Firm Rating in Online Business-to-Business Transactions

Description

The emergence of Internet-based business-to-business (B2B) platforms substantiallyfacilitates the firms’ supplier selection process. Online rating is an extensive practice ononline platform to facilitate decisions on online transactions. However, little is knownabout the manner in which firms can strategically utilize online firm rating for supplierselection in the B2B setting. First, prior literature is primarily conducted in thebusiness-to-consumer or consumer-to-consumer context, which does not fully manifestcomplex B2B decision making. Second, rating is often conceptualized as overall ratingvalence (i.e., an average value of a seller’s/product’s rating scores over time). Thecommercial consequences of online rating based on this conceptualization are somewhatinconclusive. Evidence implies that the rating is a more encompassing indicator. In thisproposal, we aim to scrutinize the impact of firm rating on online B2B transactionsthrough three steps. First, we identify two challenges that are salient in this context,namely, adverse selection in the online market (platform challenge), andreputation–bargaining power dilemma (B2B context challenge). Second, we explore howmultiple firm rating-related cues (i.e., temporal horizon, rating valence, and ratingconsensus) can help address these two challenges for supplier selection on an online B2Bplatform. Third, we propose a plan to collect interview, survey and archival data to testthe hypotheses. In this manner, this project will add to the accumulative research ononline rating and supplier selection by advocating the multifaceted nature of firm ratingand examining how it aids in supplier selection on online B2B platform. An in-depthunderstanding of the effectiveness of online rating can also provide firms with a set ofbest practices for detecting “lemons” and negotiating with good suppliers on an onlineB2B platform. B2B platform operators and policy makers can also obtain a usefulunderstanding of the challenges confronted by firms and subsequently provide enhancedsupport.?