The Impact of Asymmetric Multi-Market Competition on Competitive Interactions of User-Generated Content
In this dissertation essay, I extend the findings from my previous dissertation essay by examining how a continuous measure of competition between two firms moderates the competitive interactions in the UGC-performance relationship. Specifically, I use the airline industry to examine how asymmetric multi-market competition (the number of focal airline routes that the competitor flies on) between dyads of airlines moderate the impact of negative user-generated content (NUGC) about competitors on one another's abnormal stock returns. I collect data on nine biggest airlines in the United States for a period of 60 months spanning December 2003 to November 2008. I use a spatio-temporal model to measure the moderating effect of asymmetric multi-market competition on the role that competitors' NUGC plays in influencing the focal airline's stock returns. I find that an airline accrues the maximum stock returns benefits from a competitor's NUGC if the focal airline flies on a higher percentage of the competitor's routes than the competitor flies on the focal firm's routes. I also find that airlines engaged in symmetric multi-market competition flying on approximately half of one another's routes will both benefit from one another's NUGC. I also find that stock return benefits of competitor's NUGC are the lowest or negative when the multi-market competition among firms is mutually symmetric but high or mutually symmetric but low.. These findings provide evidence of competitive interactions in the impact of UGC on financial performance, demonstrate the nature of the relationship as moderated by a measure of competition, and provide insights to academics and practitioners for shaping online marketing strategies with the competition in mind to maximize the return on marketing investment.