A Framework for Evaluating Organizational Involvement in Online Ratings Communities

As online review systems become increasingly prevalent it is imperative for companies to evaluate their involvement in online ratings. Despite the widespread popularity of online ratings among consumers and firms alike, the business value that such systems bring to organizations, and the degree to which these organizations should be involved in filtering these reviews, remains unanswered questions. This paper addresses these questions by studying the relationship between a firm’s online product ratings and the purchases made on their website. We find that the online ratings on a website are significantly correlated with online purchases. In addition, we find that a firms’ filtering strategy for online reviews effects the impact of these ratings on purchases. The results of our work provide evidence that firms must think very carefully about their filtering policies for online reviews; the strategy that a firm implements in filtering their online reviews could indeed affect their bottom line