Channels of Impact: User Reviews When Quality Is Dynamic and Managers Respond

We examine the effect of managerial response on consumer voice in a dynamic quality environment. We argue that the consumer is motivated to write reviews not only because reviews may impact other consumers, but because reviews may impact the management and the quality of the service. We examine this empirically in a scenario in which reviewers receive a credible signal that the service provider is listening. Specifically, we examine the “managerial response” feature allowed by many review platforms. We hypothesize that managerial responses will stimulate reviewing activity and, in particular, will stimulate negative reviews that are seen as more impactful. This effect is further heightened because managers respond more and in more detail to negative reviews. Using a multiple-differences specification, we show that reviewing activity and particularly negative reviewing is indeed stimulated by managerial response. Our specification exploits comparison of the same hotel immediately before and after response initiation and compares a given hotel’s reviewing activity on sites with review response initiation to that on sites that do not allow managerial response. We also explore the mechanism behind the effect using an online experiment.

Data and the online appendix are available at https://doi.org/10.1287/mksc.2018.1090.