The value of firm engagement: how do ratings benefit from managerial responses?

This research explores firms’ digital presence in an online interactive network. Anchored in the literature on firm engagement and firm-generated content, this study discusses and empirically examines the impact of managerial response to online reviews on future ratings. A big data approach coupled with text analytics is employed on a large field dataset to analyse both structured review/response metrics and unstructured response text. Results show that an increase in future review valence is positively associated with the intensity, promptness, and sentiment of managerial responses, and the magnitude of effects is contingent upon firms’ rating status and market position. Mixed evidence is obtained for comprehensiveness and standardisation of response content. These findings reveal that the influence of firm engagement in the online review network is likely to be shaped by the goodwill signalled by managerial responses.