| Abstract: |
We evaluate the extent to which small businesses maintain an online presence,
looking at restaurant listings on a major online review platform. While the
majority of restaurants have an online presence, we find that roughly 18
percent in our sample have no presence as of the end of 2017, despite being
able to list their business for free. Using temporal variation in a
restaurant's online presence as well as a natural experiment arising from a
data acquisition that led over a thousand businesses to be added to the
platform, we find that maintaining an online presence is valuable for small
businesses. Establishing an online presence leads to a 5% revenue increase.
Using data on customer reviews post-add, we explore potential channels that
could explain why restaurants continue to remain offline despite potential
benefits from digital representation. Consistent with models of voluntary
disclosure, we find that businesses that had stayed offline until the
acquisition ended up having lower ratings, on average, than those that added
themselves or were added by customers. |