Online reviews have been indicated to play an important role in consumers’ decision-making process, as supported by numerous studies. However, none of them has considered the neighborhood effect of online reviews. The purpose of this paper is to analyze the impact of neighbor store’s reviews on central store’s, along with the moderating effects of store density and product similarity.
Using data from dianping.com, this study conducts economic analysis accounting for endogeneity.
The results show that the neighbor store’s reviews exert a negative impact on that of central stores. Nevertheless, the relationship is moderated by store density and product similarity, such that the negative effect is stronger if there are a lot of stores around the central store, or if the neighbor store and central store provide similar products.
This study is the first to investigate the neighborhood effect of online reviews.
