History Matters: The Impact of Online Customer Reviews Across Product Generations

Linyi Li (), Shyam Gopinath () and Stephen J. Carson ()
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Linyi Li: Marketing Department, Lee Kong Chian School of Business, Singapore Management University, Singapore 178899
Shyam Gopinath: Marketing Department, Kelley School of Business, Indiana University, Bloomington, Indiana 47405-1701
Stephen J. Carson: Marketing Department, David Eccles School of Business, University of Utah, Salt Lake City, Utah 84112

Management Science, 2022, vol. 68, issue 5, 3878-3903

Abstract: We examine how online customer reviews for one generation of a product affect sales of another generation in the same product series. The main intriguing result is that previous generation valence has a positive impact on current generation sales; however, current generation valence has a negative impact on previous generation sales. The positive impact of previous generation valence becomes even stronger (1) as the uncertainty (standard deviation) in reviews for the current generation increases and (2) when the current generation valence is high. In contrast, it becomes weaker (1) as the uncertainty in reviews for the previous generation increases and (2) when the current generation has been on the market for a longer period of time. Other results are discussed. Our data consist of intergenerational pairs of point-and-shoot cameras on the largest online seller of such devices, Amazon.com. We estimate the current and previous generation models jointly, allowing for errors to be clustered at the daily and product levels. In addition, we address endogeneity concerns over the online word of mouth measures by using instrumental variables.

Keywords: online customer reviews; product generations; uncertainty; complementarity; substitution; endogeneity; instrumental variables (search for similar items in EconPapers)
Date: 2022
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Citations: View citations in EconPapers (3)

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