Is Recalling Good? Learning from Toy Recalls

Current research on product recalls suggests that recalls present significant challenges to managers and affect organizational performance. However, very little is known about the effect of product recalls on organizational learning. In this paper, we argue that product recalls help organizational learning and reduces future recalls. Specifically, we contend that product recall experience of various types is associated with reduced future recalls. We test our contentions on the toy recalls initiated by 192 unique firms over an 11-year period and found broad support for our hypothesis. Our findings have important implications for the research and practice on organizational learning and product recalls.