The impact of social media signals on supplier selection: insights from two experiments

Abstract

Purpose Online B2B markets offer buyers a new source of information provided by social media signals about suppliers. These signals have not yet received much attention in the supplier selection literature. This study advances our understanding of how buyers respond to social media signals in the supplier selection process. Design/methodology/approach We develop a choice-based conjoint experimental design to isolate and manipulate two signals from social media: volume (the number of ratings) and valence (average evaluation of the ratings). We test how these signals are interpreted in the context of varying deal sizes and price points. Findings Both volume and valence are positively correlated with supplier selection. However, (1) the signals exhibit diminishing returns and (2) the efficacy of valence is interpreted in the context of volume. We also find that (3) there is no influence of the deal size and that (4) the relationships between signals and supplier selection are negatively moderated by deviations from the reference price. Research limitations/implications Social media signals should be considered in supplier selection decisions as they convey valuable information to the buyer. However, signals go through a process of interpretation which has implications for buyers, suppliers, and owners of online B2B markets. Originality/value Our research opens new lines of inquiry in behavioural operations management research regarding the mechanisms by which buyers interpret social media signals and how these ultimately influence their choice.