The effectiveness of company’s response strategies to negative publicity in social media

As already mentioned, the main aim of this master thesis is the evaluation of the effectiveness of different response strategies of a firm to negative publicity in social media. The effectiveness of the response strategy was measured using respondents’ attitude toward the corporate response (Siomkos and Malliaris 1992; Kerkhof et al. 2011), their cognitive response to this strategy (Kerkhof et al. 2011; Petty and Cacciopo 1979), perceived company’s responsibility for negative occurrence (Coombs and Holladay 2002), reputation (Coombs 2012) and trust in the company (Xie and Peng 2009). Four strategies – actual denial, apology, justification, as well as no response (or ignorance) –were analysed. The main aim was to find out which mood these strategies trigger by respondents, direction and intensity of respondent’s feedback to this strategies and their influence on company’s reputation and trust in the company. One of the most important results is that the company’s response to negative publicity online matter in the trust building, reputation building and reputation protection activities of the firm. Respondents, who were exposed to the apology response message after the negative publicity in the online blog evaluated the response message more positive, find the company more sympatic and feel more favourable about the company’s reputation. These results are in line with previous works in the field of reputational management and communication. Also in this master thesis, apology was found to be the most effective strategy when dealing with the spread of negative company information online. According to Siomkos (1994, p.38) this finding is especially important for unknown firms, as the effect of the negative publicity may have minimal consequences for well-known firms with a good reputation, but can have a devastating effect on small unknown firms. According to the SCCT, the type of response to negative company’s publicity will have an influence on perceived company’s responsibility for an issue. This assumption was also supported by the findings of this master thesis. Respondents who read the apology response message or didn’t see any response message (control group) find the company as being more responsible for an issue as respondents who were exposed to actual denial and justification response strategies. This finding is especially important, because perceived company’s responsibility for an issue has a significant influence on people’s evaluation of company’s reputation and trust in the company. Interesting is that the perceived company’s responsibility for the unfavourable issue loses its importance for the evaluation of company’s reputation, trust and attitude toward the corporate response when the apology response strategy is used. In contrast perceived company’s responsibility plays an important role in respondents’ evaluation of company’s trust and attitude toward the corporate response when the actual denial and justification strategies are used instead. Also perceived company’s responsibility has a negative influence on company’s reputation and trust when no response option is used. SCCT also states that favourable company’s reputation will affect people’s trust in the company and their willingness to buy company’s products as well as recommend the company to their friends and relatives. Also this assumption can be supported by the results of this study. This finding is very important because the trust in the company includes also the willingness to buy company’s product and has a direct influence on company’s survival and financial results. According to Siomkos (1994, p.40) company’s favourable reputation also serves as preventive device against the negative consequences of a future crisis and thus can lessen the importance of the negative publicity in the future. Finally, it can be concluded that apology is still the most effective strategy for dealing with negative publicity in social media, especially if the company is unknown and has no previous reputation. For well-known companies with a good previous reputation actual denial can also be used if the company is not responsible for the negative issue. The results have shown that acknowledgement of responsibility as in the case of justification didn’t bring better results than the denial of responsibility. It must also be mentioned that, as a scenario-based experiment with a fictitious brand name was used, the external validity of the results is limited to some degree (Xie and Peng 2009, p.586). Also a limited number of response strategies were investigated and the response message was posted only in one type of social media (social networking site Facebook). So the results should be generalized only with some caution. Only separate influences of company’s response strategy and company’s perceived responsibility for negative issue on company’s reputation and trust were investigated. It would be interesting to analyse the influence of type of response strategy, responsibility and other variables on the reputation and trust in the company simultaneously.