Why do smaller businesses tend to have better online reviews than large brands? A new Journal of Marketing study finds that company size negatively impacts word-of-mouth (WOM) valence, even when product quality is identical.
Authored by Jan Klostermann (University of Cologne), Anne Mareike Flaswinkel (Bielefeld University), Chris Hydock (Tulane University), and Reinhold Decker (Bielefeld University), the study examines how company size influences consumer review behavior. The findings reveal that consumers feel less empathy toward larger companies, making them less likely to share positive experiences and more likely to leave negative feedback. “Consumers tend to support smaller companies by sharing positive experiences, while withholding criticism,” says Klostermann. “For large brands, this empathy effect disappears, leading to lower average review scores.”
Key Findings:
- Company Size Lowers WOM Valence
Larger companies consistently receive lower star ratings and fewer positive reviews compared to smaller competitors, even when product quality is the same. - Consumer Empathy Drives Review Behavior
Consumers feel a stronger emotional connection to smaller businesses, making them more likely to leave positive reviews and less likely to post negative feedback. - Perception Skews Consumer Decisions
Because of this bias, consumers may mistakenly assume that smaller companies offer better quality when, in reality, their reviews are simply more favorable due to empathy effects.
Practical Implications for Marketers
These findings challenge traditional approaches to customer review analysis. Many companies rely on WOM to gauge customer satisfaction, compare competitors, and track brand perception over time. However, failing to account for company size can lead to misleading conclusions. For example, a large company may assume that its lower online ratings indicate a quality problem, when in reality, size alone is driving the effect. Conversely, a small company may believe it delivers superior service based on higher ratings, even if its quality is no different from a larger competitor.
“Review scores should not be taken at face value,” explains Flaswinkel. “Larger brands may appear to have worse products, not because they do, but because consumers interact with them differently.”
How Companies Can Overcome the Bias
The study finds that empathetic engagement can counteract the negative effects of size on WOM valence. Specifically, larger companies can improve their reviews by responding to customers with warmth, personalization, and emotional connection. “When companies respond to reviews in a personal, empathetic manner, they rebuild consumer trust and encourage more positive feedback,” says Hydock.
Balancing Growth and Reputation
Smaller businesses should also be mindful that their positive WOM advantage is not guaranteed. The study finds that when companies face negative environmental, social, or governance (ESG) issues—such as labor disputes or environmental harm—they lose their WOM advantage, regardless of size. “Empathy drives positive WOM for small companies, but it’s not automatic,” says Decker. “If a brand loses trust, it loses this advantage—no matter how small it is.”
Full article and author contact information available at: https://doi.org/10.1177/00222429251320603
About the Journal of Marketing
The Journal of Marketing develops and disseminates knowledge about real-world marketing questions useful to scholars, educators, managers, policy makers, consumers, and other societal stakeholders around the world. Published by the American Marketing Association since its founding in 1936, JM has played a significant role in shaping the content and boundaries of the marketing discipline. Shrihari (Hari) Sridhar (Joe Foster ’56 Chair in Business Leadership, Professor of Marketing at Mays Business School, Texas A&M University) serves as the current Editor in Chief. https://www.ama.org/jm
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Marilyn Stone is Director, Academic Communities and Journals, American Marketing Association.