Reporter：Shibin Sheng
Abstract：Although negative media coverage has been recognized as a critical external crisisthat shapes firms’ resource allocation and strategic change, it is unknown whether and how it affects firms’ customer portfolio choices, which represents a pivotal operation strategy. Drawing on the literature of customer portfolio management and crisis management, we propose that negative media coverage prompts firms to enhance customer concentration and this impact is contingent upon firms’ overseas market focus and organizational flexibility. Using panel data of listed firms in Chinese stock market, we show that negative media coverage is positively related to a firm’s subsequent customer concentration. In addition, this positive relationship is stronger when market demand uncertainty is high, but weaker for firms with strong export orientation and organizational flexibility (i.e., product innovation capability and process flexibility). Overall, our research identifies negative media coverage as a source of operations risks that can be tackled by customer concentration and boundary conditions of this strategic choice.
