Emotional Capital: The Missing Link Between Social Media Usage and Customer Relationship Performance

Abstract

Many companies are increasing the allocation of financial resources to social media management For instance, companies with over $15.6 billion in revenue will invest about $19 million in social media this year (Tata Consulting Services 2013). However, the contribution of social media management to firm performance remains uncertain. Hence, in this paper, we attempt to fill this gap. Specifically, we propose that investment in social media management is positively related to performance through emotional capital. Furthermore, we posit that this relationship is stronger for firms that manage emotional brands and firms that have products with short life cycles.

Emotional capital refers to the emotional assets and emotional liabilities related to a brand (Abeysekera 2004). Emotional assets include positively polarized attributes such as pride, passion, love, attachment and trust. While emotional liabilities include negative attributes such as anger and hate (Abeysekera 2004; Thomson 1999, pp. 22–25). Firms that are able to timely and accurately estimate the emotional capital of their brands can better manage the brand to take advantage of opportunities and to overcome threats. Furthermore, according to the Resource Based View (Barney 2005), the firms’ ability to efficiently manage a brand’s emotional capital can be an intangible company resource that is valuable, rare, imperfectly imitable or substitutable. Hence, emotional capital can be a source of competitive advantage and superior financial performance.

We further suggest that emotional capital is predicted by a firm’s social media usage and the level of ambidextrous interaction with its customers. Additionally, we argue that emotional capital leads to higher customer relationship performance for products with short rather than high product life cycles and for brands that employ emotional appeals. Practical and managerial implications are also discussed.