Are Buyers Strategic in Online B2B Reviews?

Abstract

In the digital age, buyers rely heavily on online review information. Our paper studies buyers' strategic behaviors when leaving reviews in a business-to-business (B2B) context. In particular, we explore whether they are less likely to write a review when a supplier's transaction volume increases, hoping thus to curb the supplier's business growth and future bargaining power. We collect the entire review and transaction histories of 4,605 suppliers from Alibaba.com, the largest B2B global sourcing platform. Our dataset includes these suppliers' 62,529 reviews and 455,593 transactions, on Alibaba.com, all timestamped, from February to November in 2017 and 2018. We use a generalized difference-in-differences method that leverages the natural experiment arising from the trade war between the US and China, which caused a sudden change in US buyers' purchasing behaviors, leading to fluctuations in sellers' transaction volumes. These changes served as natural shocks to non-US buyers, because they saw an exogenous change in some sellers' performances. We find that each additional transaction reduces the likelihood for buyers to leave reviews for the seller by 0.9 percentage point. We also find that the review numerical ratings did not significantly change after the shock. The results are mostly in line with our expectations---buyers leave fewer reviews in order to control the seller's growth and leave more when the seller's performance drops. We provide managerial insights on reviews on B2B platforms. The findings suggest that buyers are motivated to manipulate, for their own advantage, information on suppliers that is disclosed to the public on the platform. Therefore, information transparency could be a double-edged sword: disclosing too much information about sellers, such as their transaction histories, could induce buyers' strategic behaviors when leaving reviews. Platform owners should be careful in designing the level of information transparency.

Keywords: online reviews, B2B marketplace, strategic buyers