Assessing crisis spillover risks: The role of perceived severity and corporate response effectiveness in China

Abstract

Although the spillover effect of crises represents an emerging area of interest within crisis communication studies, the perspective of consumers on the risk of crisis spillover as a result of corporate misconduct by another company remains underexplored in emerging markets like China. This study aims to fill the void through assessing how the severity of a crisis and the strategic responses by companies influence consumer perceptions of spillover risks from corporate misconduct by another company. A pre-test (N = 120) determined two corporate misconducts as characteristic for the automotive industry in China. These scenarios were utilized in an online experiment (N = 320) to examine the effects of two crisis response strategies (issuing a denial vs. giving no response) by a competitor automaker. The results reveal that when a corporate misconduct is perceived as more severe, the perceived crisis spillover risks to the industry is higher; this perceived risk mediates the impact of crisis severity on negative word-of-mouth. Issuing a denial is more effective than giving no response, and leads to more positive consumer outcomes. This research unravels the complex dynamics at play in shaping consumer attitudes towards companies indirectly impacted by a crisis through a spillover effect.