Employee Perceptions of Crisis Spillover Risk: The Role of Perceived Crisis Severity and Corporate Response Strategies

Abstract

While the spillover effect of crises is an emerging research topic in the field of crisis communication, little attention has been given to how employees perceive the risk of crisis spillover due to a corporate misconduct of another company. Employees are important stakeholders in an organization and closer to it than any other stakeholder group. Understanding employees' judgments of crisis spillover risk and response strategies helps to assess their advocacy behavior, which can protect the organization's reputation. This research addresses how perceived crisis severity and corporate response strategies affect employee perceptions of crisis spillover risk and their subsequent advocacy behavior. A pre-test (N = 181) identified three types of corporate misconduct (overcharging customers vs. data leak vs. selling rotten meat) that are characteristic for the supermarket industry. These scenarios were used in an online experiment with retail employees (N = 300) to examine the effects of two crisis response strategies (issuing a denial vs. no response) by a competitor supermarket for which they were asked to imagine working. The findings indicate that higher perceived severity of corporate misconduct correlates with an increased perceived crisis spillover risk to the industry. This perceived risk mediates the relationship between perceived crisis severity and the perceived spillover risk to an individual's own company. Furthermore, issuing a denial is perceived as more appropriate than offering no response, and it fosters greater employee advocacy behavior.