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Do Online Reviews Always Incentivise Remanufacturers to Improve Quality in a Competitive Environment?

Author

Listed:
  • Shushu Xie

    (University of International Business and Economics, Beijing, China)

  • Yingxue Zhao

    (University of International Business and Economics, Beijing, China)

  • Lin Zhao

    (University of International Business and Economics, Beijing, China)

  • Xingyuan He

    (Shanxi University of Finance and Economic University, Taiyuan, China)

Abstract

Consumers underestimation of the quality of remanufactured products is a barrier for remanufacturers. Online reviews provide quality signals to consumers unaware of remanufactured products. To explore whether remanufacturers produce higher quality products to improve their review ratings, considering the quality signalling effect of online reviews, a closed-loop supply chain model of the original equipment manufacturer (OEM) and independent remanufacturer (IR) was developed. The IR's two strategies, with and without online reviews, were compared to analyse the quality signalling effect of online reviews on the IR's production, pricing, and quality decisions. The results show that when the IR chooses full remanufacturing, online reviews have a quality-enhancing effect on the remanufactured product if the variable investment coefficient of the quality improvement effort is low. However, if an IR chooses partial remanufacturing, then online reviews do not have a quality-enhancing effect on the remanufactured product. In addition, if the impact of online reviews on consumers' willingness to pay for remanufactured products is negative, then the IR does not improve quality. The conclusions obtained from this study provide managerial implications for selecting quality strategies and implementing operational decisions for remanufacturers entering the e-commerce channel.

Suggested Citation

  • Shushu Xie & Yingxue Zhao & Lin Zhao & Xingyuan He, 2024. "Do Online Reviews Always Incentivise Remanufacturers to Improve Quality in a Competitive Environment?," The AMFITEATRU ECONOMIC journal, Academy of Economic Studies - Bucharest, Romania, vol. 26(67), pages 903-903, August.
    • Handle: RePEc:aes:amfeco:v:26:y:2024:i:67:p:903
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    More about this item

    Keywords

    Online reviews; remanufacturing; quality; quality signalling effect; game theory; closed-loop supply chain;
    All these keywords.

    JEL classification:

    • C70 - Mathematical and Quantitative Methods - - Game Theory and Bargaining Theory - - - General
    • D21 - Microeconomics - - Production and Organizations - - - Firm Behavior: Theory
    • D24 - Microeconomics - - Production and Organizations - - - Production; Cost; Capital; Capital, Total Factor, and Multifactor Productivity; Capacity
    • D40 - Microeconomics - - Market Structure, Pricing, and Design - - - General
    • L11 - Industrial Organization - - Market Structure, Firm Strategy, and Market Performance - - - Production, Pricing, and Market Structure; Size Distribution of Firms

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