In the contemporary business landscape, product recalls have become an increasingly prevalent phenomenon, often stemming from safety concerns or manufacturing defects. These crises can inflict significant damage on a firm's reputation and erode stakeholder trust. Extant research suggests that to regain legitimacy and restore stakeholder confidence, firms strategize actions and communications. However, it remains unclear how different board characteristics shape the series of actions that we refer to as “legitimacy regaining actions” or LRA. This study explores the dynamic interplay between board characteristics and firm's LRA following severe product recalls. Drawing on Expectation Violation Theory and Upper Echelons Theory, we posit that board independence and national diversity positively moderate the relationship between recall severity and LRA while board size does the opposite. The study also presents a nuanced view of how the interplay between board characteristics and recall severity affects firm’s legitimacy regaining actions. Based on a sample of 708 drug recall events and 8496 firm-year observations from 2002–2016, we find support for our theorization. This study offers valuable insights for scholars and practitioners in navigating the complex landscape of organizational legitimacy in the aftermath of severe product recalls.
