Unraveling the Effect of Competing Product Reviews on Consumer Choice and the Moderating Role of Consumer-Reviewer Peer Types

Prior studies have paid little attention to the roles of online reviews of competing products on individuals' purchase behaviors. This article contributes to the literature by unraveling the effect of competing product reviews on consumer purchase decisions. Conceptualizing competition among rival products along two dimensions of geographical space and characteristic space, we use a panel-level binary logit choice model to examine how online reviews of restaurants are related to consumers' conversion from browsing to purchasing in the context of restaurant patronage. Our results show that a one-unit increase in average valence (volume) of spatially adjacent and feature similar alternatives reduces the odds of choosing a focal product by 77.7% (53.4%) and by 59.6%, respectively. Furthermore, we conceptualize reviewers as local peers and global peers of consumers and explore how the impact of competing product reviews can be moderated by the consumer-reviewer peer types. We find that the effect of competing product reviews along geographical and characteristic spaces is strengthened by the proportion of local peers' reviews relative to global peers' reviews on these competing products. These new findings on the impact of competing product reviews and the moderating role of consumer-reviewer peer types provide implications for academic research and practice.