Social Dynamics in Product Information Transmission - Investigating Social Interactions and Network Characteristics in Consumer Reviews

The emergence of online social networks and particularly the growth of networks offering consumer reviews online, hence making information regarding other consumers’ experiences accessible worldwide, has dramatically changed the decision making process of consumers. This additional source of information has altered the behavior of consumers, as they base their decision not solely on company information such as advertising and offline consumer advices from close others anymore, but rely more and more on product experiences of mostly strangers.Many researchers and practitioners have long assumed that consumer reviews are solely mirroring the product experiences of consumers by showing the level of satisfaction with the expected quality of the product (Moe and Trusov 2011). However, a growing amount of studies reveal that consumer reviews are subject to social biases and are therefore influenced by the rating environment, i.e. the reviews previously posted by other consumers and the social network of the consumers on these platforms. Moreover, the information used by most researchers and also most companies to date is often limited to numeric information, i.e. numeric ratings that are given by consumers such as the number of stars of platforms like Amazon neglecting the vast amount of verbal information about products given by consumers on these platforms. This also limits the current understanding of reviews and their evolution over time.The outlined importance of social dynamics and social network structures in online consumer reviews and the shortcomings of previous research to integrate textual information in this context, offers several fundamental research questions to increase the understanding of information transmission in consumer review networks. In order to answer these questions and increase the understanding of consumer review evolution the present research builds on a comprehensive framework of social impact factors in review networks and aims at investigating the posting behavior of consumers regarding two major determinants of information transmission processes: social dynamics and network characteristics. In order to fully understand the impact of these determinants on consumer review posting behavior the so far widely neglected textual content is integrated in the analysis in addition to numeric review information.The impact of social dynamics and social network characteristics on consumers’ review posting behavior is analyzed using two large data sets from two major online consumer review platforms: Amazon.com and Epinions. The research questions are to be answered with accurate and up-to-date microeconometric techniques.