Companies that frequently receive complaints from their customers on Twitter are less productive than their competitors, according to research published by a member of the London School of Economics' Centre for Economic Performance, using data from Bureau van Dijk’s Orbis company database.
In a blog post on the LSE’s Business Review website, the author of the study, the LSE’s Maria Molina-Domene, defines productivity as the return on capital employed. Maria collected 4 million tweets from January 2016 to May 2017 from respondents to the World Management Survey, a project run by the LSE’s Centre for Economic Performance.
The UK and US companies with the highest productivity tended to be praised on Twitter, while the companies that were most heavily criticized tended to have the lowest productivity. The trend was more pronounced in some sectors than others, with a very clear correlation in the food sector and a strong correlation in the machinery sector but no relation at all in the instruments and related products sector.
“The results confirm that getting negative tweets, many expressing grievances, strongly correlates with low firm performance,” said Maria. “This suggests the importance of social media in times when information spreads fast and easily.”
To build the results, Maria compared the estimated sentiment towards each company with the actual sentiment, mapping the difference between the two (the regression) against information from Orbis on productivity at the end of the studied period. A tweet is considered negative if the proportion of negative words is higher than the positive and neutral ones. This was tempered with some additional controls, such as the size and home country of the firm, whether it’s a multinational and the industry to which it belongs.
Out of the thousands of firms analysed, only 13% had a Twitter account at the start of the reference period. The report’s author notes that companies that had a Twitter account tended to perform better than those without, although no specific data was provided to support this.
Orbis, the world’s most powerful comparable data resource on private companies with information on around 300 million companies across the globe.
What Twitter reveals about a company’s reputation and productivity, Maria Molina-Domene.