Curvilinear Effects of User-Generated Content on Hotels’ Market Share

Abstract

The present study is designed to expand the current literature in the effects of User-Generated Content (UGC) on firm performance, specifically to delineate the unique effects of the UGC components on market share results using a dynamic generalized method of moments (GMM) model. A longitudinal panel-data sample of 138 hotel reviews and ratings, along with monthly market share and several control variables is used for the empirical modeling. Overall, the analysis reveals that UGC has a positive impact on market share. A curvilinear mechanism explains the relationship between ratings and market share, discouraging lower-tiered firms from seeking a high rating. Moderating factors were also found to diminish the impact of a review length on market share. Theoretical explanations and managerial suggestions are offered in the discussion section.