• Title/Summary/Keyword: negative word-of-mouth(NWOM)

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Impact of Negative Word of Mouth on Firm Value

  • Jeon, Jaihyun;Kim, Byung-Do;Seok, Junhee
    • Asia Marketing Journal
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    • v.22 no.3
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    • pp.1-28
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    • 2020
  • With the development of information and communication technology and spread of smart devices, online information exchange has become a daily routine. Accordingly, the management and utilization of online word of mouth (WOM) has become an important issue for companies. Numerous studies have examined the impact of online WOM on firm performance. This study analyzes the impact of negative word of mouth (NWOM) on firm value, considering the influence of corporate social responsibility (CSR) activity and research and development (R&D) investment. Using a hierarchical linear model, we find that 1) NWOM has a negative impact on firm value, 2) CSR activities do not significantly influence this impact, and 3) R&D investment reduces this negative impact. This study contributes by demonstrating the effect of NWOM on firm value, examining the influence of CSR activities and R&D investment on the impact of NWOM, and confirming that the hierarchical linear model can be applied effectively to panel data in empirical studies. As a practical implication, companies must prevent and manage NWOM, whose impact, when caused by an unavoidable incident, can be alleviated by proactively announcing that the company is striving for competitiveness, for instance, by investing in R&D.

Algorithmic Price Discrimination and Negative Word-of-Mouth: The Chain Mediating Role of Deliberate attribution and Negative Emotion

  • Wei-Jia Li;Yue-Jun Wang;Zi-Yang Liu
    • Journal of the Korea Society of Computer and Information
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    • v.28 no.10
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    • pp.229-239
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    • 2023
  • This study aims to explore the impact of algorithmic price discrimination on negative word-of-mouth (NWOM) through the lens of attribution theory. It also examines the mediating roles of intentional attributions and negative emotions, as well as the moderating effect of price sensitivity. For this study, 772 consumers who had purchased flight tickets completed a questionnaire survey, and the collected data were analyzed and tested using SPSS 27.0 and AMOS 24.0 software. The research findings reveal that algorithmic price discrimination has a significant positive impact on intentional attributions, negative emotions, and NWOM. Specifically, deliberate attributions and negative emotions mediate the relationship between algorithmic price discrimination and NWOM, while price sensitivity positively moderates the relationship between negative emotions and NWOM. Therefore, companies should consider disclosing algorithm details transparently in their marketing strategies to mitigate consumers' negative emotions and implement targeted strategies for consumers with different levels of price sensitivity to enhance positive word-of-mouth.

The Effects of LMX and Perceived Fit on Employees' Negative Word-of-Mouth: The Role of Corporate Citizenship and Organization-Based Self-Esteem

  • Jong-Wook Kim;Jong-Keon Lee
    • Journal of Korea Trade
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    • v.27 no.4
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    • pp.19-44
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    • 2023
  • Purpose - This study examines the relationships between leader-member exchange (LMX), perceived fit, organization-based self-esteem (OBSE), corporate citizenship, work engagement, and employees' negative word-of-mouth (NWOM). In particular, it analyzes the effect of the interaction between LMX and corporate citizenship on OBSE, and the effect of the interaction between perceived fit and corporate citizenship on OBSE. Finally, this study analyzes moderated mediation by legal/ethical citizenship and philanthropic citizenship, and work engagement in the LMX-NWOM relationship and the perceived fit-NWOM relationship, respectively. Design/methodology - The research data were collected through a questionnaire from 293 employees working at 117 restaurant companies in Korea. Findings - The results were as follows. First, both LMX and perceived fit were negatively related to employees' NWOM. Second, both LMX and perceived fit were positively related to OBSE. Third, OBSE was negatively related to employees' NWOM. Fourth, legal/ethical citizenship and philanthropic citizenship were found to attenuate the positive (+) relationship between perceived fit and OBSE, respectively. Fifth, it was found that work engagement weakened the negative (-) relationship between OBSE and NWOM. Finally, OBSE was found to have a partial mediating effect moderated by corporate citizenship (legal/ethical citizenship and philanthropic citizenship) and work engagement in the relationship between perceived fit and NWOM. Originality/value - This study makes a theoretical contribution by expanding the mechanisms associated with LMX and NWOM by revealing the mediating effect of OBSE in their relationship. Additionally, this study makes a theoretical contribution in that it demonstrates the importance of enhancing legal and ethical citizenship and philanthropic citizenship by revealing the moderating effect of corporate citizenship in the relationship between perceived fit and OBSEE. Finally, it makes a theoretical contribution by suggesting that the interaction between work engagement and OBSE is important in reducing employees' NWOM by revealing the moderating effect of work engagement.

Assessing the Damage: An Exploratory Examination of Electronic Word of Mouth (손해평고(损害评估): 대전자구비행소적탐색성고찰(对电子口碑行销的探索性考察))

  • Funches, Venessa Martin;Foxx, William;Park, Eun-Joo;Kim, Eun-Young
    • Journal of Global Scholars of Marketing Science
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    • v.20 no.2
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    • pp.188-198
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    • 2010
  • This study attempts to examine the influence that negative WOM (NWOM) has in an online context. It specifically focuses on the impact of the service failure description and the perceived intention of the communication provider on consumer evaluations of firm competence, attitude toward the firm, positive word of mouth and behavioral intentions. Studies of communication persuasiveness focus on "who says what; to whom; in which channel; with what effect (Chiu 2007)." In this research study, we examine electronic web posting, particularly focusing on two aspects of "what": the level of service failure communicated and perceived intention of the individual posting. It stands to reason electronic NWOM that appears to be trying to damage a product’s or firm's reputation will be viewed as more biased and will thus be considered as less credible. According to attribution theory, people search for the causes of events especially those that are negative and unexpected (Weiner 2006). Hennig-Thurau and Walsh (2003) state "since the reader has only limited knowledge and trust of the author of an online articulation the quality of the contribution could be expected to serve as a potent moderator of the articulation-behavior relationship. We therefore posit the following hypotheses: H1. Subjects exposed to electronic NWOM describing a high level of service failure will provide lower scores on measures of (a) firm competence, (b) attitude toward the firm, (c) positive word of mouth, and (d) behavioral intention than will subjects exposed to electronic NWOM describing a low level of service failure. H2. Subjects exposed to electronic NWOM with a warning intent will provide lower scores on measures of (a) firm competence, (b) attitude toward the firm, (c) positive word of mouth, and (d) behavioral intention than will subjects exposed to electronic NWOM with a vengeful intent. H3. Level of service failure in electronic NWOM will interact with the perceived intention of the electronic NWOM, such that there will be a decrease in mean response on measures of (a) firm competence, (b) attitude toward the firm, (c) positive word of mouth, and (d) behavioral intention from electronic NWOM with a warning intent to a vengeful intent. The main study involved a2 (service failure severity) x2 (NWOM with warning versus vengeful intent) factorial experiment. Stimuli were presented to subjects online using a mock online web posting. The scenario described a service failure associated with non-acceptance of a gift card in a brick-and-mortar retail establishment. A national sample was recruited through an online research firm. A total of 113 subjects participated in the study. A total of 104 surveys were analyzed. The scenario was perceived to be realistic with 92.3% giving the scenario a greater than average response. Manipulations were satisfactory. Measures were pre-tested and validated. Items were analyzed and found reliable and valid. MANOVA results found the multivariate interaction was not significant, allowing our interpretation to proceed to the main effects. Significant main effects were found for post intent and service failure severity. The post intent main effect was attributable to attitude toward the firm, positive word of mouth and behavioral intention. The service failure severity main effect was attributable to all four dependent variables: firm competence, attitude toward the firm, positive word of mouth and behavioral intention. Specifically, firm competence for electronic NWOM describing high severity of service failure was lower than electronic NWOM describing low severity of service failure. Attitude toward the firm for electronic NWOM describing high severity of service failure was lower than electronic NWOM describing low severity of service failure. Positive word of mouth for electronic NWOM describing high severity of service failure was lower than electronic NWOM describing low severity of service failure. Behavioral intention for electronic NWOM describing high severity of service failure was lower for electronic NWOM describing low severity of service failure. Therefore, H1a, H1b, H1c and H1d were all supported. In addition, attitude toward the firm for electronic NWOM with a warning intent was lower than electronic NWOM with a vengeful intent. Positive word of mouth for electronic NWOM with a warning intent was lower than electronic NWOM with a vengeful intent. Behavioral intention for electronic NWOM with a warning intent was lower than electronic NWOM with a vengeful intent. Thus, H2b, H2c and H2d were supported. However, H2a was not supported though results were in the hypothesized direction. Otherwise, there was no significant multivariate service failure severity by post intent interaction, nor was there a significant univariate service failure severity by post intent interaction for any of the three hypothesized variables. Thus, H3 was not supported for any of the four hypothesized variables. This study has research and managerial implications. The findings of this study support prior research that service failure severity impacts consumer perceptions, attitude, positive word of mouth and behavioral intentions (Weun et al. 2004). Of further relevance, this response is evidenced in the online context, suggesting the need for firms to engage in serious focused service recovery efforts. With respect to perceived intention of electronic NWOM, the findings support prior research suggesting reader's attributions of the intentions of a source influence the strength of its impact on perceptions, attitude, positive word of mouth and behavioral intentions. The implication for managers suggests while consumers do find online communications to be credible and influential, not all communications are weighted the same. A benefit of electronic WOM, even when it may be potentially damaging, is it can be monitored for potential problems and additionally offers the possibility of redress.

Spread of Negative Word-of-mouth of Manufacturing Companies Via Twitter: From the Supply Chain Risk's Perspective (트위터를 통한 제조 기업의 부정적 구전 확산: 공급사슬 리스크 관점에서)

  • Jeong, EuiBeom;Yoo, Hanna
    • Journal of Korea Society of Industrial Information Systems
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    • v.26 no.5
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    • pp.79-94
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    • 2021
  • Despite the importance of the supply chain risk due to the negative word-of-mouth (NWOM) in social media, related research is insufficient. Thus, this study analyzes how the NWOM of the product is distributed through social media and the characteristics of the distributor based on social exchange theory. For this purpose, we collected information on car recalls from four companies using Twitter from the National Highway Traffic Safety Administration (NHTSA). Based on the Seed Tweet, a Re-Tweet (RT) network was constructed to examine the distribution and spread of NWOM, and regression analysis was performed to test the hypothesis. As a result, it was confirmed that NWOM is a small world network structure that spreads around hub users connected to many users. Moreover, it was found that the more interactive and reciprocal relations the first distributor has, the greater the speed and scale of distribution of NWOM.

A Study on Negative Word-of-mouth Virality of Social Media Using Big Data Analysis: From the Supply Chain Risk's Perspective (빅데이터 분석을 이용한 소셜 미디어의 부정적 구전 파급력에 관한 연구: 공급사슬 리스크 관점에서)

  • Jeong, EuiBeom
    • Journal of Korea Society of Industrial Information Systems
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    • v.27 no.2
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    • pp.163-176
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    • 2022
  • As the business ecosystem has become more uncertain, the sources of supply chain risk have also been becoming more diverse. In particular, due to the development of informational technology in recent years, firms need to consider the emerging supply chain risk sources as well as traditional supply chain risk sources. A typical example is negative word-of-mouth by social media. Therefore, we investigated the virality of negative word-of-mouth on manufacturing firms by using YouTube as a representative social media. More specifically, we investigated how the social capital of the video creator influences the virality of negative word-of-mouth and how the emotional tone of the video affects the virality of negative word-of-mouth. In conclusion, the social capital of the video creator influenced the scale and speed of negative word-of-mouth. Furthermore, negative emotion words moderated the relation between the social capital of the video creator and the scale of negative word-of-mouth.