(PhysOrg.com) -- When it comes to online word-of-mouth about companies, what is bad, is good. At least, in moderation.
The potentially positive aspects of negative feedback are highlighted by Professors Ram Gopal and Ramesh Sankaranarayanan of the UConn School of Business, who recently co-authored a paper examining the effects of negative blog posts about companies and products.
The paper, co-authored with Professors Rohit Aggarwal of the University of Utah and Param Vir Singh of Carnegie Mellon University and published in Information Systems Research in June 2011, is titled Blog, Blogger, and the Firm: Can Negative Posts by Employees Lead to Positive Outcomes? In the paper, the authors say their research shows that allowing some negative blog posts about a company is actually beneficial to the companys image among key stakeholders such as consumers and investors.
The lead author, Aggarwal, is a UConn alum who began his research about blogging as a Ph.D. student at UConn, where he studied with Gopal and Sankaranarayanan, researching the effects that blog posts have on a companys image and product exposure to potential customers.
The paper notes that the Internet has given individuals the ability to freely express their opinions and views about a companys products and policies to a potentially large number of people. For companies, this means free advertising to potential consumers, clients, employees, and investors. However, companies also risk losing control of their image and could face the possibility that negative blog posts may drive away potential business.
Gopal, professor and head of the Department of Operations and Information Management, and his co-authors specialize in studying information technology and the impact of the Internet and technology on business, with research interests in online reviews and user-generated content.
Although technology is now widely studied in business literature, Gopal, Sankaranarayanan, and their colleagues are among the first to focus on the effects that employee blogs have on a businesss reputation.
To test their hypothesis that employee blogging is another key asset in raising awareness of a companys services or products, the authors studied the employee blogs of a Fortune 500 company over time.
Says Gopal, An employee blog can reach many potential stakeholders. This is a new stage in how people use the Internet that can have a big impact on a companys business.
They found that allowing employees to write a small percentage of negative blog posts about the company they work for increases the publics willingness to read and be influenced by the blogs. Bloggers must strike a balance, however, since too many negative blog posts come across as disgruntled venting, whereas totally positive postings seem as if the blog is simply another method of advertising. A small amount of negative posts increase the blogs readership, the authors concluded, and raise the companys profile without it having to spend a dime.
Although many companies have embraced the Internet and established an online presence through social media and company websites, Gopal says many have not yet realized the potential benefits of employee blogs.
He says in order to take advantage of employee blogging, companies must first develop an employee blogging policy, something many firms do not have. At the same time, however, they must avoid infringing on an employees right to free speech, and also ensure that company secrets are not leaked.
In spite of the often volatile and unpredictable flow of online information, Gopal urges companies to encourage employee blogging. It is a very human desire to express an opinion, he says, and companies should recognize this. We have found that employees mostly blog positive things, and that allowing a small amount of negative posts is believed to show honesty.
Blog posts add a human face to firms, he adds. They also make the business appear more authentic if blog posts express an honest opinion about a company.
Explore further: Economist probes the high cost of health care