Abstract

http://ssrn.com/abstract=1984350
 
 

References (44)



 


 



Social Dollars: The Economic Impact of Customer Participation in a Firm-Sponsored Online Customer Community


Puneet Manchanda


The Stephen M. Ross School of Business at the University of Michigan

Grant M. Packard


Laurier School of Business & Economics

Adithya Pattabhiramaiah


The Stephen M. Ross School of Business at the University of Michigan

July 24, 2013


Abstract:     
Many firms operate customer communities online. This is motivated by the belief that customers who join the community become more engaged with the firm and/or its products, and as a result, increase their economic activity with the firm. We describe the customer expenditures generated from increased engagement as a result of joining the community as "social dollars.” This paper tests for the existence and magnitude of social dollars via a difference-in-differences estimator using data from a multi-channel entertainment products retailer that launched a customer community online. We find that a significant increase (of at least 18%) in post-launch expenditure from community customers can be attributed to their joining the community. This result is robust across a variety of tests for self-selection and alternative explanations. These social dollars persist over the time period we observe and arise in both online and offline channels. Examination of mechanisms conceptually linked to community benefits reveals that social dollars are moderated by the extent of a customer’s social engagement (posting versus lurking) and by the unique informational benefit of product information sourced from a community of shared interests, which we observe as a shift in the preference heterogeneity of products purchased by community members.

Number of Pages in PDF File: 49

Keywords: Online Customer Communities, Online Customer Behavior, Retailing, Natural Experiments, Panel Data, Difference-in-Differences Estimation

JEL Classification: M31, M3

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Date posted: January 13, 2012 ; Last revised: July 25, 2013

Suggested Citation

Manchanda, Puneet and Packard, Grant M. and Pattabhiramaiah, Adithya, Social Dollars: The Economic Impact of Customer Participation in a Firm-Sponsored Online Customer Community (July 24, 2013). Available at SSRN: http://ssrn.com/abstract=1984350 or http://dx.doi.org/10.2139/ssrn.1984350

Contact Information

Puneet Manchanda (Contact Author)
The Stephen M. Ross School of Business at the University of Michigan ( email )
701 Tappan Street
Ann Arbor, MI MI 48109
United States
734-936-2445 (Phone)
734-936-8716 (Fax)
Grant M. Packard
Laurier School of Business & Economics ( email )
75 University Ave West
Waterloo, ON
Canada
Adithya Pattabhiramaiah
The Stephen M. Ross School of Business at the University of Michigan ( email )
701 Tappan Street
Ann Arbor, MI MI 48109
United States
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