When a Company Does Not Respond to Negative Publicity: Cognitive Elaboration Vs. Negative Affect Perspective

ABSTRACT - Company response to negative publicity is a critical element affecting consumer attitude towards the company and the brand. This study explores the mediational processes that impact changes in the attitudes of consumers when exposed to four different kinds of company responses to negative publicity. Two of the responses manipulated in the experiment deal with strong and weak arguments while the other two are Ano comment@ andAno comment due to litigation@ conditions. The latter two responses fall into the category of unavailability of information from a consumer’s perspective. In past research, unavailability of information has been shown to be mediated by two different kinds of processes. Commodity theory of Brock (1992) states that effects of the unavailability of information is mediated by cognitive elaboration while reactance theory (Brehm 1966) argues that negative affect that consumers experience results in attitude change. The results of an experiment designed to test these competing processes in the context of consumer response to a company’s response to negative publicity reveals the occurrence of both processes. Strong argument responses caused the least damage to attitude towards a company and brand faced with negative publicity. The no comment and the no comment due to possible litigation response conditions showed equal damage. Finally, the weak argument condition did not differ from the no comment and the no comment due to litigation condition revealing that when companies issue statements for damage control it is necessary to carefully craft a strong response.

Citation:

Geeta Menon, Robert D. Jewell, and H. Rao Unnava (1999) ,"When a Company Does Not Respond to Negative Publicity: Cognitive Elaboration Vs. Negative Affect Perspective", in NA - Advances in Consumer Research Volume 26, eds. Eric J. Arnould and Linda M. Scott, Provo, UT : Association for Consumer Research, Pages: 325-329.

Advances in Consumer Research Volume 26, 1999      Pages 325-329

WHEN A COMPANY DOES NOT RESPOND TO NEGATIVE PUBLICITY: COGNITIVE ELABORATION VS. NEGATIVE AFFECT PERSPECTIVE

Geeta Menon, Ohio State University

Robert D. Jewell, Ohio State University

H. Rao Unnava, Ohio State University

ABSTRACT -

Company response to negative publicity is a critical element affecting consumer attitude towards the company and the brand. This study explores the mediational processes that impact changes in the attitudes of consumers when exposed to four different kinds of company responses to negative publicity. Two of the responses manipulated in the experiment deal with strong and weak arguments while the other two are "no comment" and"no comment due to litigation" conditions. The latter two responses fall into the category of unavailability of information from a consumer’s perspective. In past research, unavailability of information has been shown to be mediated by two different kinds of processes. Commodity theory of Brock (1992) states that effects of the unavailability of information is mediated by cognitive elaboration while reactance theory (Brehm 1966) argues that negative affect that consumers experience results in attitude change. The results of an experiment designed to test these competing processes in the context of consumer response to a company’s response to negative publicity reveals the occurrence of both processes. Strong argument responses caused the least damage to attitude towards a company and brand faced with negative publicity. The no comment and the no comment due to possible litigation response conditions showed equal damage. Finally, the weak argument condition did not differ from the no comment and the no comment due to litigation condition revealing that when companies issue statements for damage control it is necessary to carefully craft a strong response.

INTRODUCTION

The cloud of negative publicity is just as much a reality for firms in the world of business today as are sporadic bursts of positive public relations that firms indulge in. Negative publicity has been defined as the noncompensated dissemination of potentially damaging information by presenting disparaging news about a product, service, business unit, or individual in print or broadcast media or by word of mouth (Sherrell and Reidenbach 1986). A documentation of six case studies of negative publicity in the automobile industryCthe bursting into flames of Ford Pinto, the oversteering of Chevrolet Corvair, the handling deficiencies of Plymouth Horizon/Dodge Omni, the sudden acceleration syndrome of Audi 5000, and the rolling over of Suzuki SamuraiCyield the following comment from the authors: "Company response is a key component in limiting the damage caused by negative publicity" ( Weinberger, Romeo and Piracha 1991). They suggest that a time-sensitive corporate explanation of the problem conveys an image of a company concerned about the welfare of its consumers.

Yet in a study on possible response strategies for Chrysler corporation faced with a spate of negative publicity from Consumers Union over the safety of Dodge Omni and Plymouth Horizon automobiles, Weinberger (1981) showed that "no immediate response can reduce the immediate negative effect of negative information." The most effective response was not a direct reply by Chrysler to the Consumers Union, but a commercial emphasizing the car’s youthful image along with a secondary handling appeal. Thus there are conflicting ideas on what works and what does not, with very little understanding of the psychological processes underlying consumer response to a company’s response to negative publicity. In this research, we contrast two situationsCone in which the affected company does not provide an informative response and the other in which it does. Specific attention is paid to the negative affect that consumers experience when deprived of information and to the unfavorable cognitions generated. The role of cognitions vs. negative affect in mediating attitude change is also examined. Thus, this study is not about negative publicity but is about consumer response to the response of a company receiving negative publicity.

Conceptual Development and Hypotheses

A company response in the face of negative publicity can take multiple forms: outright denial, no comment, redirect audience attention, voluntary admission of guilt, compliance with regulatory authority and implicit admission of guilt, admission of guilt and voluntary proactie restitution action (Sherell and Reidenbach 1986). Still another listing of specific responses outlined in Reidenbach et al. (1987) includes instinctive reaction to or denial of all allegations, stonewalling tactics in which a company responds by saying that they "would fight all the way," formal compliance as a result of intervention by a governmental agency, or seizing the initiative etc., to name a few.

Consider the situation when a consumer’s knowledge of the brand being portrayed negatively is limited (e.g. non-user or very light user). The consumer then will have to assess the merits of the response provided by the company that owns the affected brand and contrast it with the information contained in the publicity message. Assuming moderate levels of processing involvement which is likely because of the attention-getting nature of negative information (Fiske 1980), a response that contains strong arguments is likely to result in more positive attitudes than a response containing relatively weaker arguments (Petty, Cacioppo, Schumann, 1983). Thus:

H1a:  The attitude towards a negatively publicized brand will be more positive when the company provides a strong response than when it provides a weak response.

H1b:  The attitude towards a negatively publicized company will be more positive when the company provides a strong response than when it provides a weak response.

Besides responding directly, firms also carefully restrict and control information that is detrimental to their reputation. Thus a viable strategy for a company (facing negative publicity) could be to not respond at all. Such a strategy is especially attractive when the company cannot deny the publicized information in question. However, how does a consumer respond to such an action?

In general, consumer reaction to suppressed information appears to be an enhanced desire for whatever is unavailable (Worchel 1992). This increased desire for the unavailable is attributed to the reactance felt by consumers, which arises from their perception that the freedom they should have to obtain information is threatened by the company’s action (Brehm 1966, Wicklund 1974).

Reactance, which is a motivation to act in a manner that runs counter to a proscription, appears to be fairly automatic and instinctive. Brehm and Weinraub (1977), referring to the state of psychological reactance in two year old males, as manifested in the form of increased attractiveness of goal objects with barriers suggest that the development of complex cognitive abilities is not a necessary precursor of reactance processes. In other words, reactance is an automatic process requiring little thought. It is accompanied by negative affective responses. Thus failure by a company to respond to negative publicity may cause consumers to experience reactance. The negative affect that accompanies the reactance may transfer to the brand and company, which are the targets of negative publicity.

H2a:  The attitude towards a negatively publicized brand will be less positive when the company does not provide a response to the negative publicity than in any other condition.

H2b:  The attitude towards the negatively publicized company will be less positive when the company does not provide a response to the negative publicity than in any other condition.

H2c:  The negative attitude of consumers when a company does not respond to negative publicity will be mediated by negative affect experienced by the consumer.

Although negative affect in consumers is one outcome to the absence of response from a company, yet another perspective of psychological processes involved in unavailability effects can be found in commodity theory (Brock, 1968, Brock and Brannon, 1992, Lynn, 1991). Commodity theory postulates that limited access to information makes the information more desirable, which in our scenario would get translated into less positive attitudes towards the negatively publicized brand.

A meta analysis of 41 studies dealing with commodity theory revealed support for commodity theory’s proposition that scarcity enhances the value of a commodity (Lynn, 1991). He argues that other theories like reactance theory (Brehm, 1966), dissonance theory (Festinger, 1957), personal equity theory (Seta and Seta, 1982) provide explanations for scarcity effects on value in a more restricted view than commodity theory. Lynn (1992) finds commodity theory to be a meta-theory that identifies a relationship between an unavailable commodity that is valued or is desirable but which on its own does not explain why this effect occurs.

However efforts to identify mediators of the commodification process had led Brock and Brannon (1992) and Brock and Bozzolo (1992) to argue that increased message and cognitive elaboration leads to valuation polarization. Unavailability effects were systematically examined in a series of seven experiments by Brannon, (1993) who concluded that scarcity instigates increased thinking and polarizes attitudes rather than serving as a heuristic cue for mindless processing. Thus in contrast to a mindless reactance based affective response, a consumer, according to commodity theory is expected to think about the absence of information in an active manner. The negativity associated with these thoughts is expected to cause attitudes toward the unresponsive company and its brand to turn negative.

H3a:  Subjects will generate more negative cognitive responses when a negatively publicized company offers no explanation than when it offers an explanation.

H3b:  The negative cognitive responses will mediate the negative attitudes resulting from a company’s non-response to negative publicity.

An experiment that was conducted to empirically test the foregoing hypotheses will now be described.

EXPERIMENT

Consumer reactions to various types of responses given by a negatively publicized company were tested in a single factor design employing four conditions. Eighty-eight students enrolled in an undergraduate marketing class participated in the experiment for course credit. Each respondent was randomly assigned to one of the four treatment groups differing on the type of company response to negative publicity (no comment, no comment because of legal reasons, weak response and strong response condition).

Stimulus Materials

Negative Publicity Event: A study showing the possibility of development of arthritis from wearing a hypothetical brand named Northstar Running Shoe made by a hypothetical Company called Metric was provided to the subjects in an experimental situation. The report showed the Consumer Association for Shoes (CAS) making the accusation that Northstar Running Shoes impacts the long term health of leg, ankle and knee joints by being deficient in shock absorption. The study ostensibly found that instead of absorbing the shock, Northstar Running Shoes actually transferrd it up to the knee. According to the "experts on the panel of CAS, in the long term, this transfer of shock to the knee weakens it and enhances the likelihood that the consumer will get arthritis in later years."

Company Response: The following four response conditions were examined in this study.

Condition 1:

No comment. In this condition, subjects were told that when the company was approached for their reaction, they had no comment.

Condition 2:

No comment due to litigation. In this condition, the company was described as saying "Due to impending litigaton, we are forbidden by law to discuss this report. We will consider making comments on this issue at an appropriate time."

Condition 3:

In this weak response condition, an open letter from the Metric Company CEO, Martin Gunnell about Northstar brand of Running shoes included statements such as:

"Please do not believe such reports. This article is clearly written by people who do not know much about shoes. We are the ones with the knowledge and experience of making shoes. They definitely do not know what they are talking about. Most of our studies have found the shoes to be completely safe."

Condition 4:

In this strong response condition, an open letter from the Metric Company CEO, Martin Gunnell about Northstar brand of Running shoes included statements such as:

"Only 110 people nationwide participated in this study. Ten percent of the participants already had incidence of arthritis in their families. The results of the study are not reliable and statistically valid. None of our studies have found an increase in the risk of arthritis after wearing Northstar Running shoes for an extended period of time."

TABLE 1

GROUP MEANS FOR DEPENDENT VARIABLES

Procedure

After subjects were seated, they were handed a booklet that contained the experimental treatment and the questionnaire. The first page informed subjects that they will read some negative publicity information about a shoe company followed by the company’s response. They will then indicate their opinions in the questionnaire that followed. The negativity of publicity information coupled with the absence of other distracting materials was expected to engender moderate levels of processing involvement. In order to match the conditions on the time to evaluate the stimulus material, each condition was timed for a period of two and half minutes after the subjects had finished reading the general instructions. Subjects were debriefed and dismissed after completing the questionnaire.

Dependent Variables

Subjects were first asked to list the thoughts they had when they read the response of Metric Company to the negative publicity report. They were given 2.5 minutes for this task. (Petty and Cacioppo, 1977). These thoughts were classified into three categoriesCnegative, positive and message-unrelated thoughts.

Next, subjects were asked to rate the target brand on a set of four 9-point semantic differential scales (bad-good, undesirable-desirable, inferior-superior and unsatisfactory-satisfactory). They were also asked to rate the target company on four 9-point semantic differential scales (bad-good, untrustworthy-trustworthy, inferior-superior, dishonest-honest). An affect scale (Burke and Edell, 1987) was constructed to measure the positive and negative affect subjects experienced when they read the company response. Positive affect was measured using scales anchored by hopeful, peaceful, touched and calm while negative affect was measured by scales anchored by annoyed, frustrated, angry, insulted, defiant, irritated, offended, and skeptical.

Finally, in order to assess whether subjects experienced reactance as a result of the experimental manipulation, five 9-point measures were constructed ("A company like Metric is bligated to provide an explanation; It is important for me to understand the reasons behind incidents such as one involving Northstar Running Shoes; When I found out that Metric was not going to provide an explanation, I felt I was not getting what I was entitled to; I would be interested in finding information on my own; and, I felt anxious and uneasy when I realized that Metric was not going to provide an explanation") Also, Metric’s response to the issues related to Northstar Running Shoes were rated using six item 9-point scales (adequate-inadequate, good-bad, appropriate-inappropriate, informative-not at all informative, strong-weak and very believable-not at all believable).

Results

Attitude towards the Brand: H1a and H2a together predict that attitude toward the target brand will be more positive in the strong explanation condition than in the weak explanation condition and will be least positive in the no explanation condition. These hypotheses were tested using planned contrasts between the relevant conditions. Two tailed tests were employed for all contrasts. The mean attitude scores are presented in Table 1.

As expected, the strong response condition resulted in more positive attitude than the weak response condition (t₈₄=1.999, p<0.05) which in turn was more positive than the two no response conditions (t₈₄=2.156, p<0.05). The no-response conditions did not differ from each other (t₈₄=0.264, p>0.05). Apparently, consumers are not very forgiving of a company not providing a response even if it has legal reasons for doing so.

Attitude towards the company: H1b and H2b are similar to H1a and H2a but focus on the company. Planned comparisons, similar to the ones above, indicated that the no comment and weak argument conditions did not differ from each other (t₈₄ =1.231, p>0.05) but were significantly lower than strong explanation condition (t₈₄=4.634, p<0.05). Thus while H1b was supported, H2b was not.

Negative affect: H2c suggest that negative affect resulting in the no response conditions mediates attitude effects. First the items constituting negative affect scale were collapsed into one mean score based on their high internal consistency (Cronbach alpha=0.87). Planned comparisons revealed that there was significantly more negative affect in the no comment condition than in the strong response condition (t₈₄ =2.849, p<0.05). Surprisingly, the weak response resulted in as much negative affect as the no comment conditions (t₈₄ =0.084, p>0.05). It is not clear why a weak response should generate negative affect. Tests of H2c will be reported later.

Negative thoughts: A contrast between strong response and no comment conditions supported the expectations that no comment from the company results in more negative cognitions (t₈₄ =-1.682, p<0.05). The difference in the number of negative cognitions between strong and weak response conditions was significant (t₈₄ =2.374, p<0.05). Thus H3a was supported.

Mediational Analysis. The next step in the process was to examine the processes mediating the effects of no response on brand and company attitudes. While H2c argued for mediation by negative affect, H3b argued for mediation by negative cognitions. Both negative affect and negative thoughts were introduced as covariates in an ANOVA with brand and company attitudes as the dependant measures and the group as the independent variable. For attitude towards the brand, negative cognitive responses showed significance (F=9.898, p<0.002), and negative affective responses also showed significance (F=10.118, p<0.002). The group mean square effect reduced from 20.116 to 10.637 (F=10.118, p<0.002). The fact that both covariates are significant indicates that both negative affect and positive thoughts contribute to the decline in attitudes when a company fails to provide a response to negative publicity.

Discussion

The experiment in the study undertakes a test of two theories about unavailability of information. The results prove the existence of both effects as consumers respond to company responses of negative publicity by generating negative affect as predicted by reactance theory (Worchel, 1992) and negative cognitions as predicted by commodity theory of Brock and Brannon (1992). Findings in the study are also in alignment with two of the conditions stated in Inman, Peter and Raghubir (1997) who posit that restrictions affect consumer behavior through a negative affective route and through an informative route.

Attitude scores in group four (strong response) condition are the most positive while the other three groups show scores which are not significantly different from each other. A "no comment" condition and a weak argument condition resulted in about the same amount of negative affect. This implies that if issuing a statement, it is better to respond strongly rather than issue weak statements. But consumers are also not forgiving of firms who stall their response due to impending legal actions as they view that action as similar to the no comment response.

Both negative cognitive responses and negative affective responses mediate attitude changes in consumers faced with a company response to negative publicity. Unavailability of information in the form of a strong company response causes subjects to generate both negative affective and negative cognitive responses to a company. Offering an explanation stating that the company cannot respond due to legal action seems not to be adequate for the company and the brand. Company responses as weak arguments are as detrimental to a company and brand image as no responses at all.

Headlines like "Hudson Foods Seeks Buyer for its Troubled Beef Plant Company" (Somasundaram, 1997) proclaim the far reaching consequences of consumer responses to a company’s response to negative publicity. In order to counterbalance the potential harmful impact that negative publicity can have on a firm’s overall image and brand image, it will be useful for firms to have an understanding of the processes involved when consumers are faced with company responses to negative publicity. Since negative publicity is always a possibility it would be better to be prepared in advance to deal with the situation so as to give a strong response. But even the formation of crisis management teams will not achieve enough if the company does not provide a unified and strong response to a negative publicity event. Perrier’s crisis about benzene contamination in its water was managed poorly by its crisis management team as Perrier North America, Perrier France and Perrier UK acted as autonomous agencies and issued conflicting statements about this negative publicity (Kurzbad and Siomkos, 1992). Since consumers react to unavailability of information from the company and also responses perceived as weak in a more or less similar way, the importance of a carefully worded strong company response becomes salient.

Limitations and future research

Only one product was used as a stimulus in a study that employed student subjects. Whether similar effects occur in more natural processing conditions is not clear. Using multiple products within this study would have boosted our confidence in the findings. The use of a fictitious product is favorable from an internal validity perspective. However, consumers often have several associations in their minds about various brands. The interplay of those associations with conflicting external information was not studied in this research.

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