Effects of geographical proximity to headquarters on subunits' online reputation: an extended agency perspective

Purpose Existing research predominantly focuses on the short-term impact of external contextual factors on online reputation, while largely overlooking its stable quality foundation – that is, the operational standards determined by internal governance. To address this critical gap, this study draws from extended agency theory and aims to explore how the core organizational variable of geographical distance, through the dual mechanisms of “monitoring” and “autonomy,” profoundly influences the construction of a hotel's online reputation. Design/methodology/approach By combining hotel online review and management response data from TripAdvisor with tax data from Texas public accounts in four cities in Texas, we obtain panel data of 10,330 observations from 556 hotels. A series of regression models was employed to test the hypotheses. Additionally, a scenario-based experiment was conducted to validate the underlying mechanisms. Findings This study reveals a negative effect of distance to HQs on subunits' online reputation. which is ultimately determined by the dominant role of diminished monitoring effects over enhanced autonomy effects. Such a negative effect is weakened by subunits' proactive management response strategies but amplified with more diverse services provided by subunits and more intense local competition. Originality/value This study reveals the role of HQs on online performance in multi-unit firm market expansion and provides practical implications for hotels' online and offline dual-channel management.