How firm communication affects the impact of layoff announcements on brand strength over time |
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| Institution: | 1. Department for Marketing, Tilburg University, Netherlands;2. Management Accounting, Kühne Logistics University, Großer Grasbrook 17, 20457 Hamburg, Germany;3. Department of Marketing, KU Leuven, Belgium;4. Customer Management, OBI, Germany;1. Department of Marketing, College of. Business, City University of Hong Kong, Hong Kong;2. Department of Marketing, Carlson School of Business, University of Minnesota, United States;3. Department of Marketing, Marshall School of Business, University of Southern California, United States;1. Department of Information Systems and Operations Management, College of Business, The University of Texas at Arlington, United States;2. Department of Marketing, Pamplin College of Business, Virginia Tech, United States;3. Department of Marketing, Pamplin College of Business, Virginia Tech, United States;1. Marketing at HEC Paris, France;2. Marketing, Statistics and Data Science, Economics and Education at the Wharton School of the University of Pennsylvania, United States;1. Antai College of Economics and Management, Shanghai Jiao Tong University, China;2. Antai College of Economics and Management, Shanghai Jiao Tong University, 1954 Huashan Road, Shanghai 200030, China;3. Department of Marketing, Miami University, United States |
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| Abstract: | Firms usually undertake layoffs to improve financial performance. However, layoffs often have negative effects on various stakeholders, including consumers. In this paper, we examine the magnitude and duration of the potential negative effect of layoff announcements on brand strength. We also examine how a firm's communication accompanying a layoff can potentially counteract the observed negative effect of layoff announcements on brand strength. We compare how advertising communication intensity, social media communication (i.e., brand-initiated tweets), public relation (PR) communication, and communication of CSR initiatives moderate the main effect of layoff announcements on brand strength. Using an error correction model and drawing on 366 announcements of layoff events in Germany, this study identifies the magnitude and duration of the main effect. An examination of five years of weekly consumer brand perception data across multiple industries and domestic and foreign firms shows that advertising communication intensity and social media communication amplify the negative impact of layoff announcements on brand strength. Conversely, PR communication and communication of CSR initiatives help mitigate the negative effect. These findings provide guidance on the best way for firms to design firm communication in the context of layoff announcements. |
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| Keywords: | Downsizing Layoff announcements Brand image Advertising Corporate social responsibility Public relations Social media Communication mix Error correction model |
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