How Social Media Empowers Stakeholders: A Stakeholder Multiplicity Perspective

The literature shows that social media enhances individual stakeholders’ ability to directly influence firm behaviors, paying less attention to how it enables different stakeholder groups to influence firms collectively. Drawing on the stakeholder multiplicity perspective in stakeholder theory, this study theorizes and empirically demonstrates that social media can empower lower-salience stakeholders to drive the actions of higher-salience stakeholders to influence firm behaviors. By analyzing 506 consumer crises involving foreign and local companies in China from 2000 to 2020, we find that firms take more substantial responsibility when confronted with consumers’ social-media-based collective actions than when confronted with conventional channels of consumer complaints. This heightened responsibility stems mainly from collective actions’ tendency to spur law-enforcing agencies into addressing alleged firm misdeeds, demonstrating a stakeholder multiplicity effect of social media empowerment. We also identify the institutional contingency of this effect, showing that local governments’ bureaucratic capacity positively moderates collective actions’ effect on law-enforcing actions, whereas their intervention in firms’ operational decisions negatively moderates law-enforcing actions’ effect on firms’ responsibility assumption. This study extends the understanding of social media's relationship with stakeholder influence and consolidates the stakeholder multiplicity perspective in stakeholder theory.