Social Media Blog Sentiments and Brand Performances: Competitive and Asymmetric Effects

Abstract

How and to what extent social media can generate desired benefits for firms has been of great interest to both researchers and practitioners. Extant literature has offered mixed perspectives comprising both optimism and skepticism. Furthermore, research has only begun to examine how social media can bring forth sustainable value for firms beyond sales and a simultaneous consideration of their impacts on a firm as well as its rivals in today’s competitive market remains lacking. In this study, we investigate the competitive effects of social media blog sentiments and brand performances of firms operating within the same industry. We assembled a novel, comprehensive dataset that combined the extent of social media blog valence and volume of competing brands in the personal computer industry and individual consumers’ evaluations of the brands collected at a daily level with 7,871 brand-day observations. Our analyses unveil three key insights: 1) a focal brand’s social media blog sentiment enhances its own brand performances and undermines its competitors’ brand performances in the long run; 2) the focal brand’s blog sentiment has a reinforcing carry-over effect on its own subsequent sentiment and a cannibalistic effect on its competitor brands’ social media blog sentiment; and 3) the positive effect of blog sentiment on brand performances is stronger when the focal brand is a non-leading (versus leading) brand, while the reinforcing effect on social media blog sentiment is stronger when the focal brand is a leading (versus non-leading) brand. The findings advance research by offering a more holistic understanding about the competitive and dynamic effects of social media, enabling firms to gauge what they may gain (or lose) from their own (or competitors’) use of social media.