Show or Tell? Improving Inventory Support for Agent-Based Businesses at the Base of the Pyramid
42 Pages Posted: 29 May 2018 Last revised: 7 Aug 2019
Date Written: August 2, 2019
Problem definition: Firms providing products and services to low income Base of the Pyramid (BOP) customers are increasingly utilizing independent contractor agents rather than employees in their distribution models. We empirically investigate the best way to help agents perform better.
Academic/Practical Relevance: BOP customers making 5USD or less daily represent one-third of the world's economy. Providing goods and services is difficult due to highly fragmented agent-based retail channels. Improving agent performance can help firms better reach customers. We enhance the literature on agent-based models in BOP settings, behavioral operations, and technology in developing economies.
Methodology: In partnership with a Tanzanian mobile money operator, we perform a randomized controlled trial with 4,771 agents over eight weeks to examine how differing types of guidance and whether in-person training is offered impact agents' inventory management. Mobile money is a platform whereby firms in developing economies provide financial services to BOP customers via (generally non-smart) cell phones. Mobile money agents service customer withdrawals and deposits as nano-bank branches. Every day, they must decide how much money to stock to service customers' transactions, out of which they earn commissions.
Results: We find that those agents given only an explicit recommendation (as opposed to summary statistics or both) who were invited to in-person training (as opposed to simply received an automated notification) improve their performance. Agents in other treatments showed no statistically significant change. The effect is concentrated in those agents who never replenished their money at a bank, and whose money inventory levels were low in the pre-treatment period.
Managerial Implications: We show empirically how firms can better manage agents, thereby improving the value proposition of serving BOP customers. We show the utility of segmentation based on agent heterogeneity. This can improve firm performance, agent profits, and customer service.
Note: A previous version of this paper was titled: Show or Tell? Improving Agent Decision Making in a Tanzanian Mobile Money Field Experiment.
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