Elsevier

Annals of Tourism Research

Volume 50, January 2015, Pages 67-83
Annals of Tourism Research

Asymmetric effects of online consumer reviews

https://doi.org/10.1016/j.annals.2014.10.007Get rights and content

Highlights

  • Valence of online reviews has a U-shaped effect on usefulness and enjoyment.

  • Negative ratings of reviews are more useful than positive reviews.

  • Positive ratings are associated with higher enjoyment than negative reviews.

Abstract

Consumers tend to seek heuristic information cues to simplify the amount of information involved in tourist decisions. Accordingly, star ratings in online reviews are a critical heuristic element of the perceived evaluation of online consumer information. The objective of this article is to assess the effect of review ratings on usefulness and enjoyment. The empirical application is carried out on a sample of 5,090 reviews of 45 restaurants in London and New York. The results show that people perceive extreme ratings (positive or negative) as more useful and enjoyable than moderate ratings, giving rise to a U-shaped line, with asymmetric effects: the size of the effect of online reviews depends on whether they are positive or negative.

Introduction

The advent of the Internet brought about a new form of web communication (eWOM), which facilitates offering and sharing information between service providers and consumers as well as between consumers themselves. Smith (2013) stated that 60% of consumers consider ratings and reviews important when researching products. According to the Mintel report (2013), about 38% of UK travellers used consumer review websites for their holiday planning, and 86% of online travellers in the UK said online consumer reviews are a helpful information source in booking hotels. Online reviews, a type of eWOM, gain more popularity and provide influence in tourism due to the characteristics of travel products (i.e., intangibility and perishability), where people have difficulty in assessing the quality of products/services before consumption (Woodside & King, 2001). As such, travellers search for information to reduce uncertainty and perceived risks when planning their trips (Bronner & de Hoog, 2011). In this respect, online reviews of travel experiences posted on reliable websites are perceived as unbiased and trustworthy because they reduce the likelihood of later regretting a decision (Duverger, 2013) as well as allow readers to easily imagine what products look like (Yoo & Gretzel, 2008). That is, the recipients have inherent beliefs in the value of information provided by other consumers as consequences of either perceived similarities (Tussyadiah, Park, & Fesenmaier, 2008) or perceived knowledge about products (Bansal & Voyer, 2000).

With recognition of the importance of eWOM, previous scholars in tourism and hospitality have mainly investigated the effect of online consumer reviews on two facets: predicting product sales (Ye, Law, Gu, & Chen, 2011) and the consumer decision making process (Vermeulen & Seegers, 2009). These studies consistently found that the characteristics of online reviews (i.e., star ratings, review richness, and valence of reviews) (Sparks & Browning, 2011) and of review providers (i.e., identity disclosure and level of expertise) (Vermeulen & Seegers, 2009) have positive influences on increasing revenues and assisting purchase decisions. However, research that attempts to identify what makes an online review helpful to consumers is limited (Mudambi & Schuff, 2010). Importantly, along with the increasing number of reviews available online, travellers can easily obtain information via the Internet (decreased search costs), whereas they find it difficult to choose specific information to help with the final decision (increased cognitive costs). Consumers, therefore, tend to seek heuristic information cues (i.e., star ratings in online reviews) to simplify the size of information involved due to their limited ability to arrive at the optimal solution, which is known as bounded rationality (Payne, Bettman, & Johnson, 1992). Thus, this article argues and relies on the importance of understanding the effect of star ratings as a vital heuristic element on the information evaluation process.

More specifically, this study analyses perceived usefulness and enjoyment to measure how consumers evaluate online reviews. Once a consumer reads an online review, he/she would choose to adopt the information to make a decision based upon two different aspects of the information process: usefulness (extrinsic motivation: the instrumental value of the information) and enjoyment (intrinsic motivation: the performance of an activity for no apparent reason other than the performance itself) (see Deci and Ryan, 1985, Moon and Kim, 2001, Sussman and Siegal, 2003). A number of researchers in marketing, information and communication technology have applied these dual motivations (perceived usefulness and enjoyment) to understand roles of search motives for predicting consumer information search behaviours (Bloch, Sherrell, & Ridgway, 1986) and to explain the assessment and adoption of information technology (Thong, Hong, & Tam, 2006).

Therefore, the aim of this research is to estimate the relationship between “consumers’ review ratings” and “perceived usefulness and enjoyment of reviews”. In order to address the research purpose, this study analysed over 5,000 online reviews of a type of travel products (i.e., restaurants) by controlling a number of messenger and message characteristics. The findings of this current research make several theoretical contributions to tourism literature. Previous studies showed mixed empirical results (Liu, 2006), indicating that consumer review ratings have positive (Ogut & Tas, 2012), negative (Berger, Sorensen, & Rasmussen, 2010) and quadratic influences (Duverger, 2013) on information search and consumer decision-making behaviours. In this vein, the present research sheds light on the role of review ratings in online consumers’ responses to information in terms of perceived usefulness and enjoyment. As for practical implications, this article makes suggestions for tourism marketers about how to use and react to online consumer reviews when developing technological marketing strategies.

Section snippets

Online consumer reviews

Current consumers largely consider online consumer reviews as a form of eWOM in a decision making process to purchase products online and offline. Online reviews enable people to obtain detailed information with high trustworthiness and credibility compared to information provided by marketers. Based on the importance of online reviews, a number of researchers in marketing and information systems have concerned the characteristics of reviews and reviewers to estimate the effect of online

Online consumer reviews in tourism and hospitality

The nature of tourism and hospitality products (inherently experiential, intangible, and heterogeneous) makes it hard for people to estimate the quality of products before actually purchasing them. Travellers actively seek detailed and reliable information to alleviate the level of uncertainty in the decision making process. Online reviews written by other consumers allow travellers to obtain sophisticated information as well as acquire indirect experience of tourism consumption (Litvin,

Perceived usefulness and enjoyment: Extrinsic and intrinsic motivation

e-WOM information is found in various forms that differ in accessibility, scope and source (Chatterjee, 2001). Due to the presence of highly accessible information with immerse volume and various sources and contents, offering more useful and effective information to consumers is a vital task for tourism and hospitality marketers. In fact, the Internet allows consumers to obtain as much information as they want (low search costs), although it makes it hard to determine helpful information (high

Valence of online reviews

Forman et al. (2008) demonstrated that when people face an overload of information in the form of numerous online reviews, they process information heuristically, which relies on source characteristics and/or pictorial review ratings as a convenient and efficient heuristic device. Online consumers who face large number of reviews are likely to consider the valence of consumer product reviews, which serve as a proxy for underlying product quality (Chaiken & Maheswaran, 1994). This tendency is

Method

The method applied to examine the effect of online reviews (star ratings) on usefulness and enjoyment is based on the estimation of count models. The most well-known approximation is derived from the Poisson distribution P(λ), where λ is the average of the random variable, which, in this case, is the number of “useful” or “enjoyment” votes awarded to the review in a certain period of time. However, this model is based on the assumption of mean-variance equality, which is too restrictive to

Results

Table 2 shows the descriptive statistics of the sample. The mean review rating is 4.28 and 95.5% and 71.9% of people reveal their identity through real names and photos, respectively. They have written 173 reviews, have won 1.2 Elite awards, and the average length of each review is 144 words.

Table 3 presents the results of the effect of online reviews. It is important to highlight first that all the models show globally significant results (p < 0.01) through the likelihood ratio. As for the

Conclusions

Online reviews give a company access to immediate assessments of its customers’ evaluations, and offer strong predictors of tourists’ adoption of information (Filieri & McLeay, 2014). Within the e-WOM strategy, review ratings represent an attempt to quantify service quality perceptions which are determinant for customer satisfaction and behavioural intentions (Parasuraman, Zeithaml, & Malhotra, 2005). This article analyses potential asymmetries in the effect of online reviews on usefulness and

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