The Ethics of Reputation Management

If you’re trying to decide on which book to purchase, which movie to watch at the theater, which hotel to stay at, or which restaurant to go to for dinner, you are likely to use the power of the crowd—that is, you probably consult websites such as (books), (movies), or (hotels), or (restaurants) to read reviews from others. For consumers, online reviews can be a valuable decision aid. On the other hand, online reviews can make or break a business. For example, a restaurant receiving just a few negative reviews on during the preopening phase will be much less likely to attract diners in the future, and the restaurant may fail before it even started. For the restaurant owner, who has invested her life’s savings, this would mean that she would have to declare bankruptcy; further, she may have to lay off the chef, the waitstaff, and the dishwasher, all of whom have families to feed. The owner is tempted to boost the reputation of the restaurant and thinks about composing a few reviews herself and publishing those under different pseudonyms. Alternatively, she is considering giving out free drinks or desserts to diners as an incentive for posting positive reviews.
Needless to say, websites that publish customer reviews want to provide unbiased reviews and often have (proprietary) mechanisms in place to minimize (or at least reduce) the potential of biased reviews. In addition, under rules of the U.S. Federal Trade Commission, paying someone to post reviews may actually be illegal. Yet you may have noticed extensive, raving reviews about a 500-page book posted just a day after the book was released or reviews that sound suspiciously like marketing copy.
The restaurant owner thus faces a dilemma. On the one hand, she may just ignore the negative reviews and hope that diners keep coming in spite of these reviews; however, this may result in having to lay off all her staff and close the restaurant if customers are kept away by the reviews. On the other hand, she may engage in “reputation management” and try to provide a more “balanced” picture of her restaurant on the review site.

1. What would you do? How about not providing any incentives but merely asking all satisfied customers to write reviews?

2. What would happen if the public found out about the owner’s reputation management?

3. Imagine the owner knew that the initial negative reviews were posted by a competitor trying to drive her out of business. Would this change your assessment? If so, how?

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