Trust erosion during industry-wide crises

the central role of consumer legitimacy judgement

Shijiao Chen, Jing Zhang, Hongzhi Gao, Zhilin Yang, Damien Mather

Research output: Contribution to journalArticle

Abstract

Widespread unethical corporate misconduct in an industry triggers industry-wide crises. This research investigates how industry misconduct affects consumers’ trust in the industry, by incorporating insights from a micro-level psychological aspect of institutions. The conceptual framework proposes that consumer legitimacy judgement lies at the core of industry trust, following an industry-wide crisis. The results demonstrate that perception of normalisation of misconduct (PNM) affects industry trust through consumer legitimacy judgement (CLJ) (Study 1). Moreover, the PNM-CLJ-industry trust relationship is stronger during industry-wide crises compared with crises that involve only one firm (Study 2), and this relationship is not dependent on the frequency of crises (Study 3). This research contributes to the knowledge of product-harm crisis by deepening understanding of the trust erosion mechanism during industry-wide crises, with a focus on legitimacy judgement. The findings have implications for prevention of industry-wide crises and for boosting ethically desirable business activities.
Original languageEnglish
Number of pages22
JournalJournal of business ethics
DOIs
Publication statusE-pub ahead of print - 3 Aug 2020

Keywords

  • Consumer legitimacy judgement
  • Corporate misconduct
  • Industry trust
  • Industry-wide crisis
  • Institutions

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