Management Information Systems Quarterly
Abstract
Research on online product reviews has examined a variety of issues ranging from reviewers’ motivation to write reviews to the impact of reviews on product sales. Implicit in this research stream is the notion that more reviews are better for sellers and consumers. However, it is unclear whether both retailers, who control the review platform, and manufacturers, whose products are reviewed, prefer more reviews over fewer reviews. Using a game theoretical model of a context in which a dominant retailer sells competing products from two manufacturers to consumers who are uncertain about product quality and fit, we show that the retailers’ and manufacturers’ preferences regarding the number of reviews are not always aligned. The nature of misalignment depends on whether the quality or the fit is more dominant in terms of consumers’ evaluation of products. If generating reviews do not cost anything, we found that additional reviews always benefit the retailer; however, if the number of reviews exceeds a threshold in the quality-dominates-fit case scenario, they may be harmful to the manufacturer. On the other hand, if the retailer incurs a sufficiently high cost to generate reviews, the retailer may prefer to have fewer reviews. We show that retailers can exploit the divide between retailers’ and manufacturers’ preferences for reviews and monetize reviews by charging a fee to the manufacturers in return for a guarantee on the number of reviews that they generate. We show that the product type and review platform design play a significant role in the attractiveness of review monetization for retailers. Even if reviews are monetized, we determined that retailers’ revenue from “selling” reviews to manufacturers does not exceed the cost of generating reviews, implying that the benefit from reviews is driven the positive impacts of reviews on the retailer’s core business of selling products to consumers. However, in the fit-dominates-quality case scenario, retailers do not prefer large numbers of reviews whereas manufacturers do. In this case, we found that retailers are unable to exploit the misalignment between retailers’ and manufacturers’ preferences for reviews through review monetization.