Does reputation contribute to reducing organizational errors? A learning approach

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29 Citations (Scopus)

Abstract

In this study I examine the effect of a firm's reputation for product quality on its effort in learning to reduce its product defect rate. Theoretical ideas on the motivation of learning associated with social aspiration levels and the self-serving bias combined with social categorization suggest that poor quality reputation firms are more likely than their counterparts with a good reputation to attend to potential product defects and consequently reduce their defect rate. However, a stream of research on the motivation of learning stemming from historical aspiration levels and slack search leads to a different argument: a reputation for good quality is more likely to provide firms with a motivation to avoid product defects. I build upon these two competing arguments and hypothesize that stronger motives for learning exist in situations where firms have either a weak or strong reputation for product quality. My study of product recalls in the US automotive industry highlights an inverted U-shaped relationship, indicating the liability of an intermediate reputation in reducing product defects.

Original languageEnglish
Pages (from-to)676-703
Number of pages28
JournalJournal of Management Studies
Volume46
Issue number4
DOIs
Publication statusPublished - 2009 Jun 1

All Science Journal Classification (ASJC) codes

  • Business and International Management
  • Strategy and Management
  • Management of Technology and Innovation

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