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How May Different Customer (Dis)engagement Behaviours Affect a Firm’s Performance within a Market Ecosystem? A Panel Data Analysis in an e-market Context
Authors: Georgia D. Katsifaraki (University of Cyprus (UCY), Cyprus), Marios Theodosiou (University of Cyprus (UCY), Cyprus)
In today’s market ecosystems, stakeholders engage in diverse co-creation activities to generate surplus value of various forms. Within these complex ecosystems, different customer engagement behaviours coexist; they encompass co-creation, and may affect each other and a firm’s performance, presumably in very different ways. According to extant literature, customers engage in co-creation activities that are scalable in terms of effort, can destroy value, and may be “just enough” for the transaction to be completed (in-role) or they may provide “over and above” (extra-role) value. In this paper we seek to research on the impact of such different coexisting customer engagement behaviours upon a firm’s performance, aiming at a more holistic view of co-creation. As our conceptual lens we adopt the S-D logic, which portrays the complex nature of modern market transactions and embeds the co-creation notion as its cornerstone. Considering that online reviewing is one of the most common manifestations of customer engagement, our work specifically looks at how the willingness of customers to engage to reviewing co-creation in different engagement levels relates with a shop’s performance within the ecosystem of the Etsy e-marketplace. We notably ask: ceteris paribus, how are the shop’s future sales and revenues affected, when more customers contribute with negative (positive) reviews in different engagement levels in terms of effort (i. stars only ii. plus comments iii. plus uploaded photos)? How are sales and revenues affected when more customers choose to disengage (i.e. not to review)? As our empirical context, we choose the Etsy online marketspace for vintage and hand-made goods, which greatly facilitates product customization and intense communication – making it a unique case for researching on co-creation. Aiming at high data quality, a rich longitudinal dataset of shop-related and reviewing data (of 1332 clothes shops, spanning 7 months) have been downloaded from Etsy and advanced econometric static and dynamic panel models have been applied. Overall, our results provide a number of insights related to the ambiguous effects of different coexisting online customer engagement behaviours within online markets, and further unveil the catalytic impact of the institutionalized “norms” governing reviewing systems upon actors’ behaviour: in these environments, positive reviews are expected; when however, either eWoM behaviours of positive reviews but of no proper explanation, or disengagement behaviours increase, these behaviours relate to deteriorating shop performance in the future, presumably as they signal mediocre overall service quality, or non-credible reviewing behaviour. Among others, this is the first large-scale empirical longitudinal research attempting to study engagement and its relation to performance in a more holistic way; it is further one of the first studies addressing the critical role of disengagement behaviour, which also highlights the effect of contextual institutions upon the actors of the ecosystem.