From Complaint to Action: Technology-Enabled Quality Improvement from Consumer Reviews

Guangyu Cao, Shenghao He and Ginger Zhe Jin

No 34934, NBER Working Papers from National Bureau of Economic Research, Inc

Abstract: This paper examines how adopting an automated review monitoring system (ARMS) allows restaurants to translate consumer feedback into operational quality improvements. ARMS provides automated alerts for negative reviews and facilitates back-end work ticket management, reducing the costs of identifying, prioritizing, and addressing issues revealed by customer feedback. Using restaurant-level data on ARMS adoption and consumer reviews, we find that adoption increases average star ratings, lowers the share of negative reviews, and raises the positivity of review text. These improvements are not driven by strategic manipulation; they are greater for restaurants with lower initial ratings and in dimensions previously flagged as poor by consumers, consistent with the ARMS enhancing restaurant response to negative reviews. We also show that ARMS adoption partially crowds out front-end managerial responses, indicating a substitution between operational remediation and public replies, with the effect strongest when staff take a reflective approach to negative reviews. Finally, adoption is associated with greater consumer engagement, reflected in longer and more detailed reviews. Overall, our results suggest that online review systems, when paired with operational technology, can drive substantive quality improvements beyond mere reputation management.

JEL-codes: D83 L15 L86 O33 (search for similar items in EconPapers)
Date: 2026-03
Note: IO PR
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