Abstract

This research examines the impact of an online platform’s revenue model on consumers’ ethical inferences of the company. We demonstrate that consumers perceive online platforms that employ the advertising-based revenue model to be less ethical than platforms that employ the service-fee-based revenue model because platforms that adopt the advertising-based revenue model are thought to be less consumer-serving motivated. The unfavorable ethical inferences induced by the advertising-based revenue model further lower consumers’ intention to disclose personal information and the intention to generate positive word of mouth for the company. We further find that allowing consumers to skip advertisements does not improve the less favorable ethical inferences while using resources for public-service advertisements does. These findings advance the understanding of consumers’ ethical inferences regarding business models and provide insights for managers to develop effective strategies to alleviate less favorable ethical inferences.