(Georgia Institute of Technology: Atlanta) -- A product recall can significantly affect a company’s bottom line and its reputation, but a swift recall and restitution to purchasers can minimize harm to the company—and even improve customer satisfaction, according to a study by Georgia Institute of Technology and University of Manitoba.

The study examined more than 500 toy recalls between 1988 and 2007. This research was funded by the Social Sciences and Humanities Research Council of Canada.

“Recalls undermine trust in a specific brand and it can take the company a long time to recover from the damage to its reputation, but it doesn’t have to take a long time if the company uses good crisis management tactics,” says Manpreet Hora, an assistant professor in Georgia Tech’s College of Management. “Reducing the time it takes to recall a product will have a positive effect on consumers’ willingness to purchase other products from the same company and if the recall is handled well, the stock price may recover to the same level as before the incident.”

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