Unlocking Online Reputation—On the Effectiveness of Cross-Platform Signaling in the Sharing Economy

With the ever-growing popularity of two-sided online marketplaces, users increasingly face the challenge to manage their reputation on different platforms. This paper investigates whether, and if so, how users can make use of their precious and hard-earned ratings on another platform than the one, these ratings originally stem from. The paper reports results from a scenario-based experiment, finding that cross-platform signaling does in fact represent a viable strategy to engender trust and that this strategy’s effectiveness crucially depends on source-target fit, that is, how well the two contexts match. Specifically, cross-platform ratings (grey bars) significantly outperform cases in which no rating is available (white bars) and still lag somewhat behind on-site, that is, proprietary ratings (black bars).

Importantly, reputation portability is interesting for multiple of the involved parties. First, users may benefit from importing reputation, especially when they have just started on a new platform and not accumulated on-site reputation yet (i.e., the so-called “newbie dilemma” or “cold start” problem). The results also show, however, that importing reputation (even if it is excellent) may be detrimental if there is mismatch between source and target and that, hence, fit is of utmost importance. Also regulation may consider reputation portability as a means to make platform boundaries more permeable and hence to tackle platform lock-in and the associated impediments to competition. Third, also platform operators may strategically employ cross-platform signaling, for instance, as a competitive lever to win over users from competing platforms and to alleviate the start-up phase for new users.

Teubner, T., Adam, M. T. P., Hawlitschek, F. (in press). Unlocking online reputation: On the effectiveness of cross-platform signaling in the sharing economy. Business & Information Systems Engineering.

https://link.springer.com/article/10.1007/s12599-019-00620-4

This post is also available in: Dutch

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