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The Online Shadow of Offline Signals: Which Sellers Get Contacted in Online B2B Marketplaces?
This article extends the understanding of what impels buyers to contact particular sellers in online business-to-business (B2B) marketplaces, which are typically characterized by sparse social structures and concomitant limitations in observing social cues. Integrating an institutional perspective with signaling theory, our core argument is that offline seller characteristics that are visible onlineāin particular, geographic location and legal statusāconvey credible signals of seller behavior because they provide buyers with information on sellersā local institutional quality and the institutionally-induced obligations and controls acting on sellers. Using unique data from a large Italian online B2B marketplace between the fourth quarter of 1999 and July 2001, we find that both sellersā local institutional quality and their legal statuses affect a buyerās likelihood of contacting a seller. Moreover, consistent with the idea that a buyerās own local institutional quality generates a relevant reference point against which sellers are evaluated, we find that a buyer is progressively more likely to contact sellers the higher their local institutional quality relative to the buyer. Jointly, our findings imply that in online B2B marketplaces, signals conveyed by sellersā geographic locations and legal statuses may constitute substantive sources of competitive heterogeneity and market segmentation