Utilizing the platform economy effect through EWOM: Does the platform matter?

Highlights

• We examine social media, third-party booking, and direct-sales platforms.

• Consumer reviews have different linguistic characteristics among the three platforms.

• Consumer reviews focus on different attributes among the three platforms.

• Managers have different online response mechanisms among the three platforms.

• The factors affecting consumer satisfaction on the three platforms are the same.

Abstract

Businesses use the platform economy and electronic word-of-mouth generated by online reviews to attract consumers. Based on the communication accommodation theory, we examine both the contents of online consumer reviews and managerial responses to analyze what consumers and managers write and the associated linguistic characteristics to determine how they write. We examine and compare online consumer reviews and managerial responses on social media platforms, third-party booking platforms, and direct-sales platforms in four dimensions. These include (a) linguistic characteristics, (b) content, (c) the interaction between consumers and managers, and (d) the mechanism of the reflection of online reviews in consumer satisfaction. We use a text mining approach, latent semantic analysis, and text regressions to analyze data from the hotel industry. The findings suggest that both the linguistic characteristics and content of the consumer reviews and managerial responses differ depending on the platform. However, the factors influencing consumer satisfaction are the same among the three platforms. Consumer reviews on social media platforms have greater subjectivity and length; reviews on direct platforms have higher polarity, diversity, and readability. Consumer reviews focus more on interpersonal and intangible attributes on social media, on economic attributes on third-party platforms, and on tangible attributes on direct platforms. Managers’ responses have similar linguistic styles in terms of subjectivity, polarity, and readability, but they use more words with greater diversity and focus more on operations and facility issues on direct platforms than on the other two platforms. We provide implications for managers to understand consumer reviews and write responses.

Introduction

With the emergence and rapid development of various platforms, firms nowadays are leveraging the effect of the platform economy, which can be defined as the set of economic and social activities facilitated by platforms (Farrell and Greig, 2016) to increase their sales and revenues. Platforms offer distribution channels and enable firms to reach consumers. These platforms usually offer a digital framework, enabling suppliers to post information regarding their products and services and allowing consumers to post reviews after their consumption experiences (Wan et al., 2019).

Online consumer reviews can generate an electronic word-of-mouth (eWOM) effect that significantly affects consumer demand and business revenue and thus have been intensively examined in previous studies (e.g., Li et al., 2019, Yang and Dong, 2018). The advantages of the digital platforms mainly lie with their ability to cover a wide range of consumer markets and reach consumers easily (Gong et al., 2019). Thus, using the platform economy effect through positive eWOM can boost firms' image and reputation, increasing consumer demand rapidly. However, the first step to using the platform economy through eWOM is understanding the properties of the platform. Due to the different social and technical properties of the platforms (e.g., social media, third-party booking, or direct sales platforms), the platform itself can also play an important role in influencing consumers' reviews and perceptions (Xiang et al., 2017). Understanding how generated online reviews and managerial responses from various platforms differ can give firms better knowledge of consumers’ perceptions as reflected by their reviews, thus guiding the eWOM behavior and stimulating a positive effect, depending on the particular platform.

Realizing the business value of online consumer reviews, many businesses put effort into interacting with and responding to consumer reviews, which are proven to recover service failure, enhance consumer loyalty, and generate future consumer purchase behavior (Gu and Ye, 2014). The research into managerial responses should not be separate from research dealing with consumer reviews. The optimal response strategy depends on the corresponding consumer reviews (Li et al., 2018). The responses should target particular reviews to address consumers' concerns and comments directly, instead of having a standardized and consistent response to all reviews (Lui et al., 2018). Thus, examining the interactions between managerial responses and online reviews is critical for guiding the managers to implement an optimal and targeted response to better understand and alleviate consumers’ concerns. This maintains efficient communications between consumers and managers to enhance consumer retention.

What consumers mention in their reviews may not fully reflect the determinants of their satisfaction. Consumer satisfaction reflects their perception during consumption, which is determined by the gap between expectation and the perceived quality of the consumption (Oliver, 1980). However, the psychological process of writing online reviews is different from the psychological process during the consumption (Xu, 2018). Online consumer reviews contain “noise” when fully reflecting consumer satisfaction because consumers have various motives for writing reviews rather than merely exhibiting their consumption perception (Xu, 2020). Therefore, understanding the separate psychological processes of writing reviews and determining degrees of satisfaction can help managers understand online reviews more fully. In this way, firms can enhance consumers’ post-consumption satisfaction or alleviate their post-consumption dissatisfaction by targeting the most important attributes. Therefore, in this study, we also analyze the reflection of online reviews on consumer satisfaction.

Based on the communication accommodation theory (Giles and Smith, 1979), we examine how consumers and managers tailor and attune their content and style of communications by adjusting the contents and linguistic features of their online reviews or managerial responses on different platforms. This study focuses on both the linguistic and content characteristics of online reviews and managerial responses by answering questions about what consumers (managers) write in their reviews (responses), namely, the contents and how consumers (managers) write their reviews (responses), namely, the linguistic characteristics. We examine the role of platforms in affecting the contents and linguistic characteristics of online consumer reviews and managerial responses and the reflection of consumer reviews on their satisfaction. In detail, we examine and compare online consumer reviews and managerial responses on various platforms in four dimensions: (1) linguistic characteristics, (2) review content, (3) the interaction between consumers and managers, and (4) the mechanism of the reflection of online reviews in consumer satisfaction. This focus has resulted in four overarching research questions. First, to examine the first dimension of linguistic characteristics of online reviews, we pose the first research question: How do the linguistic characteristics of online consumer reviews, in terms of subjectivity, diversity, readability, sentiment, and length of review, differ across various platforms? In addition, to analyze the second dimension of online review contents, we posit the second research question: How does the focus on attribution in online consumer reviews differ across various platforms? Moreover, to discuss the third dimension of the interaction between consumers and managers from online managerial responses, we propose the third research question: How does managers' online response behavior, or the degree to which managers' responses match consumer reviews, have different mechanisms across various platforms? Furthermore, to investigate the fourth dimension of the consumer satisfaction reflection mechanism from online reviews, we present the fourth research question: How does the mechanism of online consumer reviews’ reflection of satisfaction differ across various platforms?

The three types of platforms in a hospitality context examined in this study include social media platforms (i.e., TripAdvisor in this study), third-party booking platforms (i.e., Expedia in this study), and direct-sales online platforms (namely, firms’ own channels). We collected data for both online consumer reviews of hotels and managerial responses from these three platforms to analyze and answer the four research questions.

Previous studies of online consumer reviews and managerial responses have the following four limitations, which are addressed in this study as our contributions. First, regarding online consumer review studies, the majority has focused on either consumers’ descriptions or evaluations of perceived quality or performance in their reviews (e.g., Xiang et al., 2015, Xu and Li, 2016), namely, the content or emotion reflected in reviews. Thus, the first contribution of this study lies in the fact that it combines and extends the two fields of study by examining both the content and linguistic styles of online consumer reviews. We answer two important questions: what consumers write and how they write.

Second, most previous authors have focused on only online consumer reviews or managerial responses (e.g., Lui et al., 2018) without examining the connection between them. The few researchers discussing the connections (e.g., Chen et al., 2019) have focused on how managerial response influences consumers' future review behavior instead of the reverse—namely, how online consumer reviews affect managers' responses. Thus, the second contribution of this study is that we examine how consumer reviews affect the actions of the managers in responding: how consumers' different writing content and linguistic characteristics affect managers’ writing content and linguistic characteristics.

Third, most authors focusing on online consumer reviews and managerial responses have examined them on a single platform, with the majority focusing on either third-party booking website (e.g., Xiang et al., 2015) or social media (e.g., Valdivia et al., 2017). Consumers' reviews and managerial response behaviors on direct platforms have received little discussion, with even fewer studies, if any, offering examinations of consumers' reviewing behavior and managers' response behavior on different platforms. Thus, the third contribution of this study is to fill in this gap with empirical evidence from three different platforms, thus reflecting those different reviewing and response behaviors and indicating consumers' different motivations for writing online reviews along with managers’ different response strategies.

Last, most previous authors (e.g., Xiang et al., 2015, Xu and Li, 2016) have assumed the attributes mentioned in consumers' reviews to be a direct reflection of the determinants of their satisfaction. Another contribution of this study is that we differentiate between consumers’ online review writing process and their satisfaction generation process by examining whether all attributes mentioned in the reviews affect their satisfaction. Managers can then respond to their consumers in a more targeted way, focusing on the attributes that influence consumer satisfaction most. Fig. 1 shows the limitations of previous studies and the contributions of this study.

The rest of the study is organized as follows. Section 2 describes the theoretical background. Section 3 proposes the hypotheses. Section 4 describes the data collection and analytics. Sections 5 Results, 6 Discussion present and discuss the empirical results. Section 7 discusses the theoretical and managerial implications. Section 8 concludes the study and proposes future research directions.