Abstract:

Online reviews have been indicated to play an important role in consumers’ decision-making process, as supported by numerous studies. However, none of them has considered the neighborhood effect of online reviews. This paper, based on competition theory, analyses the impact of neighbor store’s reviews on the central store’s, along with the moderating effects of store density and product homogeneity. Using data from dianping.com, this study finds that the number (ratings) of neighbor store’s reviews exerts a negative impact on that of central stores, nevertheless the impact of which is moderated by store density such that the negative effect is stronger when store density is higher. Also, the negative effect is stronger when stores provide homogeneous products.

Key words: Online reviews, Competition, Ratings, Number of Reviews