Product recalls in the medical device industry: An empirical exploration of the sources and financial consequences

Management Science

Volumn 57, Issue 2, 2011, Pages 376-392

  Thirumalai, Sriram ^a   Sinha, Kingshuk K ^b  

^a UNIVERSITY OF UTAH   (United States)

^b UNIVERSITY OF MINNESOTA   (United States)

Author keywords

Econometric analyses; Learning; Medical device; Performance; Quality; Recalls

Indexed keywords

ECONOMETRIC ANALYSIS; LEARNING; MEDICAL DEVICES; PERFORMANCE; QUALITY; RECALLS;

HEALTH CARE; HEALTH RISKS; INDUSTRY; MANUFACTURE; MEDICAL PROBLEMS;

EQUIPMENT;

EID: 79951925654     PISSN: 00251909     EISSN: 15265501     Source Type: Journal    
DOI: 10.1287/mnsc.1100.1267     Document Type: Article

References (36)

1. Abelson, R. 2004. Boston Scientific expands recall of troubled stent. New York Times (August 6), http://www.nytimes.com/2004/ 08/06/business/boston- scientific-expands-recall-of-troubled -stent.html.
2. Bhaskaran, S., K. Ramachandran. 2006. Technological evolution and launch timing: An analysis of the time-quality trade-off under competition. McCombs Research Paper Series, No. IROM-04-06. http://ssrn.com/abstract=885952.
3. Bromiley, P., A. Marcus. 1989. The deterrent to dubious corporate behavior: Profitability, probability and safety recalls. Strategic Management J. 10(3) 233-250.
4. Brown, S. J., J. B. Warner. 1980. Measuring security price performance. J. Financial Econom. 8(3) 205-258.
5. Brown, S. J., J. B. Warner. 1985. Using daily stock returns. J. Financial Econom. 14(1) 3-31.
6. Cameron, A. C., P. K. Trivedi. 1998. Regression Analysis Count Data. Cambridge University Press, Cambridge, UK.
7. Centers for Medicare and Medicaid Services (CMS). 2003. Health care industry update. Report, December 5, U.S. Department of Health and Human Services, CMS, Baltimore.
8. Chaney, P. K., T. M. Devinney, R. S. Winer. 1991. The impact of new product introductions on the market value of firms. J. Bus. 64(4) 573-610.
9. Cohen, M. A., J. Eliashberg, T.-H. Ho. 1996. New product development: The performance and time-to-market tradeoff. Management Sci. 42(2) 173-186. (Pubitemid 126545094)
10. Girotra, K., C. Terwiesch, K. T. Ulrich. 2007. Valuing R&D projects in a portfolio: Evidence from the pharmaceutical industry. Management Sci. 53(9) 1452-1466. (Pubitemid 351159595)
11. Haunschild, P. R., M. Rhee. 2004. The role of volition in organization learning: The case of automotive product recalls. Management Sci. 50(11) 1545-1560.
12. Haunschild, P. R., B. N. Sullivan. 2002. Learning from complexity: Effects of prior accidents and incidents on airline's learning. Admin. Sci. Quart. 47(4) 609-643.
13. Hauser, R. G., B. J. Maron. 2005. Lessons from the failure and recall of an implantable cardioverter-defibrillator. Circulation 112(13) 2040-2042. (Pubitemid 41377424)
14. Hendricks, K. B., V. R. Singhal. 1996. Quality awards and the market share value of the firm: An empirical investigation. Management Sci. 42(3) 415-436. (Pubitemid 126549501)
15. Hendricks, K. B., V. R. Singhal. 2003. The effect of supply chain glitches on shareholder wealth. J. Oper. Management 21(5) 501-522.
16. Hendricks, K. B., V. R. Singhal. 2005. Association between supply chain glitches and operating performance. Management Sci. 51(5) 695-711. (Pubitemid 40867138)
17. Heskett, J. L., W. E. Sasser, Jr., L. A. Schlesinger. 1997. The Service Profit Chain. Free Press, New York.
18. Ingram, P., J. A. C. Baum. 1997. Opportunity and constraint: Organizational learning from operating and competitive experience. Strategic Management J. 18(S1) 75-98. (Pubitemid 127697932)
19. Jarrell, G., S. Peltzman. 1985. The impact of product recalls on the wealth of sellers. J. Political Econom. 93(3) 512-536.
20. Kekre, S., K. Srinivasan. 1990. Broader product line: A necessity to achieve success. Management Sci. 36(10) 1216-1231.
21. Kennedy, V. B. 2006. Don't blame Guidant recalls for ICD woes. MarketWatch, Wall Street Journal Digital Network (August 26), http://www.marketwatch.com/story/dont-blame-guidant -recalls-for-icd-market- woes.
22. Kleindorfer, P. R., G. H. Saad. 2005. Managing disruption risks in supply chains. Production Oper. Management 14(1) 53-68. (Pubitemid 40763476)
23. Lapre, M. A., N. Tsikriktsis. 2006. Organizational learning curves for customer dissatisfaction: Heterogeneity across airlines. Management Sci. 52(3) 352-366. (Pubitemid 43385141)
24. Mackinlay, A. C. 1997. Event studies in economics and finance. J. Econom. Literature 35(1) 13-39.
25. McWilliams, A., D. Siegel. 1997. Event studies in management research. Acad. Management J. 40(3) 626-657.
26. Neter, J., M. H. Kutner, C. J. Nachtsheim, W. Wasserman. 1996. Applied Linear Statistical Models, 4th ed. McGraw-Hill, Columbus, OH.
27. Norton, S. W. 1988. Franchising, brand name capital, and the entrepreneurial capacity problem. Strategic Management J. 9(S1) 105-114.
28. Office of Health and Consumer Goods. 2005. Medical devices outlook 2005. Accessed December 18, 2010, http://www.ita .doc.gov/td/health/outlook-05- medical.pdf.
29. Sitkin, S. 1992. Learning through failure: The strategy of small losses. Res. Organ. Behav. 14 231-266.
30. Skinner, W. 1974. The focused factory. Harvard Bus. Rev. 52(3) 113-121.
31. Sorescu, A. B., R. K. Chandy, J. C. Prabhu. 2003. Sources and financial consequences of radical innovation: Insights from pharmaceuticals. J. Marketing 67(4) 82-102. (Pubitemid 37347412)
32. Speiss, D. K., J. Affleck-Grave. 1995. Underperformance in long-run stock returns following seasoned equity offerings. J. Financial Econom. 38(3) 243-267.
33. Subramani, M., E. Walden. 2001. The impact of e-commerce announcements on the market value of firms. Inform. Systems Res. 12(2) 135-154.
34. Thomsen, M. R., A. M. McKenzie. 2001. Market incentives for safe foods: An examination of shareholder losses from meat and poultry recalls. Amer. J. Agricultural Econom. 83(3) 526-538. (Pubitemid 33726447)
35. U.S. Department of Commerce. 2008. Medical device industry. Accessed August 11, http://www.ita.doc.gov/investamerica/medical-device.asp.
36. Wallack, T. 2008. A blockbuster revisited. Boston Globe (January 13), http://www.boston.com/business/healthcare/articles/2008/01/13/ a-blockbuster-revisited/.