Abstract:
Firms are increasingly turning to social media platforms for complaint handling. Previous research and practitioners’ reports highlight the benefits of complaint handling on social media, urging firms to provide prompt and detailed responses to complaints. However, little research has explored the possible drawbacks of such practices, especially when responses inadvertently further publicize complaints. Utilizing two unique data sets in a series of observational and quasiexperimental analyses, this research provides the first evidence of “complaint publicization” in social media, a phenomenon in which firm responses to complaints on popular social media platforms increase the potential public exposure of complaints. This negative effect can outweigh any positive customer care–signaling impact from firm responses. The authors show that a response strategy that engenders a high level of complaint publicization (e.g., providing detailed responses through multiple communication exchanges with a complainant) could negatively impact perceived quality and firm value, diminish the positive impact of a firm’s own posts, and increase the volume of future complaints. Additional analyses reveal that these adverse impacts are stronger for firms that are targeted by retail investors. The authors also uncover specific response strategies and styles that could mitigate these effects.
