The Effect of Company Size on Aggregate Word-of-Mouth Valence

Abstract

Online word of mouth (WOM) is a critical driver of consumer purchases; however, relatively few researchers have sought to understand how a company's characteristics might impact aggregate WOM valence (e.g., average star ratings of online reviews). The authors examine the effects of one such attribute—company size—and how it impacts WOM valence through individuals’ decisions regarding whether to engage in WOM. In four field studies, the authors find a negative relationship between company size and WOM that persists when controlling for the quality of consumers’ experience with the company. Subsequent experiments show that this effect occurs because consumers are more empathetic toward smaller companies. This empathy increases their desire to help smaller companies, which in turn increases the likelihood that they share WOM about a smaller company following a high-quality experience and decreases this likelihood in the case of a low-quality experience. Larger companies can mitigate the negative effect on aggregate WOM valence by responding frequently to WOM posts and employing language that evokes empathy—for example, by using emotional words, providing personalized responses, and addressing consumers by name.