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The study examines quarterly media coverage of 45 US public toy companies a 10-year period and over 5,500 press releases generated by the companies during that time.

Almost half of the companies surveyed conducted a toy recall (for a total of 56 million toys associated with thousands of reported injuries or incidents) during the study period. Those recalls were indications of a firm’s “wrongdoing,” defined as behaviors that placed stakeholders at risk or violated consumer expectations for standards of conduct.

The research reveals that the worse a company’s “wrongdoing,” the more damaging media coverage it received. It also showed a spillover effect: Many of the companies that were not associated with toy recalls suffered from negative media backlash aimed at the entire industry, making them “guilty by association.”

But the key to managing the crisis is different depending on whether a corporation was directly to blame or “guilty by association,” according to lead study author Anastasiya Zavyalova, assistant professor of strategic management in Rice University’s Jones Graduate School of Business.

“If your corporation is directly to blame, it’s best to stick to the facts,” Zavyalova says. “A media strategy that shares substantive information about how you’re planning to address the problem can help change the tone of the media coverage.”

However, for companies that are “guilty by association,” it’s better to have communication that takes attention away from the scandal and puts the focus on how the corporation differs from others in the industry. These ceremonial press releases included information about company plans such as starting a foundation, engaging in a charity event, etc.

“For companies not directly to blame that have suffered negative press, this type of communication helps shift attention from the media backlash,” Zavyalova says.

Zavyalova notes that during times when more than one company was conducting a recall, media coverage was somewhat less negative for individual wrongdoing firms.

“It goes to show that there is some ‘safety in numbers,’” she says.

The study, co-authored by researchers from the University of Georgia and University of Maryland-College Park, appears in Academy of Management Journal and was funded by the University of Maryland-College Park.

Source: Rice University