Service Quality, Inventory and Competition: An Empirical Analysis of Mobile Money Agents in Africa

31 Pages Posted: 13 Jan 2015 Last revised: 6 Oct 2015

See all articles by Karthik Balasubramanian

Karthik Balasubramanian

Harvard Business School

David Drake

University of Colorado at Boulder - Leeds School of Business

Date Written: October 2, 2015

Abstract

The use of electronic money transfer through cellular networks ("mobile money") is rapidly increasing in the developing world. The resulting electronic currency ecosystem could improve the lives of the estimated 2 billion people who live on less than $2 a day by facilitating more secure, accessible, and reliable ways to store and transfer money than are currently available. The development of this ecosystem requires a network of agents to conduct cash-for-electronic value transactions and vice versa. This paper examines how service quality, competition, and poverty are related to demand and inventory (of electronic credit and physical cash) where, in this setting, service quality consists of pricing transparency and agent expertise. Among our results, we find that average demand increases with both pricing transparency and agent expertise, and that agent expertise interacts positively with competitive intensity. We also find that competition is associated with higher inventory holdings of both cash and electronic value, and that agents in high-poverty areas hold greater amounts of cash but do not carry a smaller amount of electronic value indicating that they devote more capital to their inventory. These results offer insight to mobile money operators with respect to monitoring, training, and the business case for their agents. This paper furthers our understanding of service quality, competition and inventory, while developing a foundation for the exploration of mobile money by OM scholars.

Keywords: operations strategy, competition, inventory management, base of the pyramid, mobile money

Suggested Citation

Balasubramanian, Karthik and Drake, David, Service Quality, Inventory and Competition: An Empirical Analysis of Mobile Money Agents in Africa (October 2, 2015). Harvard Business School Technology & Operations Mgt. Unit Working Paper No. 15-059. Available at SSRN: https://ssrn.com/abstract=2549171 or http://dx.doi.org/10.2139/ssrn.2549171

Karthik Balasubramanian

Harvard Business School ( email )

Soldiers Field Road
Morgan 270C
Boston, MA 02163
United States

David Drake (Contact Author)

University of Colorado at Boulder - Leeds School of Business ( email )

Boulder, CO 80309-0419
United States

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