Measuring and Managing the Externality of Managerial Responses to Online Customer Reviews

Information Systems Research, Forthcoming

55 Pages Posted: 7 Feb 2018 Last revised: 1 Mar 2019

See all articles by Wei Chen

Wei Chen

University of Arizona - Eller College of Management

Bin Gu

Arizona State University (ASU) - Department of Information Systems

Qiang Ye

Harbin Institute of Technology, School of Management

Kevin Zhu

University of California, San Diego

Date Written: January 24, 2018

Abstract

Managerial responses to online customer reviews not only affect customers who receive the responses but may also influence subsequent customers who observe the responses. This externality arises because of the public nature of online interactions. However, prior studies were mainly in offline settings where such externality rarely exists. In this study, we assess the magnitude of such externality. Using a difference-in-difference-in-differences framework and matched hotels across two large travel agencies, we find that managerial responses indeed have a significant and positive impact on the volume of subsequent customer reviews. The impact on the review valence is not evident, which can be attributed to the unique design of identity disclosure in our research context. Furthermore, our results suggest nuances that were not known in the prior literature. For example, responding to positive and negative reviews may have different effects on future reviews, and managers should provide detailed responses to negative reviews but brief ones to positive reviews. Our results offer managerial implications to service providers on how to improve customer engagement in the inter-connected online environment.

Keywords: online interactions with customers, managerial responses, customer reviews, externality, volume, valence, mechanisms

Suggested Citation

Chen, Wei and Gu, Bin and Ye, Qiang and Zhu, Kevin, Measuring and Managing the Externality of Managerial Responses to Online Customer Reviews (January 24, 2018). Information Systems Research, Forthcoming. Available at SSRN: https://ssrn.com/abstract=3112895

Wei Chen (Contact Author)

University of Arizona - Eller College of Management ( email )

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

Bin Gu

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

Tempe, AZ
United States

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

Kevin Zhu

University of California, San Diego ( email )

9500 Gilman Drive
Mail Code 0502
La Jolla, CA 92093-0112
United States

HOME PAGE: http://https://rady.ucsd.edu/people/faculty/zhu/

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