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The purpose of this paper is to investigate the relationship between customer’s electronic word-of-mouth (eWOM) regarding their direct service experiences with firms and these firms’ company value. The authors drew on the marketing-finance interface research approach to demonstrate how interactive social media adopted by individual customer relate to important firms’ financial performances.

The authors used seven American airline companies’ customers’ tweets collected during a 52-week observation period and paired with their corresponding financial data using stock returns and volatilities. Sentiment analysis algorithm and a vector autoregressive (VAR) model quantified the strong association between customer’s eWOM and these firms’ stock returns and volatilities.

The results show that customer’s eWOM regarding a firm positively associate with the firm’s stock return but negatively associate with its stock volatility; as negative valence of customer’s eWOM increases, the positive effect of eWOM on firm’s stock return decreases; the negative eWOM impacts on the stock market more profoundly compared with when both positive and negative sensitivities are considered; and eWOM’s wear-out effect is much shorter than that of traditional WOM.

The authors address a literature gap where little is known for how customer’s eWOM, that is evaluating firm services, can ultimately impact on firms’ long-term financial performances. The authors discuss how findings from this study offer implications for marketing management as well as strategic insights for practitioners and investment analysts alike.

Electronic commerce (EC) strategy – performance logic has gained significant popularity in the literature, particularly from the resource-based view (RBV) of theoretical underpinning. However, such an obsession of focusing on organizations' complementary resources has been increasingly challenged, which has pressed the RBV to examine the possibility of external factors that can also impact firm performance. In this study, the authors shed light on the firm's external readiness—defined as the extent to which a firm's customers and suppliers perceive EC as important—in the relationship between SME's complementary resources and firm performance.

The authors employed a refined data set based on the British EC Award database, in which the authors sampled 430 British SMEs' senior managements and examined how EC investments made by the SMEs influenced firm performance, and how their external readiness moderated this main relationship.

The results showed that, in line with the RBV perspective, SMEs' complementary business resources and human resources both had strong and direct impacts on the firm performance. They were also strongly mediated by EC functionality. In addition, SMEs' external readiness moderated the relationship between human resources and firm performance and that of EC functionality on firm performance.

The findings contribute to RBV theory building by extending earlier research on the role of technology as performance enablers for SMEs and shed light on the often-overlooked role of SMEs' external readiness.