Judging Corporate Ostriches? A Study of Consumers’ Attitude Towards the Chain Liability and Green Characteristics of a Focal Firm during Sustainability Crises

Abstract

When sustainability crises occur, and these are revealed to the consumers, scandals may arise, triggering reactions among the consumers. Even though the crisis may happen far away, both geographically and organizationally, the focal firm may be held accountable by the consumers, triggering a “chain liability” for their chain members. This paper uses the consumers as a “jury.” It assesses the chain liability of a focal firm for unsustainable supplier behavior and the effect of organizational distance between the focal firm and sustainability crises, measuring accountability for the crisis at the first supplier tier level as opposed to integration. Also, following the green shift, we assess how certain green characteristics - green marketing and ecolabels, affect the degree to which the focal firm is held accountable. Lastly, accountability is tested towards consumers' purchase intentions. Using an experimental design consisting of eight experimental groups obtained through convenience sampling, we found that organizational distance increases accountability at this tier level. This trend means the focal firm is punished for outsourcing or equally rewarded for integration of production that becomes subject to a crisis. They are also rewarded for using ecolabels, and accountability is significantly negatively correlated with purchase intentions. We found no effect of green marketing on accountability or any interaction effects between any of the variables in the study. The findings that integration and ecolabel act as mitigating circumstances suggest that consumers adopt a somewhat simplified judgment and merely evaluate the degree to which the focal firm has faced the risks and reward them for taking preventive steps to lower the chance of a crisis. On the flip side, they seemingly punish firms for the act of “sticking their heads in the sand” and being “corporate ostriches.”