Brand crisis and recovery in livestream commerce: A psychological contract violation theory perspective

Brand streamer crisis (BSC) is a growing concern in livestream commerce due to its accidental, adverse, and uncontrollable consequences. Drawing on psychological contract violation (PCV) theory, we examine the effect of BSC and its recovery strategies on brand performance. In study 1, we conducted a natural experiment with a synthetic difference-in-differences (SDID) model and found that BSC reduces product sales (i.e., financial performance) and follower increments (i.e., relational performance). In Study 2, we performed an observational study with an interrupted time series (ITS) analysis and revealed that the defensive recovery strategy has positive effects on product sales and follower increments. Additionally, the offensive recovery strategy has a positive effect on product sales, while it has a nonsignificant effect on follower increments. Our study contributes to the literature by developing a PCV perspective of brand crisis and offers effective recovery strategies for practitioners in livestream commerce.