More than the Tone: The Impact of Social Media Opinions on Innovation Investments

Social media is a valuable knowledge source for firm innovation. Extending the literature of both social media and innovation management, we attempt to examine how the valence and volume of usergenerated content (UGC) from social media influence firm organizational innovation behaviours. In this research-in-progress study, we have reviewed the existing literatures and proposed three hypotheses. Firstly, we propose that valence of UGC from social media has a U-shaped relation with firm innovation investments. In particular, compared with neutral UGC, both negative and positive contents are found to push firms to invest more in innovation. Secondly, we argued that such a curvilinear relation is mitigated with an increase in volume of UGC. Last but not least, we argued that firm investment in innovation improves firm performance. To validate our proposed hypotheses, we have designed an innovative framework of sentiment analysis and collected a large dataset including 5-year panel with 886 listed firms and their relevant 6.2 million micro-blogs. The preliminary results from applying sentiment analysis into the collected dataset are reported in this study. In the future, we will validate our hypotheses with more sophisticated estimation models and strict robustness check. The potential contribution to theory and practice is also discussed.