Asymmetric Reputation Spillover Effects from DigitalAgencies in Online Markets

54 Pages Posted: 25 Oct 2019 Last revised: 25 May 2021

See all articles by Marios Kokkodis

Marios Kokkodis

Boston College

Panagiotis Adamopoulos

Emory University - Information Systems and Operations Management

Sam Ransbotham

Boston College - Carroll School of Management

Date Written: October 17, 2019

Abstract

Digital markets proliferated in recent years, overcoming many market inefficiencies by facilitating direct interactions between consumers and producers. Thanks to this disintermediation, consumers nowadays have access to a vast number of alternatives, while producers can efficiently reach huge markets. However, the success of digital markets created a concomitant challenge: producer differentiation. In crowded markets, agencies (e.g., publishing companies in books, freelance agencies in online labor markets, independent labels in music) can differentiate producers by signaling product quality. But how do agencies' reputations affect product success for producers? Can some agencies do more harm than good? To investigate these research questions, we theorize how variation in producer and agency reputation lead to asymmetric and heterogeneous effects, including that (1) more-reputable agencies have stronger positive effects on less-reputable producers than they have on more-reputable producers, and (2) less-reputable agencies hurt more-reputable producers more than they hurt less-reputable producers. Analyses of more than one million observations from two digital markets ---MusicShare (a music distribution platform) and Amazon (in the book department)--- provide empirical support to these theory-driven arguments. These findings have design implications for markets, and they contribute to our understanding of how agencies, depending on producer reputation, can either benefit or hurt product success.

Keywords: Reputation effects, Digital platforms, Third-party agencies, Econometric analysis

Suggested Citation

Kokkodis, Marios and Adamopoulos, Panagiotis and Ransbotham, Sam, Asymmetric Reputation Spillover Effects from DigitalAgencies in Online Markets (October 17, 2019). Available at SSRN: https://ssrn.com/abstract=3471273 or http://dx.doi.org/10.2139/ssrn.3471273

Marios Kokkodis (Contact Author)

Boston College ( email )

140 Commonwealth Avenue
Chestnut Hill, MA 02467
United States

Panagiotis Adamopoulos

Emory University - Information Systems and Operations Management ( email )

1300 Clifton Road
Atlanta, GA 30322
United States

Sam Ransbotham

Boston College - Carroll School of Management ( email )

140 Commonwealth Avenue
Chestnut Hill, MA 02467
United States

HOME PAGE: http://www.SamRansbotham.com

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