I Hear You: Does Quality Improve with Customer Voice?

56 Pages Posted: 20 Oct 2019 Last revised: 28 Oct 2021

See all articles by Uttara M Ananthakrishnan

Uttara M Ananthakrishnan

University of Washington, Michael G. Foster School of Business

Davide Proserpio

Marshall School of Business, University of Southern California

Siddhartha Sharma

Kelley School of Business, Indiana University

Date Written: October 9, 2019

Abstract

We empirically study whether firms improve their quality based on online customer reviews in a dynamic quality environment. We do so by analyzing the U.S. hotel industry using data from two major online review platforms: Tripadvisor and Expedia. Using management response as a proxy for whether hotels pay attention to consumer reviews and a difference-in-differences strategy, we find that hotels that are more likely to pay attention to reviews increase their ratings more than hotels that do not do so. Moreover, we show that low-rated hotels experience larger gains as they have more margin of improvement than high-rated hotels. We reinforce these findings by using natural language processing algorithms and show that hotels that respond to reviews improve on issues that are frequently mentioned in their reviews. Overall, our results suggest that online reviews provide a useful source of information for firms that can help them improve their quality.

Keywords: Online reviews, Reputation management, TripAdvisor, Expedia, Hotel industry, Sentiment analysis, Sentence embeddings

Suggested Citation

Ananthakrishnan, Uttara M and Proserpio, Davide and Sharma, Siddhartha, I Hear You: Does Quality Improve with Customer Voice? (October 9, 2019). Available at SSRN: https://ssrn.com/abstract=3467236 or http://dx.doi.org/10.2139/ssrn.3467236

Uttara M Ananthakrishnan

University of Washington, Michael G. Foster School of Business ( email )

Box 353200
Seattle, WA 98195-3200
United States

Davide Proserpio

Marshall School of Business, University of Southern California ( email )

701 Exposition Blvd
Los Angeles, CA Los Angeles 90089
United States

HOME PAGE: http://dadepro.github.io/

Siddhartha Sharma (Contact Author)

Kelley School of Business, Indiana University ( email )

1275 E 10th St
Bloomington, IN 47405
United States

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