BIS Cluster: Firms’ Social Media Efforts, Consumer Behavior, and Firm Performance
Despite the increasing attention paid to the business value of social media, it is still not clear how they affect firm performance. This study theorizes and empirically examines how firms’ social media efforts—in terms of intensity, richness, and responsiveness—influence consumer behavior (engagement and attention) and firm performance. Using detailed data collected from the Facebook pages of 63 firms over the 2010-2012 period, we find that the richness and responsiveness of a firm’s social media efforts are significantly associated with the firm’s market performance, captured by abnormal returns and Tobin’s q. Interestingly, the intensity of a firm’s social media efforts is not significantly associated with firm performance. We also find that not only do consumer engagement and attention directly impact firm performance, but they also mediate the relationship between a firm’s social media efforts and firm performance. Unlike prior studies that examine the impact of third-party or consumer-initiated social media, such as blogs and consumer ratings, our study focuses on estimating financial returns to firms’ own efforts on firm-initiated social media, thereby assessing the business value of social media directly.
Dr Sunghun Chung is a Lecturer in the University of Queensland, UQ Business School. Before joining UQ Business School, he was a Postdoctoral Research Fellow in the Information Systems Department in the Desautels Faculty of Management, McGill University in Montreal, Canada. His research interests include: 1) business value of IT, especially IT-related intellectual property; 2) strategic management and the impact of social media such as firm-initiated social media. His research has appeared in Information & Management, Information Technology and Management, International Conference on Information Systems (ICIS), Conference on Information Systems and Technology (CIST), Workshop of Information Systems and Economics (WISE), among others. He received his PhD Degree in Information Systems from the KAIST (Korea Advanced Institute of Science and Technology) Business School, South Korea in 2010. He worked at Samsung Electronics and Science and Technology Policy Institute (STEPI), after finishing the graduate school.