The Value of Reputation Systems in Business Contexts – A Qualitative Study Taking the View of Buyers

Abstract

Reputation systems for companies to rate each other's performance are largely unexplored in research and hardly available in practice. However, these systems are relevant for prospective buyers to find a trustworthy seller. This observation applies especially to short-lived business relationships where fulfilling the performance promise is subject to a high degree of uncertainty. This paper explores the value of a reputation system for a business-to-business (B2B) context and focuses on three novel solutions for designing reputation systems. These solutions include selling ratings, conducting ratings as payments, and employing a counter-rating mechanism. We interview buyers to fathom the added value of these solutions in different contexts. Our findings suggest that such a system is useful for companies acting in less transparent markets and also helps when companies already have a good market overview. Depending on the market conditions and business context, the perceived value of the proposed system varies.