Getting on the Map: The Impact of Online Listings on Business Performance
Michael Luca, Abhishek Nagaraj, Gauri Subramani
Management Science · Mon
Abstract
We evaluate the extent to which small businesses maintain an online presence and estimate the impact of digital representation on business performance. Looking at a review platform, we find that roughly 18% of bars and restaurants in our sample do not have a listing as of the end of 2017, even though creating one is free. We then estimate the effect of adding a new listing using tax records on revenues combined with temporal variation in listing activity as well as a natural experiment that added over a thousand businesses to the platform via a data acquisition. The results suggest that new listings increase revenues in the range of 5%–10%; however, these effects vary substantially across establishments. Establishments that struggle to develop a reputation (e.g., nonchains or those in tourist areas) and those with a higher quality of product (e.g., larger restaurants or those with good reviews) experience larger increases after being listed. This paper was accepted by Duncan Simester, marketing. Supplemental Material: The online appendix and data files are available at https://doi.org/10.1287/mnsc.2024.04716 .
Keywords
online platforms, marketing, information systems, economics of information
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