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We theorized that the development of two contemporary social commerce-IT capabilities (social media and e-commerce) enables firms to engage online customers to improve their firm performance. We tested this theory by employing a secondary dataset on a sample of U.S. firms. The empirical analysis supported our theory in both examining the effects of social media and ecommerce as two individual capabilities and as two complementary capabilities. This study provides a unique organizational theory and empirical evidence on how social commerce-IT capabilities influence firm performance through the online engagement of customers.
6. Discussion and conclusions
This research examines the impact of two contemporary social commerce-IT capabilities (social media capability and e-commerce capability) on firm performance on a sample of U.S. firms. We theorized that the development of these social commerce-IT capabilities enables firms to engage online customers to improve their firm performance. The empirical analysis supports our theory. Specifically, the empirical analysis suggests that the social commerce-IT capabilities of social media and e-commerce positively individually influence firm performance through online customer engagement. The empirical analysis also supports our theory in examining the effects of social media and e-commerce as two complementary capabilities. The interplay of social media and e-commerce capabilities (i.e., social commerce) improves the flow of information and develop a better and deep connection with customers, who may be more motivated to participate in the digital platforms (social media and e-commerce). Firms that better leverage its social media and e-commerce achieve fine-grained customer knowledge by engaging customers virtually in social media and the firm’s website. For example, Finnair (a Finland’s national airline) ran some social media platforms (Facebook, Twitter, corporate blogs, YouTube, Pinterest) looking for innovative ideas from customers. After properly developing the community (e.g., offering support, reacting to comments, giving information), Finnair obtained hundreds of ideas from community members. Some of the most voted ideas to implement were giving passengers a service of swapping books and offering vegetarian meals onboard (Jarvenpaa & Tuunainen, 2013). This example illustrated how a company with proficiency in social media can engage customers to acquire knowledge to innovate in product and service.