Abstract

In the digital age, merchants are presented with an expanding range of resources to enhance operational transparency for customers. Moreover, the digital marketplace increasingly demands improved transparency due to the physical separation between merchants and customers. This paper explores a new method to enhance operational transparency for merchants on digital platforms: displaying real-time videos of their operational processes. Using a unique dataset obtained from chain restaurants on a leading food delivery platform in China, we employ the difference-in-differences (DID) method together with matching techniques for empirical analyses. Our findings show that the display of real-time videos indeed improves restaurants’ operational performance on the platform, including demand, customer average spending per order, and revenue. Moreover, we show that reducing information asymmetry is one potential mechanism driving these positive effects. Finally, we delve into general features present in real-time videos through image mining, utilizing advanced computer vision algorithms to assess image quality and identify interpretable attributes. Our analyses reveal that image quality plays a pivotal role in explaining the benefits of operational transparency. Notably, visual information characterized by warm hues, saturation, brightness, and clarity significantly contributes to these benefits. Overall, our study highlights the importance of sharing visual information on operational processes to enhance performance in the digital marketplace, offering actionable insights for platform managers and service providers aiming to optimize their video content for improved outcomes.

Note: Research papers posted on SSRN, including any findings, may differ from the final version chosen for publication in academic journals.  

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• Keyword(s):
• operations 143
• strategy and entrepreneurship 191

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