Reputation Spillovers and Recovery Paths of Brand Alliances after Product Harm Crises in Consumer Packaged Goods Markets

• Usman Farooq

  Department of Business Administration, Karakoram International University, University Road, Gilgit 15100, Pakistan

  Author

• Bilal Qureshi

  Department of Management Sciences, University of Sahiwal, Farid Town Road, Sahiwal 57000, Pakistan

  Author

Brand alliances are usually evaluated when they are introduced, priced, and distributed, but their resilience is tested only when something goes wrong. Product harm episodes are especially demanding because they force consumers, retailers, and investors to decide whether the problem belongs to the product alone, to one partner brand, or to the alliance structure itself. This paper studies how brand alliances behave after recalls and related product harm crises by tracing immediate losses, cross-partner spillovers, and recovery over time. The analysis combines product-level scanner data, partner-level stock returns, and public recall records for consumer packaged goods markets over an extended period. Alliance crises are compared with matched nonallied harm episodes and with unaffected sibling products owned by the same firms. The results indicate that alliance products suffer larger initial demand losses than otherwise comparable single-branded harmed products, but the size and persistence of the loss depend on whether fault attribution is clear. When the source of the problem is difficult to assign, the penalty spreads more strongly across both partners and recovery becomes slower. Nonresponsible partners are not insulated from the event, although their losses are smaller when partner roles were visually and functionally distinct before the crisis. The evidence also shows that prominence imbalance magnifies contagion. Alliances dominated by one highly salient brand experience deeper reputational spillover to the stronger partner, while more balanced pairings distribute the loss more evenly and recover faster after corrective action. Product structure matters as well. Endorsement-oriented alliances show the largest ambiguity costs, whereas ingredient and composite alliances respond more favorably to targeted remediation and relaunch. The findings suggest that downside risk in brand alliances is shaped not only by defect severity but also by how clearly the alliance allocates responsibility before any crisis occurs.

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