Defensive Response to Negative Reviews in P2P Markets

Description

Negative reviews can seriously damage the reputation and sales of businesses, especially in peer-topeer (P2P) service markets where potential consumers make purchase decisions based heavily on reading reviews. When faced with negative reviews, existing literature advocates for business owners to employ accommodative responses (i.e., responses that admit failure and offer compensation to the complaining consumer), even when they have valid reasons to defend themselves and their services. Few studies have thoroughly explored the strategic use of defensive responses, which deny fault with reasonable and defensible explanations. To address this research gap, we propose to conduct randomized field experiments on a leading P2P homestay platform to understand whether and when defensive responses can help business owners recover from the damaging effects of negative reviews. Our proposal hypothesizes that a defensive response posted by a business owner can alleviate the damage done by a negative review if the complaint describes a tangible aspect of the service; however, it may worsen the damage if the complaint describes an intangible aspect of the service. Our proposed empirical study will further unravel the underlying mechanisms for the identified effects of defensive responses. Our research proposal for the first time tries to capture the positive side of defensive management responses in a P2P service market, and also warns that improper use of defensive responses may backfire and intensify the damage.