The role of formal and informal institutional pressures in local gatekeepers' responses to international product recalls.

Abstract

Product recalls are omnipresent and unavoidable in the global marketplace. Despite the financial losses, brand equity damage, and the hazard to consumer health they impose there is little multidisciplinary international research on the phenomenon. A growing number of studies are investigating the impacts of product harm crises and the recalls and providing valuable implications, but little has been done to address the determinants of organisational behaviour and decision making during the product recall.

The purpose of this thesis is to conduct an investigation into the role of local New Zealand gatekeepers and their interaction with international brands during an international product recall. I also investigate the institutional environment in which these firms operate in, and the influence it subjects to their product recall strategies and processes. Because of the lack of empirical research on international product recalls in the extant literature, a qualitative interpretative methodology based on semi-structured interviews is employed.

Findings suggest that in the event of a potential product harm crisis leading to product recall in New Zealand, home country regulatory institutions take a collaborative approach with focal firms involved in the recall process. The gatekeeper orientation towards the customer, environmental institutional pressures (coercive and normative), and gatekeeper risk avoidance influence the gatekeeper to initiate preventative recalls. Furthermore, in face of a potential product harm crises, where the local gatekeeper is the dominant organisation, coercive institutional pressure to initiate a preventative recall is exerted towards the partnering international brand. In a severe international product harm crisis leading to product recall, normative institutional pressures encourage the local gatekeeper to initiate preventative product recalls and alongside the international brand, undertake proactive recall strategies. Whereas in ambiguous recall situations, mimetic institutional pressures encourage the local gatekeeper to initiate preventative product recalls and alongside the international brand undertake proactive recall strategies. I propose that in environments of weak formal institutions, informal institutional pressures play a greater role on gatekeeper and international brand recall strategies and processes. Traceability and supply chain knowledge are found to be vital in effective international product recalls.