The Double-Edged Sword of Entrepreneurial Orientation: Product Recalls and the Role of COO Power

This study examines how entrepreneurial orientation (EO) influences firms’ likelihood of product recalls. Integrating EO and upper echelons theory, we first argue that EO’s bold, variance-enhancing actions increase a firm’s product recall risk by diverting managerial attention away from quality control. Using 23 years of data on U.S. public firms, we find that EO increases recall likelihood. Second, we argue that this relationship is moderated by chief operating officer (COO) power, and the effectiveness of COO power is contingent on the firm’s product life cycle context. Empirical analyses support our theory and offer new insights about EO’s potential downsides.