Purpose Trust in corporate governance is at an all time low due to well-documented corporate scandals such as Enron, Martha Stewart and excessive CEO compensation practices, to mention but a few. Yet relatively little is known about how companies can repair trust once a trust violation has occurred. Recent research in crisis communication management suggests that an appropriate response depends on the situation or type of crisis. This study seeks to investigate the role of violation type (intentional harm v. harm due to external cause) and communication response (apology v. denial) on consumer trust, attitudes towards the service provider and behavioral intent. Design-methodology-approach A 2 (violation type: intentional harm v. external cause) : 2 (communication response: apology v. denial) between-subjects design was employed. Alleged price gouging by a Louisiana hotel in the aftermath of Katrina served as the study context. Subjects were asked to read a hypothetical newspaper article in which the trust violation was framed as being either intentional (The General Manager (GM) intentionally increased room rates by 60 percent following the hurricane) or caused by a computer malfunction (the revenue management program automatically hiked up the prices due to increased demand). The GM was then reported either to deny the allegation or to admit responsibility and to apologize for the incident. Findings The results of this experimental study indicate that denials are ineffective in consumer settings and that publicly apologizing for the event can somewhat mitigate the negative impact of PR disasters. Offering a causal explanation for the event is also important in order to avoid highly damaging intentional harm attributions. Originality-value Two streams of literature, crisis communication management and trust repair, are combined to help managers develop effective PR strategies.
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