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Electronic word of mouth and its effects on firm reputation and performance

Nisar, Tahir; Prabhakar, Guru Prakash

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Authors

Tahir Nisar



Abstract

Prior research on firm reputation has acknowledged the importance of word of mouth (WoM) in influencing the choices made by businesses, as well as by individuals. In recent developments, Internet-based WoM systems aggregate vast amounts of information relevant to firm strategy and operations. For example, online social media communities aggregate information generated by both the firm (i.e. firm generated content FGC) and users (i.e. user generated content UGC). We theorize that FGC and UGC generate reputation benefits for a company in the form of two intermediate information mechanisms: information diversity and valence. Information diversity contributes to the ability of individual market agents to evaluate firm actions with greater access to information, whereas valence reflects the positive feelings that an online community generates for the firm (e.g. members trumpets the firm’s positive attributes). We first undertake a qualitative content analysis to investigate the extent to which FGC and UGC generate information diversity and valence. We then test the hypothesis that both information diversity and valence increase a firm’s financial performance. Our findings show that electronic WoM enhances a firm’s reputation and thereby its performance through both these effects (i.e. embedded information and valence).

Citation

Nisar, T., & Prabhakar, G. P. (2016, May). Electronic word of mouth and its effects on firm reputation and performance. Paper presented at 2016 EURAM Conference, Paris, France

Presentation Conference Type Conference Paper (unpublished)
Conference Name 2016 EURAM Conference
Conference Location Paris, France
Start Date May 30, 2016
End Date Jun 3, 2016
Acceptance Date May 31, 2016
Publication Date May 31, 2016
Deposit Date Feb 13, 2017
Publicly Available Date Mar 28, 2024
Peer Reviewed Not Peer Reviewed
Keywords reputation, social media communities, firm generated content, users generated content, performance
Public URL https://uwe-repository.worktribe.com/output/1435182
Additional Information Title of Conference or Conference Proceedings : EURAM Conference

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