Measuring the Influence of Managerial Responses on Subsequent Online Customer Reviews – A Natural Experiment of Two Online Travel Agencies

44 Pages Posted: 15 Jul 2010  

Qiang Ye

Harbin Institute of Technology, School of Management

Bin Gu

Arizona State University (ASU) - Department of Information Systems

Wei Chen

University of Arizona - Eller College of Management

Date Written: July 1, 2010

Abstract

Managerial responses to online customer reviews not only affect customers who receive the responses but also influence the behavior of subsequent customers who observe the responses. This externality arises because of the public nature of managerial responses. However, prior studies on managerial responses have been mainly limited to the offline setting where such externality rarely arises. In this exploratory study, we propose possible causes of the externality and empirically assess its magnitude. We leverage a natural experiment provided by two online travel agencies. Both agents allow customers to post reviews on hotels, but only one of the travel agents allows hotel management to post managerial responses. Using a difference-in-difference approach, we find that managerial responses have a significant and positive impact on the valence and volume of subsequent customer reviews. Average review rating increases by 15% and average review volume increases by 48% after the provision of managerial responses. We also find evidence that the increase in review volume can be partially attributed to increases in hotel sales. Our result highlights the importance of managing and responding to online customer reviews.

Keywords: managerial responses, online WOM, natural experiment

Suggested Citation

Ye, Qiang and Gu, Bin and Chen, Wei, Measuring the Influence of Managerial Responses on Subsequent Online Customer Reviews – A Natural Experiment of Two Online Travel Agencies (July 1, 2010). Available at SSRN: https://ssrn.com/abstract=1639683 or http://dx.doi.org/10.2139/ssrn.1639683

Qiang Ye

Harbin Institute of Technology, School of Management ( email )

No. 92, Xidazhi street
Harbin, Heilongjiang 150001
China
+86-451-86418123 (Phone)
+86-451-86414024 (Fax)

HOME PAGE: http://som.hit.edu.cn/prof/162.htm

Bin Gu (Contact Author)

Arizona State University (ASU) - Department of Information Systems ( email )

Tempe, AZ
United States

Wei Chen

University of Arizona - Eller College of Management ( email )

McClelland Hall
P.O. Box 210108
Tucson, AZ 85721-0108
United States

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