Exit, Voice, and Response in Digital Platforms: An Empirical Investigation of Online Management Response Strategies

Posted: 31 Aug 2016

See all articles by Naveen Kumar

Naveen Kumar

School of Business, University of Washington Bothell; University of Memphis

Liangfei Qiu

University of Florida - Warrington College of Business Administration

Subodha Kumar

Temple University - Department of Marketing and Supply Chain Management

Date Written: August 28, 2016

Abstract

In the past decade, we have witnessed the growing importance of management responses to online reviews in digital platforms. In this study, we examine the impact of online management responses on business performance and their spillover effect on nearby businesses. By adopting multiple causal identification strategies to address the issue of self-selected responses, we find that the responses by a business owner do play a significant role in the performance of the focal business as well as in the performance of the nearby businesses. First of all, we observe that, in general, the launch of the new management response feature benefits businesses. What is more interesting is that the benefit is not observed in a consistent manner across all businesses. Only the businesses that choose to use the management response feature observe increases in check-ins. On the other hand, the businesses that are unaware of the management response feature launch on digital platforms, or are aware but choose not to use the management response feature, tend to remain at disadvantage. Interestingly, we also uncover that the spillover effect (externality) of online management responses on the nearby businesses crucially depends on whether the focal business and the nearby businesses are in a direct competition. Further, we identify conditions under which business owners are more likely to respond to consumer comments. Our findings have direct implications for both the business owners and the digital platforms: Digital platforms can help businesses develop the right engagement strategies by taking the online response strategies of the nearby businesses into account.

Keywords: online management responses, digital platforms, spillover effect, self-selected responses

JEL Classification: L15, M31

Suggested Citation

Kumar, Naveen and Qiu, Liangfei and Kumar, Subodha, Exit, Voice, and Response in Digital Platforms: An Empirical Investigation of Online Management Response Strategies (August 28, 2016). Mays Business School Research Paper No. 2831236. Available at SSRN: https://ssrn.com/abstract=2831236

Naveen Kumar (Contact Author)

School of Business, University of Washington Bothell ( email )

18115 Campus Way NE
Bothell, WA 98011
United States

University of Memphis ( email )

Memphis, TN 38152-3370
United States

Liangfei Qiu

University of Florida - Warrington College of Business Administration ( email )

Gainesville, FL 32611
United States

HOME PAGE: http://sites.google.com/site/qiuliangfei/

Subodha Kumar

Temple University - Department of Marketing and Supply Chain Management ( email )

Philadelphia, PA 19122
United States

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