Corporate Reputation in the Volkswagen Emissions Scandal

While some scholars argue that a strong reputation can protect an organization from reputational loss during a crisis, others believe that a high reputation leads to higher expectations among the public, which are violated during a crisis and make the organization suffer. As the role of corporate reputation in the crisis context is still inconclusive in literature, it is thus of interest to investigate to what extent it affects the outcomes of a global crisis for a corporation. In this study, the emissions scandal of the highly reputed corporation the Volkswagen Group (VW) was investigated. The focus is on whether the crisis resulted in reputational loss of and an increased negative word-of-mouth intention towards the VW Group among the German public. The Situational Crisis Communication Theory (SCCT) is employed to conceptualize the crisis context. In addition to crisis responsibility and anger, which have been identified as key predictors of crisis outcomes in the SCCT, this study also examines two potential predictors: The newly introduced concept crisis involvement, and the positive thus less regarded emotion - sympathy. Moreover, the impact of the person-company fit is investigated in this crisis context. Using a quantitative online survey, this study investigates the mechanism through which the emissions scandal influenced the Volkswagen Group’s reputation and the negative word-ofmouth intention among the German public. These outcomes are compared between the affected and non-affected German public. The data consists of 1475 German respondents in total and the data analysis was conducted by employing the structural equation modeling method. The results suggest that the German respondents evaluate the post-crisis reputation of the VW Group only on a modest level, though, their intention to express negative word-of-mouth is rather low. Both emotions - anger and sympathy - among the German public mediate the impact of perceived crisis responsibility and crisis involvement on post-crisis reputation and negative word-ofmouth intention. However, the impact of crisis responsibility on anger and that of anger on both crisis outcomes is stronger among the affected German public than the non-affected German public, while no difference is observed with respect to sympathy. Next to this, person-company fit is identified as moderator in the relationships. It weakens the impacts of crisis responsibility and crisis involvement on anger, as well strengthens the impact of crisis responsibility on sympathy. II The results of this study imply an extension of the SCCT framework through identifying the role of crisis involvement and person-company fit in the crisis context. Managerial implications are provided with regard to corporate crisis communication. Corporations should consider that not only anger might influence the post-crisis reputation and negative word-ofmouth intention but also sympathy. This implies that corporations should on the one hand mitigate anger and on the other hand reinforce sympathy in order to save themselves from negative crisis outcomes. To achieve this, one options is to carry out low perceived crisis responsibility and crisis involvement. Further, as person-company fit may vary the negative crisis outcomes for both affected and non-affected general public, it is important for corporations to build a strong relationship with current and potential customers.