Toyota Recall Crisis: Public Attitudes on Leadership and Ethics

By Piotrowski, Chris; Guyette, Roger W. | Organization Development Journal, Summer 2010 | Go to article overview

Toyota Recall Crisis: Public Attitudes on Leadership and Ethics


Piotrowski, Chris, Guyette, Roger W., Organization Development Journal


Abstract

The Toyota recall crisis of 2010 has prompted much criticism in media circles, national business forums and automotive trade publications. It is hoped that business and management researchers will take an unbiased, i.e., objective and empirical examination, on the many unique aspects of this corporate crisis. The current study focuses on three central features of the evolving Toyota recall: (a) Leadership issues, (b) Brand loyalty, and (c) Ethics and leadership. In order to gauge public attitudes about these issues, we developed a brief survey instrument and a semantic differential measure. Participants (Total =109) included 72 business college students and 37 adults from the local community. Results indicated that a majority (57%) of the sample felt that Toyota leadership's handling of the recall was somewhat disappointing or very poor. Moreover, few respondents (18%) had any confidence in the veracity of public statements from Toyota. With regard to ethics, 50% of the sample felt that Toyota's decision- making is unethical to some degree. In addition, a majority (56%) expressed little faith in Toyota's transparency during this crisis. Noteworthy, only 13% felt that Toyota would probably not regain its prominence in the auto sector. These findings were discussed in light of recent research on crisis management and perception management.

Introduction

Over the past 30 years, Toyota Motor Corp. has not only been the envy of the automotive industry but also been held in high esteem as a symbol of manufacturing and leadership excellence in the business world (Dyer, 1998; Iyer et al., 2009; Spear, 2004). In fact, the Toyota brand has been touted as the pinnacle of automotive excellence by rating agencies (e.g., Consumer Reports) and industry consultants alike, and this status has been reflected in a continuous stream of high marks in consumer confidence (Stewart & Raman, 2007).

At the same time, auto manufacturers have not been immune to major crises within the sector over time; that is, product recalls, production disruptions, supply-chain inefficiency, labor disputes, and perennial competitive pressures. Despite these onerous concerns, Toyota has maintained product superiority and consumer loyalty to its brand.

Since 2007, however, Toyota has experienced a series of car model recalls that have escalated into a major crisis where several of their top-selling models (e.g., Camry, Prius, Corolla) have been flagged with serious potential defects (unexpected acceleration problem, software glitches, steering malfunction, brake system defects). To date, the 2010 recall crisis has affected about 8 million cars and repair costs are estimated to exceed $2 billion. Although there were some warning signs that Toyota had a potential manufacturing problem in 2007, it wasn't until January of 2010 that the seriousness of the crisis was made public and caught the attention of the media and, more importantly, U.S. regulatory agencies (e.g., U.S. Highway Safety Administration). Furthermore, Congressional panel investigations were scheduled for early March 2010.

The current research study a) discusses the historical significance of model recall in the auto sector, b) reviews the literature on crisis management and perception management, and c) reports some preliminary data on public attitudes regarding Toyota's leadership, brand loyalty (Chia-Hung, 2008), and ethical decision-making in response to the 2010 recall crisis.

About Toyota Motor Corp.

Today, Toyota manufactures vehicles, including motorcycles, and parts at 53 production sites in 27 countries around the world. In fiscal year 2009, Toyota sold about 7.5.million vehicles in 170 countries under the Toyota, Lexus, Daihatsu, and Hino brands. In 2008, it was ranked as the 5th largest company in the world. In 2005, Toyota ranked 8th on Forbes 2000 list of the world's leading companies, and ranked #1 in global automotive sales in 2008. …

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