Dynamic Attribution in Chain Liability: Managing Recovery From Environmental Supply Chain Incidents

ABSTRACT Environmental supply chain incidents caused by upstream suppliers are increasingly scrutinized by end‐customers. Although prior research on chain liability suggests that greater incident severity leads to more negative customer reactions and more substantive recovery efforts mitigate these effects, important dynamics in these variables have not yet been fully examined. This study advances a dynamic perspective on attribution theory and introduces forgiveness as a key process variable in how companies might recover from environmental chain liability incidents. Using a vignette experiment, we examine how multiple types of incident severity (environmental impact, human health risk, and physical proximity) and recovery strategies (apology, restitution, and monitoring) interact to influence customer forgiveness and repurchase intentions. The results reveal that an incident's human health risk and physical proximity reduce repurchase intentions independently without compounding effects and that recovery through monitoring and restitution independently increases forgiveness and repurchase intentions but loses effectiveness when combined. These findings refine current knowledge of chain liability by challenging several current assumptions about incident severity and recovery and highlight the need for a more nuanced approach to managing environmental supply chain incidents.