Unlocking Online Reputation: On the Effectiveness of Cross-Platform Signaling in the Sharing Economy

By Timm Teubner, Marc T. P. Adam, and Florian Hawlitschek

Digital platforms are now pervasive in our daily lives, with two-sided markets emerging as a popular alternative to many conventional sales channels and business models. With billions in venture capital and significant market evaluations, the most prominent players in this platform economy have pushed aside long-established industry incumbents in their respective domains. Examples include electronic commerce (such as Amazon, eBay, Zalando), accommodation markets (Airbnb, Booking.com, ImmobilienScout24), and even labor markets (Helpling, TaskRabbit, UpWork). In this proceeding economization and “platformization” of people’s lives, all transactions critically rely on a sufficient level of trust. Thus, the 21st century human being is forced to maintain a complex online reputation.

Against this backdrop, complementors (that is, sellers, freelancers, drivers, etc.) increasingly face the challenge of managing their reputation in different environments. In the present study, BCCP Fellow Timm Teubner and his co-authors Marc T. P. Adam and Florian Hawlitschek report the results from an experimental online experiment considering how and under what conditions reputation (that is, a rating score on a 1-5 star scale) is effective at engendering trust across platform boundaries.

Their study shows (1) that cross-platform signaling can, in fact, be a viable strategy to engender trust and (2) that its effectiveness crucially depends on source-target fit, that is, the contextual overlap between the source platform of reputation and the target context to which it is imported. Naturally, platform complementors may benefit from importing legacy reputation from elsewhere, especially when they have just started on a new platform and have not yet earned an on-site reputation. However, the results also show that importing reputation (even if it is excellent) may be detrimental if there is a mismatch between the source and target as well as, hence, that fit is of utmost importance. Moreover, policy makers have picked up the idea of reputation portability as a means to make platform boundaries more permeable, thus tackling lock-in and the resulting detrimental effect on platform competition.

Consequently, there have been repeated calls to make workers’ reputational data portable between platforms. The European Commission suggested studying the “mechanisms for reputation portability, assessing its advantages and disadvantages and technical, legal and practical feasibility,” Further, two ministers of the German government recently demanded that “platform workers must be able to take their reviews to another platform” (Lambrecht and Heil in 2020). The present paper demonstrates that, from a consumer behavior perspective, stipulating cross-platform portability of online ratings and reviews may, in fact, be a viable policy means to address platform lock-in and, in turn, ensure competition.

The full paper “Unlocking Online Reputation: On the Effectiveness of Cross-Platform Signaling in the Sharing Economy” is published in Business & Information Systems Engineering.

This text is jointly published by BCCP News and BSE Insights.