Effects of firm responses to anti-firm episodes on social media

Due to the increasing prevalence of IT-mediated communication between firms and their stakeholders in digital ecosystems, it is particularly important to add to theory in the Information Systems area on firm reactions during online anti-firm episodes (AFEs). Specifically, the current study addresses both (a) whether firm interventions during a crisis have an effect on the AFE, both in terms of the growth of the episode and the sentiment expressed by the social media users, and (b) how different firm intervention strategies affect the AFE. Drawing from the research area of conflict management from psychological science, we apply the Situational Crisis Communication Theory to develop hypotheses on four relational styles which firms may apply in their IT-mediated crisis management activities. Analyzing 325 AFEs, we show that firm responses can be a double-edged sword. The firm runs the risk of attracting extra attention to the crisis, but is at least able to influence the sentiment of the discussion in its favor. A wholly new finding is that when a firm’s reaction avoids the specific criticism of an ongoing crisis, instead aiming to bolster the firm’s reputation, this is most beneficial to the firm, both for reducing AFE growth and increasing pro-firm sentiment.