The Role of Network Embeddedness and Psychological Ownership in Consumer Responses to Brand Transgressions

Research has recognized that in addition to consumer–brand relationships, consumers are engaged in social networks of consumer-to-consumer interactions, which increasingly take place online through virtual brand communities. However, little attention has been paid to how consumer-to-consumer influence within virtual brand communities plays a role when brands behave badly. This research examines the role of network embeddedness, specifically network centrality and network density, and psychological ownership in consumer responses to a brand transgression. Across three studies of virtual brand communities and one of offline brand communities, we document an inherent conflict for those who occupy a central position within a brand community. Central consumers are more likely to punish the brand for the transgression, but centrality also leads to greater psychological ownership of the brand community and the brand, which makes consumers less likely to punish the brand. Psychological ownership also leads to a higher likelihood of helping the brand recover from the transgression, creating an additional conflict for central consumers. Network density resolves these conflicts by strengthening the negative relationship between psychological ownership and likelihood to punish the brand, but only in online brand communities where punishing and helping behaviors are more visible and more likely to act as reputational signals for the central consumer. This suggests that firms should encourage the formation of dense virtual brand communities and cultivate psychological ownership among central community members in order to protect themselves from negative consequences in the wake of a transgression.