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

Author

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  • Karthik Balasubramanian

    (Harvard Business School)

  • David F. Drake

    (Harvard Business School, Technology and Operations Management Unit)

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.

Suggested Citation

  • Karthik Balasubramanian & David F. Drake, 2015. "Service Quality, Inventory and Competition: An Empirical Analysis of Mobile Money Agents in Africa," Harvard Business School Working Papers 15-059, Harvard Business School, revised Oct 2015.
    • Handle: RePEc:hbs:wpaper:15-059
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    References listed on IDEAS

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    Cited by:

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    2. Pédussel Wu, Jennifer & Metzger, Martina & Neira, Ignacio Silva & Farroukh, Arafet, 2023. "What determines demand for digital community currencies? OurVillage in Cameroon," IPE Working Papers 209/2023, Berlin School of Economics and Law, Institute for International Political Economy (IPE).
    3. Susan Feng Lu & Konstantinos Serfes & Gerard Wedig & Bingxiao Wu, 2021. "Does Competition Improve Service Quality? The Case of Nursing Homes Where Public and Private Payers Coexist," Management Science, INFORMS, vol. 67(10), pages 6493-6512, October.
    4. Michael N.A. Mensah & Adusei Jumah, 2021. "Electronic Money and Consumer Spending Behaviour: Evidence from Ghana," Advances in Management and Applied Economics, SCIENPRESS Ltd, vol. 11(3), pages 1-6.

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    Keywords

    service operations; operations strategy; competition; base of the pyramid; mobile money;
    All these keywords.

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