Social Media Publicity and New Product Entry Via Local Entrepreneurs

63 Pages Posted: 30 Nov 2023 Last revised: 11 Dec 2023

See all articles by Boya Xu

Boya Xu

Duke University

Tong Guo

Duke University, Fuqua School of Business

Daniel Yi Xu

Duke University

Date Written: September 30, 2023

Abstract

We study how social media publicity affects the early-stage adoption of new products by local businesses. Understanding this connection is challenging because of the lack of empirical measurement of local entrepreneur decisions at scale and, more importantly, the endogeneity of marketing communication to unobserved local demand shocks coupled with cross-geographic information flow on social networks. Focusing on Impossible Meat products, we devise a unique location-specific adoption metric based on social media announcements, tracking local business decisions from 2015 to 2019. This metric is linked to comprehensive marketing communication extracted from social media using Natural Language Processing. We leverage the quasi-random variations of county-quarter-level news production for different topics to causally identify the linkage between social media publicity and adoption. We find that local coverage of social media news on the innovation increases the adoption of impossible meat products by local entrepreneurs. Interestingly, news content about producer financials was as important as content about sustainability and taste in driving local adoption of impossible meat products, potentially due to the signaling role of financial news for the trustworthiness of the technology (thus lowering uncertainty) and the trendiness of the technology (thus providing free marketing to small businesses who adopted the innovation). We discuss managerial implications in content marketing based on the rich heterogeneity patterns by topic, location, and timing.

Keywords: new product entry, entrepreneurship, content marketing, social media publicity, causal inference in unstructured data, shift-share, natural language processing, topic modeling

Suggested Citation

Xu, Boya and Guo, Tong and Yi Xu, Daniel, Social Media Publicity and New Product Entry Via Local Entrepreneurs (September 30, 2023). NET Institute Working Paper No. 23-06, Available at SSRN: https://ssrn.com/abstract=4635910 or http://dx.doi.org/10.2139/ssrn.4635910

Boya Xu

Duke University ( email )

United States
27708 (Fax)

Tong Guo (Contact Author)

Duke University, Fuqua School of Business ( email )

100 Fuqua Dr
Durham, NC 27708
United States

Daniel Yi Xu

Duke University ( email )

100 Fuqua Drive
Durham, NC 27708-0204
United States

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