Recently, IQDS research paper titled “Brand, Word-of-Mouth and Certification: A Comparative Analysis on the Choice of Quality Signals of Different Types of Enterprises”, written by Cheng Hong and Tan Lin, was published in Journal of East China Economic Management (No. 11, 2016). This is another research paper based on data of China Employer-Employee Survey (CEES).
This paper presents that quality signal transmission is of great value for reducing information asymmetry and promoting product sales, and quality signals demand a large amount of input from the enterprises. Therefore, how to choose a best quality signal is essential to making business decisions. Through an empirical study on quality signal selection based on a large samples of CEES survey, it is found that enterprises generally choose brand as their most favorite quality signal, word-of-mouth ranks the second, and certification is the least chosen. Chinese enterprises are obviously lagging behand in providing quality signals. Due to their differentiated capacities in affording “signal cost”, large- and medium-sized enterprises mainly choose brand as their quality signal, while small businesses tend to choose word-of-mouth. In Industries featuring search goods, enterprises tend to choose brand, while in industries featuring experience goods, enterprises prefer word-of-mouth. Based on the analysis, the following suggestions are put forward: the government should boost the market for third-party certification to develop effective quality signal of certification; small businesses should formulate signal transmission strategies centered on word-of-mouth and signal of ‘small is beautiful’; efforts should be made to enhance brand strength, optimize brand structure and increase market value of brands.