Whereas the interest in the area of corporate crises and crisis response strategies has been increasing during the last decades (e.g. Coombs, 2007; Dawar & Pillutla, 2000), little is known on the spillover effects that an organizational crisis can induce towards other firms within the same industry. Though over the years, a variety of reputational collapses of single companies have become memorable by causing whole industries to suffer. Following these considerations, the aim of this study is to extend prior research on corporate crises and crisis management by focusing on intra-industry spillover effects. We investigate the topic by means of an experiment taking as an example the sportswear industry. We randomly assigned participants interested in sports to a scenario with either a personally relevant scandal or a personally irrelevant one about one major sportswear brand. We then measured the corporate reputation, purchase intentions and willingness to recommend the brand for an overall of five sportswear companies as dependent variables. We find a significant negative spillover and reduction of corporate reputation and behavioral intentions for different sportswear brands and thereby distinguish between the unexplored effects of scandal relatedness to the customer. We are the first to investigate the degree of personal relevance of upcoming negative information, finding no significant influence on the strength of scandal spillover. Furthermore, we argue against existing literature and question the role of reputation as protective shield and buffer against negative spillover, finding especially companies with high corporate reputation to suffer from scandal spillover. In a next step, we employed three different response strategies, namely active, defensive and collective (Dawar & Pillutla 2000) in order to find the best spillover correction method for competing brands. Conversely, we found none of the three response strategies to be suitable spillover correction methods placing managers of spillover-affected companies into a blind alley.

Extant research has expansively studied the effect of celebrity endorsements on consumer choice and behavior (Amos, Holmes, and Strutton, 2008) and found celebrities to positively influence the endorsed brands. According to prior literature, three fundamental ties between endorser, consumer and product influence the effectiveness of celebrity endorsement, namely the endorser-product match-up, the consumer’s identification with the endorser and the consumer’s product category involvement. So far, these have been investigated predominantly in a positive endorser information context (Erdogan, 1999). However, the effect that negative information about the endorser hitting the spotlight has on the brand’s future and the role that these ties play in this context remain widely unknown. This research fills the gap by exploring the effect of negative information about an endorser on consumers’ attitude towards the ad, brand attitude, behavioral intentions and word of mouth. By further integrating the meaning transfer model, social influence theory, the match-up hypothesis and product-category involvement, this research offers deeper insights into the three essential ties between endorser, consumer and product. In an extensive main experiment, with two brands - Nike and Adidas - and 7 celebrity endorser the author finds that a strong fit between celebrity and product, high product-category involvement and high identification of consumer with the celebrity offer beneficial effects for consumer perceptions and intentions. However, when an endorser scandal becomes public, negated meanings get transferred to the brand, leading to less favorable attitudes towards the ad, brand attitudes, behavioral intentions and willingness to recommend the brand. This phenomenon is stronger in case of attitude towards the ad for high product involvement and low identification with the celebrity. Furthermore, a low identification with the celebrity also moderates a higher decrease in willingness to recommend the product in case of celebrity negative information. Thus, marketing managers should keep an eye especially on highly involved and low identified consumers in case of endorser scandals, as this immoral behavior can damage the endorsed brand image and hurt earlier ad expenditures.