The corporate social responsibility of pharmaceutical product recalls: An empirical examination of U.s. And U.k. Markets [Book Review]
David Bourget (Western Ontario)
David Chalmers (ANU, NYU)
Rafael De Clercq
Jack Alan Reynolds
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Journal of Business Ethics 76 (4):427 - 449 (2007)
The pressure on companies to practice corporate social responsibility (CSR) has gained momentum in recent times as a means of sustaining competitive advantage in business. The pharmaceutical industry has been acutely affected by this trend. While pharmaceutical product recalls have become rampant and increased dramatically in recent years, no comprehensive study has been conducted to study the effects of announcements of recalls on the shareholder returns of pharmaceutical companies. As product recalls could significantly damage a company's reputation, profitability and brand integrity, this paper investigates the effect on shareholder wealth and the extent to which the adoption of CSR practices by pharmaceutical companies in the United Kingdom (U.K.) and the United States (U.S.), the two largest markets for pharmaceutical products in the world, affected market reactions surrounding product recall announcements. The analysis of product recall announcements from 1998 to 2004 compiled from The Pharmaceutical Journal and U.S. Food and Drug Administration enforcement reports revealed marked differences in the way market participants in the two countries responded to news of product recalls. U.S. investors penalised firms according to the severity of product defects while U.K. investors were indifferent. While U.K. investors rewarded product recalls by firms which were not usually CSR-active, U.S. investors punished non-CSR active firms that performed recalls. These observations could pose strategic challenges to pharmaceutical firms operating in both countries
|Keywords||corporate social responsibility pharmaceutical industry product recalls shareholder wealth UK and US comparison|
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Citations of this work BETA
Pepijn K. C. van de Pol & Frank G. A. de Bakker (2010). Direct-to-Consumer Advertising of Pharmaceuticals as a Matter of Corporate Social Responsibility? Journal of Business Ethics 94 (2):211-224.
Olga Bruyaka, Hanko K. Zeitzmann, Isabelle Chalamon, Richard E. Wokutch & Pooja Thakur (2013). Strategic Corporate Social Responsibility and Orphan Drug Development: Insights From the US and the EU Biopharmaceutical Industry. [REVIEW] Journal of Business Ethics 117 (1):45-65.
Pieter Jong, Antony Paulraj & Constantin Blome (2014). The Financial Impact of ISO 14001 Certification: Top-Line, Bottom-Line, or Both? Journal of Business Ethics 119 (1):131-149.
Pepijn K. C. Van de Pol & Frank G. A. De Bakker (2010). Direct-to-Consumer Advertising of Pharmaceuticals as a Matter of Corporate Social Responsibility? Journal of Business Ethics 94 (2):211 - 224.
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