Consumers Watch and Talk: The Mediating Role of Electronic Word-of-Mouth Behavior between Firms’ Strategic Actions and Online Performance
Posted: 23 Apr 2014
Date Written: April 2014
This study investigates two critical research questions: (1) how is consumers’ electronic word-of-mouth (e-WOM) behavior influenced by firms’ strategic actions, and (2) how does consumers’ e-WOM behavior mediate the relationship between strategic actions and firm online performance? We examine these questions using two studies. First, we empirically analyze a longitudinal dataset of six representative Internet firms. Second, we further verify the hypothesized causality relationships using a two-stage 2×2 controlled laboratory experiment at the individual level. We find that the volume of a firm’s strategic actions enhances both the breadth and depth of e-WOM. The simplicity of firms’ strategic actions enhances the depth, but not the breadth, of e-WOM. We also find that the impact of action volume on firms’ online performance is mediated by both the breadth and depth of e-WOM, whereas the impact of action simplicity is mediated only by the depth of e-WOM.
Keywords: electronic word-of-mouth, strategic actions, firm performance, mediating effect, Internet firms, consumer information processing
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