Question

Dutton and Dukerich (1991) pointed to the role the organization’s external image has on individuals’ identification. What role do you think the public nature of the scandal played in how individuals responded to the scandal?

Answer 1

ANS :

A scandal occurs when a negatively perceived event or action gains notoriety with a relevant audience. Not all negative events become scandals. The likelihood of a full-blown public scandal, in need of an equally public response, goes up when the incident is surprising, vivid, emotional, or pertinent to a central attribute of the company or brand. Applying these criteria, managers in the Chinese dairy supply chain might have anticipated that the news of tainted milk products would blossom into a crisis. The scandal received extensive press coverage because a large number of illnesses and several infant deaths struck an emotional chord and because a core benefit of dairy products—healthful nutrition—was compromised.

A company’s own good behavior does not guarantee protection from scandal. Damage may occur via spillover from other companies, particularly those perceived to be similar on attributes central to the scandal. When Vioxx was linked to elevated cardiovascular risk and Merck was forced to withdraw it from the market in 2004, Pfizer sought to capitalize on the scandal by positioning its COX-2 inhibitor, Celebrex, as a safer alternative. But many physicians perceived the Vioxx problem to be class related (associated with COX-2 inhibitors) rather than drug specific. As a result, Celebrex suffered along with Vioxx, whereas painkillers from other classes were unaffected. Meanwhile, dissimilarity on a scandal attribute appears to offer companies protection from spillover. In 2005, when a severed finger was allegedly found in a bowl of Wendy’s chili, competitors didn’t take a hit, because the menu item was unique to that restaurant chain.