Impact of Average Rating on Social Media Endorsement: The Moderating Role of Rating Dispersion and Discount Threshold

Information Systems Research, Forthcoming

HEC Paris Research Paper No. MOSI-2017-1201

45 Pages Posted: 3 May 2017 Last revised: 7 May 2017

See all articles by Xitong Li

Xitong Li

HEC Paris - Information Systems and Operations Management

Date Written: May 3, 2017

Abstract

This paper examines how a restaurant’s online review ratings affect consumers to endorse deal vouchers sold by the restaurant via social media before they redeem the vouchers. While the effect of the average of review ratings is straightforward, we focus on examining how the effect is moderated by the dispersion of review ratings and the discount threshold set for the group-buying deals. A comprehensive literature review suggests that a large rating dispersion can deliver two different messages to consumers (uncertainty in product quality and uniqueness of product taste) and thus may either positively or negatively moderate the effect of average rating on social media endorsement. Discount threshold may serve as a quality signal, reinforcing the effect of average rating. The empirical results show that the effect of average rating is greater when review ratings are more dispersed and discount threshold is relatively large. The findings generate important managerial and research implications.

Keywords: social media endorsement, online reviews, average rating, dispersion of review ratings, discount threshold

Suggested Citation

Li, Xitong, Impact of Average Rating on Social Media Endorsement: The Moderating Role of Rating Dispersion and Discount Threshold (May 3, 2017). Information Systems Research, Forthcoming; HEC Paris Research Paper No. MOSI-2017-1201. Available at SSRN: https://ssrn.com/abstract=2962234

Xitong Li (Contact Author)

HEC Paris - Information Systems and Operations Management ( email )

1 rue de la Liberation
Jouy-en-Josas Cedex, 78351
France

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