The Strategic Influence of Firm-Created WOM: Evidence from a Movie Industry

Abstract

A growing number of marketers have recognized the strategic importance of firm-created WOM (FCWOM) activity, which is defined as a firm's proactive management of customer-to customer communication. However, the basic questions of whether the implementation of FCWOM can drive more profits compared with non-implementation and when a firm should implement FCWOM are still largely unanswered. To answer these questions, the authors analyzed a panel data of WOM generated by movie distributors in the movie industry. Findings show that the implementation of FCWOM improves box office revenues; however, the early launch of FCWOM does not always lead to better firm performance.