Consumer Reactions to Incidents within a Retailer's Supply Chain: A Collective Reputations Perspective

Abstract:Prior research has demonstrated that a horizontal reputation commons is shared across the breadth of an industry. However, less is known about the existence of a vertical reputation commons among supply chain members. The purpose of this consumer-centric study is to examine the spillover effect of an upstream incident in the supply chain on consumer perceptions of a retailer's reputation and consumer repatronage intention. Specifically, this study explores two factors that may impact consumer perceptions: location of the incident within the retailer's supply chain and the severity of the incident. Study 1 tests the spillover effect on the retailer's reputation and repatronage intention using a two-tier supply chain and two relative extremes of severity. Study 2 examines how a retailer through messaging could dampen the spillover effect following an upstream incident. Our findings provide insight regarding when and how consumer perceptions regarding a retailer's reputation may change following an incident in the retailer's supply chain and how those perceptions can be influenced by effective messaging. Collectively, our results offer initial theoretical insights into the concept of a supply chain (vertical) reputation commons.