Feeding negativity on social media: how compensating customers creates vicious cycles of complaint

Purpose The study explores the paradoxical impact of managerial responses to negative comments on social media, revealing how offering compensation inadvertently escalates negativity into a vicious cycle. Through a unique Facebook policy quasi-experiment, we show that apologies, in contrast, effectively neutralize further complaints. Design/methodology/approach We utilize interactive data on Facebook to assess how firms' managerial responses to negative comments – particularly responses involving compensation topics – affect the volume and tone of subsequent complaints. Additionally, we use instrumental variables and difference-in-differences (DID) models to account for potential sources of endogeneity. Findings The results reveal that managerial response increase both the volume and negativity of subsequent posts, creating a “vicious” cycle of escalating complaints. This effect is stronger for messages that include compensation-related content. In contrast, apology-based responses do not lead to further negative commenting, indicating that the type of managerial response plays a critical role in influencing consumer behavior on social media. Originality/value This study highlights the importance of firm-generated response type in managing online complaints, which can drive subsequent commenting activities from other users. Firms can use the insights to provide more nuanced complaint-handling strategies and navigate consumer interactions in this interactive marketing era.