From Being a Rater to Being Rated: The Influence of Customer Ratings on Customer Attitudes and Behavior

• Applicant: Dr. Sergej von Janda
• Subject Area: Accounting and Finance
• Term: from 2020 to 2021
• Project identifier: Deutsche Forschungsgemeinschaft (DFG) - Project number 440642239

The increasing digitalization leads to profound changes in established industries and to the emergence of companies employing new types of business models. For example, companies using platform-based business models, such as the online retailer Amazon and the mobility services provider Uber, already represent seven of the ten most valuable companies in the world. These platforms connect participants on the supply and demand side of the market and orchestrate their interaction.Due to the anonymity of market participants on online platforms, information asymmetries are considerably higher than in traditional service transactions, as are the associated risks and uncertainties for both customers and service providers. To reduce these uncertainties, some platforms use bidirectional rating systems. On the one hand, these rating systems allow customers of a platform to use reviews and ratings as information about products and services from providers on the same platform, thereby reducing uncertainties. On the other hand, bidirectional rating systems also allow service providers to access customer ratings by other providers on the same platform. Bidirectional rating systems, thus, can guide the behavior of market participants by rewarding positive behavior and penalizing negative behavior with respective ratings. Product and service ratings by customers, i.e., the demand side of the market, have existed for quite some time. Customer ratings of customers by providers, i.e., the supply side of the market, represent a new phenomenon which is currently understudied. Existing literature on customer ratings in the realm of online platforms has examined the phenomenon exclusively from a company’s perspective, focusing on providers’ reactions to customer ratings. However, there is paucity of research on the customer perspective to examine how customers react in attitude and behavior to being rated.The overall goal of this research project is to investigate how customer ratings work on platforms and how they affect customers and the relationships between customers, service providers, and platforms. This should lead to an understanding of how customer ratings influence customer attitudes and their behavior and potentially prevent market failures in platform markets.The project aims to provide valuable contributions to research and practice. The results of this project will hone our understanding of the effects of customer ratings on relevant customer-related variables in the context of platform-based business models. Based on the findings, the project will provide recommendations for companies using customer ratings and with regard to the effectiveness of these ratings as a mechanism for the management of market uncertainties.

• DFG Programme: Research Grants
• Co-Investigator: Professorin Dr. Sabine Kuester