Does social media elevate supply chain importance? An empirical examination of supply chain glitches, Twitter reactions, and stock market returns

Abstract

We build upon supply chain management and social media research by exploring the Twitter response to supply chain glitches and how this response may moderate the relationship between supply chain glitches and stock market returns. We analyze data on 213 supply chain glitches for 150 firms across 5 years and over 2 billion tweets on publicly traded firms. Leveraging event study methodology, we find support for our hypotheses. Using both volume and sentiment of tweets, we observe significant reactions on Twitter after supply chain glitches; tweet volume increases and tweets become more negative. We also find that Twitter reactions after a glitch accentuate the relationship between supply chain glitches and stock market returns, demonstrating how social media may elevate the prominence of supply chain problems. To address concerns associated with simultaneity bias, we demonstrate that pre‐stock‐market‐open Twitter activity preempts post‐stock‐market‐open returns. Finally, we conduct post hoc analyses that explore how firms can leverage Twitter to counteract the negative stock market consequences of Twitter, and how firm proximity to the end customer may influence how tweets moderate the stock market reaction to glitches.

Guest editorial

“…In addition to the seven papers published in this IJOPM special issue, we are happy to see quite a few social media papers being published or accepted for publication in JOM and POM over the past few months (e.g. Schmidt et al, 2020;Yoo et al, 2020). Taken together, we hope this momentum can motivate more OM researchers to engage in this emerging research area and to advance our understanding of the social media phenomenon.…”

Will Communication of Job Creation Facilitate Diffusion of Innovations in the Automobile Industry?

“…However, some brands from developing countries may have been neglected (i.e., China). Third, it is not clear how social media engagement affects firm performance, as the sentiment of tweets regarding supply chain problems could affect stock market prices (Schmidt, Wuttke, Ball and Heese [15]). Such effects may also affect firms' innovation and should be investigated.…”

“…More specifically, based on diffusion of innovations theory (DOI) and technology anxiety, we explore how the impact of JC in the automobile and transportation industry can be disseminated on social media. In this study, we collect social media engagement data from Twitter because many stakeholders share their views on new technologies on this platform [15]. Twitter has 336 million active users in 2020 (https://www.statista.…”

“…Twitter has 336 million active users in 2020 (https://www.statista. com/statistics/272014/global-social-networks-ranked-by-number-of-users/, access date: 3 September 2021) and compared with traditional media, new information quickly spreads on Twitter [15]. In this sense, Twitter, one of the most popular social media platforms, benefits from the diffusion of EVs and AVs [16].…”

“…Moreover, we investigate the number of retweets to measure public endorsement of EVs and AVs as Twitter users tend to retweet their endorsement of a popular post to attract more followers. Twitter or/and social media users share others' or brands' messages that conform to their personal values [15].…”