The Effects of Online Social Identity Signals on Retailer Demand

Abstract

Recent shifts in societal discourse have led digital platforms to support equity, inclusivity, and diversity by introducing identity-signaling features, for example, indicators of owner race or gender. In this work, we explore whether, when, and how using those features may impact retailer demand. We tackle this question via a multimethod study. We begin by conducting a controlled experiment on Prolific.co , presenting subjects with actual Google Places business profiles for a set of Black-owned restaurants in Chicago. We randomly vary the presence of Black- and women-owned labels in these profiles and assess subjects’ expectations of popularity and quality along various restaurant dimensions. Our results demonstrate that the Black-owned label, in particular, drives significant increases in all outcomes with the effects arising primarily from Black and democratically liberal subjects. Next, we conduct an archival analysis of the effect label adoption has on the physical foot traffic that retailers receive based on SafeGraph’s mobile patterns database. Our difference-in-differences estimations yield consistent results; we find evidence of a positive average effect on foot traffic volumes. Further, we show that a rise in visitors from liberal-leaning geographies drives these effects. We discuss implications for digital platform operators and retailers. This paper was accepted by Duncan Simester, marketing. Supplemental Material: The online appendix and data are available at https://doi.org/10.1287/mnsc.2023.01168 .