Reputation premium and reputation management: Evidence from the largest e-commerce platform in China

Ying Fan; Jiandong Ju; Mo Xiao

doi:10.1016/j.ijindorg.2016.01.004

Reputation premium and reputation management: Evidence from the largest e-commerce platform in China

Ying Fan, Jiandong Ju, Mo Xiao

Economics

Research output: Contribution to journal › Article › peer-review

66 Scopus citations

Abstract

We study the life-cycle effects of reputation using a panel data set consisting of a 25% random sample of all sellers on China's largest e-commerce platform, Taobao.com. We find a substantial return to reputation, but only for established sellers. New sellers, in contrast, lower their prices to boost transaction volume and ratings. This reputation management by new sellers leads to a decrease in their revenue in the short run and even a decrease in their business' survival likelihood in the longer run. We show that such differential effects at different stages of a seller's business life-cycle can arise when the effect of reputation on future payoffs dominates that on current payoffs.

Original language	English (US)
Pages (from-to)	63-76
Number of pages	14
Journal	International Journal of Industrial Organization
Volume	46
DOIs	https://doi.org/10.1016/j.ijindorg.2016.01.004
State	Published - May 2016

Keywords

E-commerce
Reputation dynamics
Reputation management

ASJC Scopus subject areas

Industrial relations
Aerospace Engineering
Economics and Econometrics
Economics, Econometrics and Finance (miscellaneous)
Strategy and Management
Industrial and Manufacturing Engineering

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10.1016/j.ijindorg.2016.01.004

Cite this

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title = "Reputation premium and reputation management: Evidence from the largest e-commerce platform in China",

abstract = "We study the life-cycle effects of reputation using a panel data set consisting of a 25% random sample of all sellers on China's largest e-commerce platform, Taobao.com. We find a substantial return to reputation, but only for established sellers. New sellers, in contrast, lower their prices to boost transaction volume and ratings. This reputation management by new sellers leads to a decrease in their revenue in the short run and even a decrease in their business' survival likelihood in the longer run. We show that such differential effects at different stages of a seller's business life-cycle can arise when the effect of reputation on future payoffs dominates that on current payoffs.",

keywords = "E-commerce, Reputation dynamics, Reputation management",

author = "Ying Fan and Jiandong Ju and Mo Xiao",

note = "Funding Information: This paper was previously circulated under the title “Losing to win: Reputation management of online sellers”. We thank the Editor, two anonymous referees, Ginger Jin, Tobias Klein, Vineet Kumar, Philip Leslie, Gaston Llanes and participants in numerous seminars and conferences for their constructive comments. We also thank Emek Basker for her careful reading and feedback on an earlier draft. Mo Xiao acknowledges the McGuire Center for Entrepreneurship at the University of Arizona for financial support. Publisher Copyright: {\textcopyright} 2016 Elsevier B.V. All rights reserved.",

year = "2016",

month = may,

doi = "10.1016/j.ijindorg.2016.01.004",

language = "English (US)",

volume = "46",

pages = "63--76",

journal = "International Journal of Industrial Organization",

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AU - Fan, Ying

AU - Ju, Jiandong

AU - Xiao, Mo

N1 - Funding Information: This paper was previously circulated under the title “Losing to win: Reputation management of online sellers”. We thank the Editor, two anonymous referees, Ginger Jin, Tobias Klein, Vineet Kumar, Philip Leslie, Gaston Llanes and participants in numerous seminars and conferences for their constructive comments. We also thank Emek Basker for her careful reading and feedback on an earlier draft. Mo Xiao acknowledges the McGuire Center for Entrepreneurship at the University of Arizona for financial support. Publisher Copyright: © 2016 Elsevier B.V. All rights reserved.

PY - 2016/5

Y1 - 2016/5

N2 - We study the life-cycle effects of reputation using a panel data set consisting of a 25% random sample of all sellers on China's largest e-commerce platform, Taobao.com. We find a substantial return to reputation, but only for established sellers. New sellers, in contrast, lower their prices to boost transaction volume and ratings. This reputation management by new sellers leads to a decrease in their revenue in the short run and even a decrease in their business' survival likelihood in the longer run. We show that such differential effects at different stages of a seller's business life-cycle can arise when the effect of reputation on future payoffs dominates that on current payoffs.

AB - We study the life-cycle effects of reputation using a panel data set consisting of a 25% random sample of all sellers on China's largest e-commerce platform, Taobao.com. We find a substantial return to reputation, but only for established sellers. New sellers, in contrast, lower their prices to boost transaction volume and ratings. This reputation management by new sellers leads to a decrease in their revenue in the short run and even a decrease in their business' survival likelihood in the longer run. We show that such differential effects at different stages of a seller's business life-cycle can arise when the effect of reputation on future payoffs dominates that on current payoffs.

KW - E-commerce

KW - Reputation dynamics

KW - Reputation management

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JO - International Journal of Industrial Organization

JF - International Journal of Industrial Organization

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Reputation premium and reputation management: Evidence from the largest e-commerce platform in China

Abstract

Keywords

ASJC Scopus subject areas

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