Role of hazard severity on the effect of a firm’s supply chain position on time to recall

Abstract

This study examines how hazard severity (SevCATEGORY) moderates the relationship between supply chain position (SCPcom) and the time to recall (TIMEtoRECALL) in the US toy industry. Product recalls are critical in minimizing consumer harm; however, firms differ significantly in the speed with which they issue recalls. Drawing on the Behavioral Theory of the firm, this study proposes that upstream firms (e.g., manufacturers) will exhibit longer recall times than downstream firms (e.g., retailers), particularly under conditions of high hazard severity.

Using a dataset of 400 products from the US Consumer Product Safety Commission (CPSC) and external sources, such as the Global Competitiveness Report, the findings reveal that the interaction of supply chain position and hazard severity is positive and significant. This indicates that upstream firms experience significantly longer recall times when hazard severity is high. The results contribute to the literature by highlighting the conditional nature of recall timing decisions and the importance of crisis severity in shaping firm behavior. Managerial and regulatory implications are also discussed