Authors: Sunghun Chung, Animesh Animesh, Kunsoo Han and Alain Pinsonneault
ICIS 2014 Proceedings, December 15, 2014.
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.
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