The value of firm engagement: How do ratings benefit from managerial responses?
Introduction
In the digital era, firms' pivotal role in engaging with customers and other stakeholders on online platforms has been elevated to the forefront of firms' marketing and service operation strategies in recent times [1,2]. One of the contemporary mechanisms for effective engagement is online communities which foster new social interactions and change the way firms connect with customers [3,4]. Often intending to retain customers or attract new customers, firms engage in online social interactions by proactively creating a platform or participating in an existing third-party organised group. Such digital presence has a public nature that transforms a dyadic firm-customer relationship into potential influence on a broader network.
While engagement has received considerable attention from researchers [1,2,5], the preponderance of the existing research has far concentrated on individual-level customer engagement [6]. The discussion on firm engagement – a term conceptualised to describe actions taken by focal firms to interact with customers via online platforms – is still at an early stage [7]. Scholarly efforts have been devoted to exploring how marketer-generated content affects consumers' engagement intention measured by behavioural matrices such as comments, likes, and sharing [8,9], whereas little attention has been paid to sentimental engagement [10]. There are inconclusive discussions on the efficacy of firm engagement, particularly concerning how and to what extent firm engagement leads to attitudinal changes in an online network and what optimal approaches are to manage firms' online presence.
Against this backdrop, this research investigates firm engagement behaviour and its power in affecting collective opinions. We focus on a typical case of firm engagement – managerial responses to online reviews – and explore the relationship between responding approaches and future online ratings. This issue has received growing scholarly interest given its importance to online reputation management (e.g., [11,12]), yet limited evidence has been documented to justify the effectiveness of various engagement approaches in influencing customer ratings over time. Responding is not merely a one-off action or policy change but a strategy that may have a continuous impact on public perceptions of the focal firm over the long term. A set of measures of firm engagement is developed to assess the conjoined effects on future ratings. In particular, textual features of response content are incorporated into the framework. Drawing on a sample of 765,082 reviews and 339,123 responses of 1037 hotels over an approximately 15-year period, we examine both the behavioural and textual cues embedded in managerial responses and their associations with customer ratings. The main finding is that sustainable growth in ratings can form when firm engagement displays greater intensity, promptness and positivity, and these effects vary with firms' rating status and market position.
This study adds to the theorisation of firm engagement and the line of research on firm-generated content by comprehensively investigating the operational value of both engagement behaviour and content on collective sentiment [13]. The mixed-method approach coupling textual and statistical analyses on a big data set enable us to respond to one of the research calls in [7] about assessing how much advantage firm engagement can generate. Our analysis of the dynamic in engagement behaviour and interactions in a time series extends the current research frontier by simultaneously testing the significance of firm engagement characteristics and identifying the most influential attributes. In so doing, we move beyond answering the question of whether or not to engage and attempt to delineate the best responding strategy for firms' operation and management of online social media presence.
The remainder of the article is organised as follows. Section 2 reviews relevant literature on firm engagement, and hypotheses about managerial responses are developed in Section 3. Section 4 explains the research methodology, and empirical results are reported in the following section. The last two sections conclude the paper with a discussion on findings, implications, and future research.
Section snippets
Online firm engagement
Extant research on engagement has mainly focused on interpreting engagement among customers and attempting to discern customer engagement behaviour in the online social interaction network (e.g., [[14], [15], [16]]). However, an online social interaction network also involves actors other than customers, such as firm managers, employees, regulators, and platforms, and engagement essentially reflects the connectedness among multiple actors [1,17]. Engagement behaviour of actors is affected by
Managerial responses and customer ratings
As delineated earlier, firm engagement in this study refers to a firm's online responding to customer reviews. In light of the network perspective of actor engagement [18], we argue that firm intervention influences not only current reviewing customers but also bystanders who observe previous reviews and responses, and the interactive engagement process will ultimately shape the valence of engagement over time [18].
Firm engagement can impact the network by building trustworthiness and swaying
Data
Given the importance of firm–customer interactions in the service industry, we employ data from the hospitality sector with a specific focus on London hotels. In addition to London being a globally popular travel destination, the large number of customer reviews and managerial responses on a range of hotels in the city meets the expectations for sampling and the requirements for the research purpose. Our data are retrieved from TripAdvisor. Managerial responses are permanently displayed on the
Descriptive statistics
Across the sampled 1037 hotels, 734 hotels (70.78%) provide managerial responses. Response provision by hotels differs with respect to star class and rating levels (see Table 4). Hotels of a higher star class tend to be more active in responding than those that are lower-rated. Over 90% of 4- and 5-star hotels offer responses to more than half of the online reviews they receive. Approximately 77% of 3-star hotels respond, but the response rate is almost halved compared to that of luxury hotels.
General discussions and managerial implications
Our work offers important implications for practising service managers in engaging in online communications with customers. First, our results strongly support that response ratio, speed, and sentiment have significant associations with future ratings, and firms are advised to pay attention to these aspects that are most influential in the firm–customer communications. Responding in a frequent, prompt, and positive way advocates firms' professionalism in engaging customers and hence builds
Theoretical contributions and future research
Customers frequently engage in online communities and platforms to voice their experience and views. While engagement continues to accumulate new research streams [1,2], an investigation into how firms effectively engage in online interactions is a notable shortcoming of the literature. Standing on a network perspective, the present study discusses firm engagement with a focus on its power in influencing customer attitudes and sentiment in their online engagement. Customers' sentimental
Jie Sheng is a Lecturer in Management at the School of Management, University of Bristol. Her current research focuses on online social interactions and networks, firm engagement with digital technologies and platforms, and data-driven strategies in operations management and marketing practices. Her research has been published in internationally excellent journals, including International Journal of Production Economics, British Journal of Management, Journal of Interactive Marketing, Journal
References (52)
- et al.
Consumer behavior in social commerce: a literature review
Decis. Support. Syst.
(2016) - et al.
Collective engagement in organizational settings
Ind. Mark. Manag.
(2019) - et al.
Popularity of brand posts on brand fan pages: an investigation of the effects of social media marketing
J. Interact. Mark.
(2012) - et al.
Electronic word-of-mouth via consumer-opinion platforms: what motivates consumers to articulate themselves on the Internet?
J. Interact. Mark.
(2004) - et al.
Modeling the dynamics of online review life cycle: role of social and economic moderations
Eur. J. Oper. Res.
(2020) - et al.
It’s all B2B…and beyond: Toward a systems perspective of the market
Ind. Mark. Manag.
(2011) Being active in online communications: firm responsiveness and customer engagement behaviour
J. Interact. Mark.
(2019)- et al.
Responding to negative online reviews: the effects of hotel responses on customer inferences of trust and concern
Tour. Manag.
(2016) - et al.
The effect of review valence and variance on product evaluations: an examination of intrinsic and extrinsic cues
Int. J. Res. Mark.
(2017) - et al.
Do actions speak louder than voices? The signaling role of social information cues in influencing consumer purchase decisions
Decis. Support. Syst.
(2014)
Customer engagement behaviors and hotel responses
Int. J. Hosp. Manag.
Online damage control: the effects of proactive versus reactive webcare interventions in consumer-generated and brand-generated platforms
J. Interact. Mark.
Modeling the relationship between firm and user generated content and the stages of the marketing funnel
Int. J. Res. Mark.
An empirical investigation of electronic word-of-mouth: informational motive and corporate response strategy
Comput. Hum. Behav.
The business value of online consumer reviews and management response to hotel performance
Int. J. Hosp. Manag.
Who will use augmented reality? An integrated approach based on text analytics and field survey
Eur. J. Oper. Res.
Competitive advantage through engagement
J. Mark. Res.
Customer engagement: the construct, antecedents, and consequences
J. Acad. Mark. Sci.
The impact of new media on customer relationships
J. Serv. Res.
A dynamic model of the effect of online communications on firm sales
Mark. Sci.
Online communities and firm advantages
Acad. Manag. Rev.
Advertising content and consumer engagement on social media: Evidence from Facebook
Manag. Sci.
The role of marketer-generated content in customer engagement marketing
J. Mark.
Effects of managerial response on consumer eWOM and hotel performance: evidence from TripAdvisor
Int. J. Contemp. Hosp. Manag.
Online reputation management: estimating the impact of management responses on consumer reviews
Mark. Sci.
Big data analytics in operations management
Prod. Oper. Manag.
Cited by (20)
Strategies and conditions for crafting managerial responses to online reviews
2024, Tourism ManagementHow customized managerial responses influence subsequent consumer ratings: The language style matching perspective
2024, Decision Support SystemsExploring online consumer review-management response dynamics: A heuristic-systematic perspective
2024, Decision Support SystemsJob satisfaction, management sentiment, and financial performance: Text analysis with job reviews from indeed.com
2023, International Journal of Information Management Data InsightsAesthetics of hotel photos and its impact on consumer engagement: A computer vision approach
2023, Tourism ManagementCitation Excerpt :Given rich studies on the aesthetic interior environment of offline businesses (e.g., Liu & Jang, 2009; Alfakhri et al., 2018; Jiang et al., 2022), the present paper explores, in a hotel-booking website, whether the aesthetics of hotel photos have the similar effect to promote consumer engagement. While consumer engagement is a multi-dimensional construct, the review volume and consumer rating are normally considered among the most fundamental measures for a review website (e.g., Kang et al., 2021; Sheng et al., 2021). By deploying a hybrid approach of computer vision technique and econometric analysis, we link the aesthetics of hotel photos with review volume and consumer ratings.
Speed and symmetry: Developing effective organisational responses to social media criticism of CSR
2022, Computers in Human BehaviorCitation Excerpt :These responses were all relatively short (approximately 50 words), in line with Li et al.’s (2017, p.50) recommendation that, on social media, “lengthy response should be avoided” as too much information is likely to induce cognitive overload, resulting in consumers ignoring or discounting the response. Furthermore, Sheng et al. (2021) observe that shorter responses are more effective, as social media sites often show only the first three lines of a management response, unless users opt to ‘read more’. We varied the speed and nature of the company responses to create stimuli that clearly and distinctively reflected each treatment condition (see Table 2).
Jie Sheng is a Lecturer in Management at the School of Management, University of Bristol. Her current research focuses on online social interactions and networks, firm engagement with digital technologies and platforms, and data-driven strategies in operations management and marketing practices. Her research has been published in internationally excellent journals, including International Journal of Production Economics, British Journal of Management, Journal of Interactive Marketing, Journal of Business Research, and Technological Forecasting & Social Change.
Xiaojun Wang is a Professor of Operations Management at the School of Management, University of Bristol. His current research predominantly focuses on supply chain risk and resilience, low carbon manufacturing, eco-design, sustainability, and social media research. His research outputs have been published in many international journals, including Production and Operations Management, European Journal of Operational Research, British Journal of Management, Computers in Human Behaviour, Omega, International Journal of Production Economics, International Journal of Production Research, and Journal of the Operational Research Society.
Joseph Amankwah-Amoah is a Professor of International Business at Kent Business School, the University of Kent. His research interests include global business strategy, international divestment, entrepreneurship (business failure), lateral hiring in emerging markets. He has published over 80 articles in leading academic journals and over 50 papers in academic conference proceedings.