The Spillover Effect of a Moral Brand Scandal on Brand Legitimacy: Do Consumers not only Reassess a Scandalized Brand's Moral Legitimacy but also its Instrumental Legitimacy?

Julia Anna-Maria Kick & Pui Kei Chan

Student thesis: Master thesis

Abstract

Volkswagen’s emission scandal, the explosion of British Petroleum's oil well Deepwater Horizon in 2010 or only currently Facebook being accused of harvesting and using personal data do not only epitomize the observed frequency of brands misbehaving but also illustrate the detrimental effects such misconduct has. Brand boycotts, a damaged reputation, and decreasing stock prices are only a few consequences brand managers have to face. Understanding the processes underlying consumers’ assessment of the scandalized brand provides important and interesting insights for brand managers. While brand transgressions and their effect on the consumer-brand relationships have already been investigated by prior research, this paper reverts to the newly developed construct brand legitimacy to do so. Merging organizational theory and the concept of legitimacy with contemporary marketing approaches, this study investigates how a moral transgression also affects consumers’ evaluation of the brand’s instrumental legitimacy, thus studying a so-called spillover effect for the first time in relation to different brand legitimacy dimensions. This study is not only interested whether such a spillover effect occurs but also which factors moderate its prevalence. The following research question, therefore, serves as a guidance during the paper: Under what conditions do consumers see a brand’s moral scandal also negatively affecting its products’ functionality and performance guaranteed to the consumers, i.e. a brand’s instrumental legitimacy? Drawing from institutional theory, the authors develop a model and test the proposed hypotheses in an experimental design. To measure whether a moral brand scandal functions as a jolt which results in consumers reassessing previously formed legitimacy judgments regarding the respective brand, the authors design and incorporate a fictitious brand scandal, involving H&M, thereby taking inspiration from reported misbehavior in the garment industry. With the authors being of different nationalities, a quantitative, cross-cultural study between Germany and China is considered to result in exciting observations. The study shows that consumers also reassess a brand’s instrumental legitimacy after a moral brand scandal, thus demonstrating the hypothesized spillover effect, which bears highly relevant managerial implications presented in due course. As none of the hypothesized moderators, namely brand trust, prior brand attitude, brand commitment, egalitarianism and the newly developed construct seriousness of the scandal show a significant impact, this paper partially answers the proposed research question. Understanding this study as a starting point further research is invited to capitalize on its findings to thus not only enrich the currently existing literature on legitimacy and more precisely brand legitimacy but to also suggest guidelines for brand managers.

EducationsMSc in International Marketing and Management, (Graduate Programme) Final ThesisMSc in Business, Language and Culture - Diversity and Change Management, (Graduate Programme) Final Thesis
LanguageEnglish
Publication date2018
Number of pages168
SupervisorsFlorian Kock