Know Your Firm: Managing Social Media Engagement to Improve Firm Sales Performance

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Publication History

Received: March 21, 2019
Revised: June 29, 2020; June 29, 2021; February 21, 2022
Accepted: April 17, 2022
Published Online as Articles in Advance: February 28, 2023
Published in Issue: March 1, 2023

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We examine the impact of firm social media engagement on sales performance, answering “whether,” “what,” and “how” questions. The study uses a quasi-experimental design in a social e-commerce setting, for which propensity score matching and difference-in-differences methods quantify a mean 20.67% sales increase after firm social media adoption. We also find that firms that sell low-involvement products benefit more from social media adoption, compared to those that sell high-involvement products. Further, in terms of how to manage social media engagement, we find that informative content, in general, is effective for sales of high-involvement products, whereas promotional content, a new type of content discovered in this study, is more beneficial for sales of low-involvement products. Meanwhile, more social media followers generate better firm sales performance. We used instrumental variables and the control function method to address endogeneity issues and conducted robustness checks to support our conclusions. This study sheds light on the value of firm social media, particularly regarding industry differences and firm know-how. 

Additional Details
Author Fei Ren, Yong Tan, and Fei Wan
Year 2023
Volume 47
Issue 1
Keywords Firm social media, sales performance, product involvement, content analysis, quasi-experiment, propensity score matching, difference-in-differences, instrumental variable, control function
Page Numbers 227-262
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