The impact of negative customer engagement on market-based assets and financial performance

Mahabubur Rahman, Anisur Faroque, Georgia Sakka and Zafar Ahmed
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Mahabubur Rahman: ESC [Rennes] - ESC Rennes School of Business
Anisur Faroque: LUT University School of Business and Management
Georgia Sakka: University of Nicosia
Zafar Ahmed: VNU - Vietnam National University [Hanoï]

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Abstract: Negative customer engagement (NCE) has received little research attention. The effect of NCE on market-based assets (i.e. brand equity) and firm performance remains a particularly underexplored topic despite the increasing rates of NCE with brands across a multitude of service industries. This study develops a comprehensive and parsimonious model of the causes and consequences of NCE. In this study, time-series cross-sectional data from the US airline industry and a simultaneous equation modelling technique were used to provide evidence for why some firms experience more NCE than others. The results indicate that airlines with a higher relative marketing capability (RMC) experience fewer NCE incidents in the form of customer complaints. A firm's relative marketing capability determines the extent to which its customers engage negatively with it. Furthermore, deviating from earlier studies which explored the direct and immediate relationships between the focal variables, this study theoretically argued and empirically demonstrated that brand equity mediates the nexus between NCE and financial performance. That is, the number of NCE incidents a firm experiences affects its brand equity, which in turn impacts its financial performance, as measured by Tobin's q and market value added (MVA).

Keywords: Brand equity; Customer complaints; Firm performance; Relative marketing capability; Negative customer engagement (search for similar items in EconPapers)
Date: 2022-01
New Economics Papers: this item is included in nep-bec and nep-sea
Note: View the original document on HAL open archive server: https://rennes-sb.hal.science/hal-03545814
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Citations: View citations in EconPapers (2)

Published in Journal of Business Research, 2022, 138, pp.422-435. ⟨10.1016/j.jbusres.2021.08.023⟩

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Persistent link: https://EconPapers.repec.org/RePEc:hal:journl:hal-03545814

DOI: 10.1016/j.jbusres.2021.08.023

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