Young Kwark

User-Generated Content and Competing Firms’ Product Design

Firms employ various techniques to obtain information about consumer taste/location and valuation prior to making product design decisions. User-generated content has become an important information source. The vast variety and volume of user-generated content makes firms better informed about consumers (precision-improving effect), and the common and public nature of user-generated content makes firms’ information more correlated (correlation-increasing effect). We examine the impact of user-generated content in a setting in which two competing firms that are uncertain about consumer location or valuation design and sell horizontally differentiated products. We find that user-generated content has very different implications for competing firms’ location decisions and quality decisions. When firms are uncertain about consumer taste and choose their product locations, whether firms and/or consumers benefit from the user-generated content depends on which of the two effects dominates. We find that only whe...

On the Spillover Effects of Online Product Reviews on Purchases: Evidence from Clickstream Data

We analyze the spillover effect of the online reviews of related products on the purchases of a focal product using clickstream data from a large retailer by investigating (a) whether the related, co-visited products are complementary or substitutive; (b) whether the related products are from the same or a different brand, and (c) the choice of media channel (mobile or PC) used. To identify complementary and substitutive products, we used a text-mining approach of topic modeling on the product descriptions to quantify the functional similarity of pairwise products. Our empirical analysis shows that the mean rating of the online reviews of substitutive products has a negative effect on the purchasing of the focal product, while the mean rating of complementary products has a positive effect. Moreover, we find that the negative spillover effect of the online reviews of substitutive products across different brands on the purchasing of a focal product is significantly higher than those of the same brand, and for consumers who viewed online product reviews on mobile devices versus traditional PCs. Our study has theoretical and managerial implications on leveraging the spillover effects of the online product reviews of related products on purchases.