Publication Type

Journal Article

Version

publishedVersion

Publication Date

5-2022

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

Discipline

E-Commerce | Marketing

Research Areas

Marketing

Publication

Management Science

Volume

68

Issue

5

First Page

3878

Last Page

3903

ISSN

0025-1909

Identifier

10.1287/mnsc.2021.4061

Publisher

Institute for Operations Research and Management Sciences

Copyright Owner and License

Publisher

Additional URL

https://doi.org/10.1287/mnsc.2021.4061

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