The influence of online review expertise on performance of environmental enterprises

This research investigates the impact of social media reviews on corporate environmental performance, with particular emphasis on the influence of reviewers’ professional expertise. We propose a two-stage social learning model to capture consumer product selection, the dissemination of reviews and firms’ decisions regarding environmental investments. Theoretically, our analysis demonstrates that social media reviews help bridge information gaps left by traditional product information sources and incentivize firms to enhance their environmental performance. Notably, reviews authored by professional reviewers have a more pronounced effect on motivating such investments. Empirically, we validate these theoretical insights using an eight-year dataset comprising daily observations from 125 publicly traded companies, which includes 294,727 expert reviews and 2,677,228 non-expert reviews sourced from online platforms. The empirical findings corroborate the theoretical predictions. Additionally, we observe that increased consistency and transparency in firms’ disclosed environmental values mitigate information asymmetry and reduce dependence on potentially biased expert evaluations.