History matters: The impact of reviews and sales of earlier versions of a product on consumer and expert reviews of new editions

Product reviews are assumed to be based on the observable characteristics of the underlying product. However, in the case of new editions in a product series, the determinants may include signals that originate from the reviews and the sales of editions that precede the focal product edition. Our analysis of 577 video games released in a series between 2000 and 2009 indicates that the reviews of earlier versions carry over to the reviews of the sequel by the same type of reviewer. We also find that expert reviews are influenced by the average review of previous editions by consumers and the average sales of previous editions of the product. This suggests that experts tend to adapt to the taste of consumers. Furthermore, it is found that a lack of consensus, between reviewers of a particular type, weakens the impact of average past reviews, whilst it magnifies the impact of the sales of earlier versions

Risk-taking behavior of technology Firms: The role of performance feedback in the video game industry

This study focuses on what drives technology-driven companies to engage in risk-taking behavior by serving new markets. Building on the behavioral theory of the firm and prospect theory, this study suggests that technology-driven organizations tend to respond to past performance rather than future possibilities. Using a sample of 5312 video games from 362 game developers, the results reveal that market performance trend and market performance variability have opposing effects on risk-taking behavior: while a positive market performance trend negatively influences a company's tendency to venture into new markets, a high-degree of market performance variability tends to positively influence new market entry. The study also finds opposite results for expert performance trend and expert performance variability: companies with consistently positive expert evaluations are more likely to enter into new markets, while variability in expert evaluations has a negative effect on new market entry. Furthermore, the effects of expert performance trend and variability are conditional on market performance trends. Finally, the results suggest that companies that venture into new markets tend to choose relatively similar markets if these companies are suffering from a negative market performance trend or a negative expert review trend