Salim Chahine and Naresh K. Malhotra
Social media have recently become an important strategic marketing tool to increase firm value. Based on an integrated theoretical framework, this study aims to examine the market…
Abstract
Purpose
Social media have recently become an important strategic marketing tool to increase firm value. Based on an integrated theoretical framework, this study aims to examine the market reaction at the time of the creation of a Twitter platform for 312 firms from the Fortune 500 firms.
Design/methodology/approach
To test the hypotheses related to the effect of social media platforms on firm value, the event history analysis (EHA) was used, also known as event study, usually designed to examine the impact of a historical phenomenon for the US Fortune 500 firms that developed a Twitter platform.
Findings
A significant market reaction was found around the starting date of Twitter activities for the subsample of firms that are not contaminated by any other corporate announcements, but not for the overall sample. The market reaction is higher for firms with two-way interaction strategies rather than one-way messaging in both the uncontaminated subsample and the overall sample. It is higher in smaller firms, firms with losses and those with a family and/or a dominant shareholder. Further, firms in the contaminated subsample are likely to follow a two-way strategy after a positive revision of their earnings per share. We have run several robustness checks, including cross-validation on a holdout sample, and these findings remain consistent.
Research limitations/implications
The integrated theoretical framework is another significant contribution. To our knowledge, this is the first study across disciplines that integrates the social exchange theory (SET), social representation theory (SRT), social network analysis (SNA), social identity theory (SIT), signaling theory (ST) and the impression management theory (IMT) into one framework that is built around information as a resource and social interaction.
Practical implications
The results suggest that Twitter can be used to add value if firms interact and reciprocate with the various stakeholders.
Social implications
Firms using social media must interact and reciprocate with the various stakeholders.
Originality/value
This research is different than the published research on this topic in that it examines the impact on stock prices of the introduction of a specific social media platform, i.e. Twitter. The present results of the paper add to the prior research on database marketing and show that marketing “with” the customer is adding more value than marketing “to” the customer. The use of the net extends the scope of database marketing into a certain form of interaction marketing with “face-to-face” interaction within the relationships between the firm and its customers. Finally, the conditions under which social media platforms are used in an interactive manner are shown, and depicts that firms are more likely to use a two-way interactive strategy following a one-year period of positive momentum.
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Naresh K. Malhotra and Can Uslay
The purpose of this paper is to provide a conceptual and historical overview of the evolution of outsourcing. The authors then focus and prognosticate on the future of outsourcing…
Abstract
Purpose
The purpose of this paper is to provide a conceptual and historical overview of the evolution of outsourcing. The authors then focus and prognosticate on the future of outsourcing and develop several compelling ideas based on extant insights and the rule of three axioms.
Design/methodology/approach
The insights are developed based on a review of the extant literature and evolution of trends.
Findings
The paper generates several insights. First, there is a need to carefully differentiate between core and non-core functions when deciding on whether/what to outsource. Some outsourcing options may boost financial performance in the short run but undermine the long-term viability of the firm. Public firms outsource more than private firms after controlling for size. In many cases, the optimal number of primary suppliers for a critical function/process/stock keeping unit (SKU) is three (while also allowing for a number of secondary suppliers). The optimal share distribution between the suppliers for the same SKU is rank ordinal (i.e. not equal). The complexity and the maturity of the supply chain as well as industry life cycle, regulation and technology influence the optimal number of primary suppliers.
Research limitations/implications
The insights have significant implications for outsourcing decisions and for improving their impact on firm performance. The emergence of the shared economy, subscription-based business models and crowdsourcing will lead to consumers, business and society that increasingly borrows rather than one that makes or buys.
Originality/value
The paper represents the first attempt to integrate the axioms of the rule of three with the outsourcing literature and the theory of the firm. It emphasizes the need to align (long-term) performance objectives with managerial incentives as businesses manage their outsourcing efforts.
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Ravi Shekhar Kumar, Satyabhusan Dash and Naresh K. Malhotra
This study aims to propose and empirically test new improved customer-based brand equity (CBBE) creation framework, which advocates marketing activities create CBBE through…
Abstract
Purpose
This study aims to propose and empirically test new improved customer-based brand equity (CBBE) creation framework, which advocates marketing activities create CBBE through customer experience (CE). The proposed framework is in contrast to extant literature suggesting marketing activities directly create CBBE.
Design/methodology/approach
Qualitative interviews with patients, followed by interaction with respondents using a structured questionnaire, were used to collect the data.
Findings
The results suggest that CE is the focal mediating variable for the relationship between marketing activities and CBBE. Out of 15 marketing activities, 8 positively impacted CBBE through CE and 2 negatively affected CBBE through CE. Among the remaining five, three had only a direct positive impact on CBBE and two neither directly nor indirectly impacted CBBE.
Research limitations/implications
The effects of only individual marketing activity, and not of the interaction among marketing activities, were assessed.
Practical implications
The study provides insights into the importance of CE in building CBBE for credence-dominant services (e.g. healthcare). This work will help managers in implementing experiential marketing by designing suitable activities for creating service CBBE.
Originality/value
The study outlines service CBBE creation through CE, offering specific insights for the healthcare market.
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Avinash Jain, Satyabhusan Dash and Naresh K. Malhotra
This study aims to investigate the role of consumption coping in managing collective tragedy stress and stress outcomes using the COVID-19 pandemic context.
Abstract
Purpose
This study aims to investigate the role of consumption coping in managing collective tragedy stress and stress outcomes using the COVID-19 pandemic context.
Design/methodology/approach
A mixed-method study with a sample size of 931 was conducted to develop the questionnaire, followed by a quantitative study with 1,215 respondents to test the hypotheses.
Findings
The results of this study empirically validated the use of consumption coping and found it effective in managing collective tragedy stress and its outcomes (subjective well-being and continuance intention).
Research limitations/implications
This study advances the literature on stress coping in a collective tragedy context, with a specific focus on consumption coping.
Practical implications
The COVID-19 pandemic has affected all elements of the marketing mix. Understanding pandemic-induced stress and the role of consumption coping can help managers to proactively formulate strategic responses suitable for changing consumer habits.
Social implications
The COVID-19 pandemic has affected all elements of the marketing mix. Understanding pandemic-induced stress and the role of consumption coping can help managers to proactively formulate strategic responses suitable for changing consumer habits. This should lead to better social outcomes.
Originality/value
This study developed a scale for pandemic-induced stress that integrates various well-established theories to identify the role of consumption coping in managing collective tragedy stress and the psychological mechanism behind the shift in consumer behavior after a collective tragedy.
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This article proposes a conceptual framework and a research methodology for transferring marketing technology to developing countries to address important societal problems. The…
Abstract
This article proposes a conceptual framework and a research methodology for transferring marketing technology to developing countries to address important societal problems. The methodology developed by the author is described and illustrated with an empirical investigation. Guidelines for implementation of this methodology in developing countries are also provided.