Shaping Strategy in the Digital Age: The Impact of Consumer Electronic Word of Mouth on Firm Strategic Emphasis.

This article investigates how consumer electronic word of mouth (eWOM) influences a firm's strategic emphasis on value appropriation (e.g., advertising) versus value creation (e.g., research and development, R&D). Analyzing over 33 million social media posts about 39 publicly traded firms from 2010 to 2020, the study finds that positive eWOM leads firms to prioritize value appropriation to capitalize on favorable consumer sentiment, while negative eWOM prompts a shift toward value creation to address product deficiencies. These effects are moderated by product category—being weaker for hedonic products and stronger for utilitarian ones—as well as by market competition and industry instability, which amplify firms' strategic responses. The findings provide insights for managers and investors on tailoring resource allocation and interpreting consumer sentiment in dynamic market contexts.