Firms are now gradually investing and creating their own social media platforms to support their new product development (NPD). However, there is a lack of research explores whether and under what conditions these platforms influence firm performance. This study addresses this gap by examining the impact of NPD-focused company-built social media on firm performance, measured through abnormal stock returns. Using a propensity score matching (PSM) approach to create a control group of firms without such platforms, a difference-in-difference analysis is conducted on 132 U.S.-listed companies (66 treatment firms and 66 matched control firms) from 2005 to 2022. The findings reveal that in general firms adopting NPD-focused company-built social media platforms underperform relative to industry peers lacking similar technologies. However, firms with high absorptive capacity benefit from improved performance when leveraging these platforms. Notably, industry dynamism does not moderate the negative relationship between company-built social media adoption and firm performance. This study provides pioneering empirical evidence on the performance implications of firm-specific NPD-focused social media technologies. It also highlights the interplay between social media adoption and firm performance, calling for further research to unravel these contradictions.
