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

Karthik Balasubramanian () and David F. Drake ()
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Karthik Balasubramanian: Harvard Business School
David F. Drake: Harvard Business School, Technology and Operations Management Unit

No 15-059, Harvard Business School Working Papers from Harvard Business School

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: service operations; operations strategy; competition; base of the pyramid; mobile money (search for similar items in EconPapers)
Pages: 31 pages
Date: 2015-01, Revised 2015-10
New Economics Papers: this item is included in nep-com and nep-mfd
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (4)

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