as congruent with Apple's CA associations (M = 4.60, SD = 0.96) than was employing child labor (M = 3.65, SD = 1.14); t(131) = 5.17, p < .001, indicating that the participants' perception of the fit between the corporate associations and the crisis issue was successfully manipulated. Descriptive analyses of Apple's corporate associations also confirmed that the participants were more likely to perceive Apple as a company with more CA (M = 5.47, SD = 0.91) and fewer CSR associations (M = 4.02, SD = 0.90).

Moderating Effects of Perceived Fit between Corporate Associations and Crisis Issues

We performed two-way ANCOVAs on both feelings of betrayal and attitudes toward the company while controlling for perceived severity of the crisis. As shown in Table 1, significant interaction effects between the type of crisis communication strategy and perceived fit were found on both feelings of betrayal, and attitudes toward the company. Specifically, as presented in Figures 1 and 2, when Apple was involved in the device catching fire (corporate association and crisis issue congruence), both the excuse and apology strategies generated lower levels of feelings of betrayal and more favorable attitudes toward the company than they did when Apple was involved in employing child labor (corporate associations and crisis issue incongruence). To further confirm the significant differences in strength of feelings of betrayal and favorability of attitudes toward the company between the congruent and incongruent conditions in both the excuse and apology strategies, we performed one-way analysis of variance (ANOVA) contrast tests. The results showed that the mean differences between the apology congruence and incongruence groups were statistically significant in strength of feelings of betrayal: [M.sub.Congruence] = 2.83, [M.sub.Incongruence] = 3.53, contrast value = -0.70, SE = 0.36, t(61) = -1.97, p = .05; and favorability of attitudes toward the company: [M.sub.Congruence] = 5.86, [M.sub.Incongruence] = 4.96, contrast value = 0.90, SE = 0.35, t(61) = -2.61, p < .05. These results suggested that Hypothesis 1a was marginally supported and Hypothesis 1b was supported. However, the mean differences between the two groups of excuse congruence and incongruence were nonsignificant for feelings of betrayal (p > .05), and attitudes toward the company (p > .05). Thus, Hypotheses 2a and 2b were not supported. We found it interesting that the apology strategy was more effective than was the excuse strategy in preventing feelings of betrayal and unfavorable attitudes toward the company when the crisis was an issue congruent with the corporate associations, and the excuse strategy was more effective than was the apology when the fit was incongruent (see Figures 1 and 2).

Mediating Effect of Feelings of Betrayal

To confirm the moderated mediation effect of feelings of betrayal in attitudes toward the company (Hypothesis 3), we used the PROCESS macro (Model 8) in the SPSS program. We found a significant interaction effect of perceived fit between corporate associations and crisis issue, and type of crisis communication strategy on feelings of betrayal: [beta] = 2.67, SE = 0.45, p < .01. When we examined the interaction effect and the effect of feelings of betrayal on attitudes toward the company, we found the interaction effect was nonsignificant: p = -1.52, SE = 0.47, p > .05, whereas the effect of feelings of betrayal on attitudes toward the company was still significant: [beta] = -3.87, SE = 0.09, p < .001. This implies that the interaction had an indirect effect on the attitudes toward the company through feelings of betrayal (confidence interval [CI] 95% 1,000 bootstrap samples [-0.8704, -0.1066]). Specifically, feelings of betrayal mediated the effect of the type of crisis communication strategy on attitudes toward the company in the congruent condition (CI 95% [0.0619, 0.7296]), but not in the incongruent condition (CI 95% [-0.3507, 0.0466]). Hypothesis 3 was, therefore, partially supported.

Discussion

The results partially supported the hypothesized interaction between the type of crisis communication strategy used and the consumers' perception of fit between the corporate associations and the crisis issue on feelings of betrayal and attitudes toward the company. That is, the apology strategy was more effective when the company was involved in a crisis issue that involved violation of its core image for consumers, compared to when the company was faced with a crisis irrelevant to its corporate associations. A result that was unexpected for us was that there was no significant difference in the effect of use of an excuse strategy regardless of participants' perception of the fit between the corporate associations and the crisis issue. It was particularly interesting to us that, in the congruent condition, the apology strategy was more effective than was the excuse strategy, whereas in the incongruent condition, the excuse strategy was more effective than was the apology strategy.

A possible explanation for such interaction effects is the motivation for information processing. According to motivated reasoning theory (Kunda, 1990), when people process information and form judgments, they can be motivated to arrive at either an accurate or a particular desired conclusion. If they are searching for a particular conclusion, individuals process information in a biased manner, and if they are searching for accuracy, they do so in an unbiased manner. In the context of this study, the information processing motivation of the participants may have differed according to the degree of corporate associations and crisis issue congruence. Namely, when a company faces a crisis issue that involves violation of consumers' perception of its key corporate associations, the consumers are more likely to process such information in a negatively biased manner. Thus, their perceptions and attitudes are more likely to be swayed by the negative corporate information. Consequently, use of a more accommodative strategy, like a sincere apology and taking full responsibility, would be more effective for the company. On the other hand, when the crisis is not relevant to the consumers' perception of its key corporate associations, their information processing should be free of negative emotion. Therefore, they may be motivated to process the negative corporate information in an unbiased manner. In this case, use of an apology strategy may only exacerbate the situation. For example, if a company uses the strategy of seeking forgiveness, this may give consumers the impression that the responsibility for the crisis should be attributed to the company. However, consumers may view an excuse strategy as simply a reasonable explanation of what happened.

We found it notable that the mediating flow of the crisis communication strategy (type of crisis communication strategy [right arrow] feelings of betrayal [right arrow] attitudes toward the company) in the corporate associations and crisis issue congruence condition explained the role of feelings of betrayal in the effectiveness of crisis communication strategies. In corporate crises that involve a violation of a company's key corporate associations (e.g., when a company with CA associations experiences a product defect, or when a company with CSR associations behaves unethically), the adoption of a more accommodative crisis response by the company will consequently lead to a more positive attitudinal reaction among the consumers by lessening their feelings of betrayal.

Our findings cast doubt on those of previous researchers who have generally concluded that apologizing is the best crisis strategy (Coombs & Holladay, 1996; Dean 2004; Huang, 2006; Lyon & Cameron, 2004). We believe that it is not only incorrect but impractical for the company to use this strategy. In some crisis situations, the apology strategy may backfire because of immense crisis management costs and by giving consumers the impression that the crisis is completely attributable to the company.

In such complex conditions, our findings in the current study point to the importance of the company establishing consistent corporate associations and image management in routine and noncrisis situations and, when selecting the best response strategy in a crisis, also taking into consideration the consumers' perception of the fit between those corporate associations and the type of issue involved. Although a well-established and hard-won positive corporate image can work in routine and noncrisis situations, the image can be tarnished when the company is involved in a crisis that relates to an issue in which its corporate veracity is called into question. In the context of high congruence between corporate associations and the crisis issue, the response from consumers is aggravated, and feelings of betrayal are evoked, because consumers may feel that the crisis violated their expectations of the company. Thus, despite the financial burden, a more accommodative response strategy, such as the apology strategy, is required. Companies should strive to monitor preventive crisis management and avoid involvement in a crisis in which their corporate mission and ethical values are violated.

In addition, our results help provide crisis managers and communicators with cost-effective crisis communication processes according to perceived fit between corporate associations and the crisis issue. We do not suggest that there is a specific crisis communication strategy that should be selected for a specific crisis. Rather, we suggest that a more accommodative response strategy, such as taking full crisis responsibility (e.g., an apology strategy) is not always the best solution. From the perspective of cost-effective and strategic crisis communication, according to the crisis situation, a less accommodative response strategy should be employed.

There are some limitations in this study. We used a real-world company to enhance external validity. However, using a real company in the experimental design may threaten internal validity. One-time exposure to a newspaper article about a corporate crisis in a laboratory setting with a time limit is different from being exposed in real life to a great deal of information about the incident. The controlled setting may have influenced the external validity of the study.

In addition, our college student sample was not representative of the general population. However, because college students are frequent purchasers of Apple products, they were suitable for this study. As well, care was taken to ensure that all participants were randomly assigned to a condition, which should help mitigate concerns about a student sample. Nevertheless, we recommend that it would be advisable to use a more representative sample to extend our findings. Finally, the interaction of perceived fit between corporate associations and the crisis issue, and the type of crisis communication strategy should be explored in different settings. If the moderating effect of corporate associations and crisis issue congruence on the effect of the type of crisis communication strategy was also found for a company with CSR associations, it would further validate our findings. Future researchers should examine this issue more thoroughly.

https://doi.org/ 10.2224/sbp.6090

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SOJUNG KIM

The Chinese University of Hong Kong

SEJUNG MARINA CHOI

Korea University

LUCY ATKINSON

The University of Texas at Austin

Sojung Kim, School of Journalism and Communication, The Chinese University of Hong Kong; Sejung Marina Choi, School of Media and Communication, Korea University; Lucy Atkinson, Stan Richards School of Advertising and Public Relations, Moody College of Communication, The University of Texas at Austin.

This paper is based in part on the first author's doctoral dissertation.

Correspondence concerning this article should be addressed to Sojung Kim, School of Journalism and Communication, The Chinese University of Hong Kong, Shatin, NT, Hong Kong Special Administrative Region. Email: sojungkim@cuhk.edu.hk

Caption: Figure 1. Crisis communication strategies and perceived fit between corporate associations and crisis issue in consumers' feelings of betrayal.

Caption: Figure 2. Crisis communication strategies and perceived fit between corporate associations and crisis issue in consumers' attitudes toward the company.
Table 1. Results of Analyses of Covariance for Hypotheses
Testing (F Values)

Experimental                        Feelings of     Attitudes
condition                             betrayal     toward the
                                                     company

Strategy             Congruence        M (SD)        M (SD)
Excuse               Congruence      3.40 (1.38)   5.33 (1.39)
Excuse               Incongruence    3.12 (1.37)   5.46 (1.46)
Apology              Congruence      2.83 (1.60)   5.86 (1.28)
Apology              Incongruence    3.53 (1.22)   4.96 (1.43)
Type of strategy                     1.22          0.17
Perceived fit                        7.49 **       5.48 *
Type of strategy x                   7.12 **       5.54 *
  Perceived fit
Perceived severity                  24.63 ***      5.03 *
  of crisis

Note. * p < .05, ** p < .01, *** p < .001.
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Author:Kim, Sojung; Choi, Sejung Marina; Atkinson, Lucy
Publication:Social Behavior and Personality: An International Journal
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Date:Aug 1, 2017
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