Effective use of online review systems: Congruent managerial responses and firm competitive performance

Abstract

Abstract Systems beyond firm control are information systems neither designed nor commissioned by an organization, that the firm must use to compete. We extend Effective Use Theory (EUT) to theorize how hotels can leverage systems beyond firm control within the constraints they impose. Specifically, we study the competitive effect of managerial responses to online reviews in the lodging industry. Writing managerial responses is the only action hotels can take in response to customer comments within online review systems. We use an advanced text mining technique, topic modeling, to develop a non-perceptual measure of informed action: review-response congruence. We then empirically test the association between informed action and performance. Our work shows that specific responses are more effective than generic responses and that the degree of review-response congruence positively affects hotel s competitive performance.