Does Social Media Accelerate Product Recalls? Evidence from the Pharmaceutical Industry
Information Systems & Technology Management
School of Business
The George Washington University
Friday, Dec 4
10 – 11 am | Zoom
(send an email to firstname.lastname@example.org to get the Zoom link)
Social media has become a vital platform for voicing product-related experiences and concerns, which not only signal potential defects but also impose pressures on firms. This study scrutinizes the rarely-studied relationship between these voices and product recalls by focusing on the pharmaceutical industry since social media pharmacovigilance is becoming increasingly crucial for detecting drug safety signals. Using Federal Drug Administration (FDA) drug enforcement reports and social media data crawled from online forums and Twitter, we investigate whether social media can accelerate the product recall process in the context of drug recalls. The results, derived from the discrete-time survival analysis, suggest that more adverse drug reaction (ADR) discussions on social media would lead to a higher hazard rate of the drug being recalled, and, thus, a shorter time to recall. To better understand the underlying mechanism, we propose the information effect, which captures how extracting information from social media helps detect more signals and mine signals faster to accelerate product recalls, and the publicity effect, which captures how firms or government agencies are pressured by public concerns to initiate speedy recalls. This study offers new insights for firms and policymakers concerning the power of social media and its influence on product recalls.