Learning from recall patterns: the spatial concentration of past recalls, CEO regulatory focus, and future recall prevention

Abstract

Product recalls pose serious risks, yet firms often fail to learn from them. While existing research offers valuable insights into recall drivers through the lenses of organizational learning and characteristics of top executives, it overlooks the critical interplay between these factors, particularly the impact of managerial cognition on learning from the spatial distribution of product recalls. This study investigates how the spatial distribution of past recalls influences the count of future recalls and explores the moderation effects of CEO regulatory focus. By analyzing 219 publicly traded medical device firms, our findings reveal the critical role of the spatial distribution of product recalls in shaping future recall risk. Furthermore, the results reveal that promotion-driven CEOs amplify this effect, whereas prevention-focused ones mitigate it. This work advances the field of product recall research and provides valuable perspectives into the rapidly growing field of regulatory focus theory by associating it to product recalls.