This study examines the survival factors of informal community-based financial groups in Burkina Faso, Mali, and Niger over the period 2014 to 2018. The results identify group size, meeting attendance, financial performance, and engagement in 'plus activities' as key predictors of savings group survival. The more efficiently funds are used and the higher the returns on savings, the more groups sustain their operations in the long run, irrespective of the absolute amount of savings per member. Similarly, active group engagement and involvement in additional non-financial activities alongside the core financial activities, also contribute to long-run survival. These findings highlight that social capital and financial efficiency should be at the forefront when designing savings-groups programs.

We derive and estimate a production function for microfinance institutions to provide empirical evidence of the ethical dilemma of balancing social and financial logics in hybrid organizations. A worldwide panel dataset of microfinance institutions is utilized and a production function augmented by average loan size is estimated using the control function approach. We show how this framework can be used to quantify the tradeoff between social outreach and financial sustainability in relation to the expansion of microfinance institutions’ credit operations. The study reveals that expanding the extensive margin (increasing the number of loan clients) requires on average more than twice as many inputs as expanding the intensive margin (increasing the average loan size) to achieve the same growth in assets. Beyond the case of microfinance our production function illustrates that as hybrid organizations expand, they will inevitably face an ethical dilemma as the laws of economic efficiency exert pressure on their social missions.

A substantial share of customers in emerging markets use dual-SIM phones and subscribe to two mobile networks. A primary motive for so called multi-simming is to take advantage of cheap on-net services from both networks. In our modelling effort, we augment the seminal model of competing telephone networks a la Laffont, Rey and Tirole (1998b) by a segment of flexible price hunters that may choose to multi-sim. According to our findings, in equilibrium, the networks set a high off-net price in the linear tariffs to achieve segmentation. This induces the price hunters to multi-sim. We show that increased deployment of dual-SIM phones may induce a mixing equilibrium with high expected on-net prices. Thus, somewhat paradoxically, deployment of a technology that increases substitutability, and thereby competition, may end up raising prices.

PurposeThe purpose of this study is to determine whether there exists employee-client matching at the bottom of the pyramid (BOP) and the most favourable employee-client categorization in terms of employee productivity when serving the BOP market. This is important in a bid to determine how to effectively operate at the BOP given the market’s unique characteristics.Design/methodology/approachThis study uses two methods depending on the research question. First, a one-way analysis of variance (ANOVA) is used to determine the different employee-client categories based on socio-economic status. Second, fixed effects analyses are performed based on these categories to determine the most suitable employee-client category.FindingsThe results show the existence of employee-client matching based on similar socio-economic status. However, multivariate testing reveals that the mismatch category, where employees are of higher socioeconomic status than the clients, generates more favourable employee productivity. Moreover, this result may be contingent on the geographical location of the firm.Practical implicationsThe findings are important for human resource management particularly the employment strategy of BOP firms. It suggests the need to consider employee profiles and client profiles when deciding which new markets to target.Originality/valueThe paper uses a global database of microfinance institutions as a case of BOP firms to investigate employee-client matching at the bottom of the pyramid.

The theoretical literature on mobile termination rates (MTRs) is inconclusive on how the level of MTRs affects overall consumer charges and firms' profits. We show that when firms offer bundles with fixed included usage – a tariff structure that has become more common in recent years – an identical change in all MTRs does not affect firms' retail prices or profits. We use a panel dataset from saturated European markets to estimate the effect of MTRs on mobile operators' profits. As predicted by the theoretical model, we cannot reject the fact that firms' profits are unaffected by an identical change in all MTRs.

Text messaging has become an important revenue component for European and Asian mobile operators. We develop a simple model of demand for mobile services incorporating the existence of call externalities and network effects. We show that when incoming messages and calls stimulate outgoing communications, services that are perceived as substitutes, such as mobile text and voice, may evolve into complements in terms of the price effect when the network size becomes large. We estimate the demand for text messaging in the Norwegian market and find that the cross-price effect of voice depends on the network size. Voice is a substitute for text messages for small network sizes, and a complement for large network sizes.

Text messaging has become an important revenue component for European and Asian mobile operators. We develop a simple model of demand for mobile services incorporating the existence of call externalities and network effects. We show that when incoming messages and calls stimulate outgoing communications, services that are perceived as substitutes, such as mobile text and voice, may evolve into complements in terms of the price effect when the network size becomes large. We estimate the demand for text messaging in the Norwegian market and find that the cross-price effect of voice depends on the network size. Voice is a substitute for text messages for small network sizes, and a complement for large network sizes.

Short Message Service (SMS) has been an overwhelming success in Europe, substantially larger than in the United States. Norway represents in relative terms one of the largest SMS markets in the world. The aim of this paper is to examine the relationship between economic theories of bandwagon effects, and the Norwegian mobile providers' management of the SMS market. We narrow the focus on the problem of getting the SMS bandwagon rolling. We emphasise two features crucial to the SMS success. The first is low prices on text messaging relative to mobile phone call charges for low-end tariffs. This seams to have been particularly important in the price sensitive youth market. The second key feature is the high degree of interlinking with respect to functionality and pricing. Both these features differ between Europe and the United States, and we argue that this might explain the difference in market development. The development in the SMS market suggests that it is important that the regulator does not interfere in the early stage. In the SMS market the absence of regulations and ex ante superfluous functionality ended up ex post as major successful services. This suggests that the regulator should be very careful when designing regulation regimes in bandwagon markets to avoid reduced innovation.

We consider two different qualities of broadband access, one that simply means greater access speed to Internet applications and content, and a premium version that also gives access to interactive TV services. Based on a market survey we find that potential consumers of this premium broadband access do not consider basic broadband Internet access as a substitute. The price of basic broadband does not constrain the price that may be charged for the premium broadband that allows for interactive TV services.

We consider two different qualities of broadband access, one that simply means greater access speed to Internet applications and content and a premium version that also gives access to interactive TV-centric applications. Based on a market survey we find that potential consumers of this premium broadband access do not consider basic broadband Internet access as a substitute. The price of the basic Internet-centric service does not constrain the price that may be charged for the premium TV-centric service.

Text messaging represents today more than 20% of the total revenue from mobile phone markets in several European countries, where people now send more than 60 messages per month in average. Using a unique dataset that includes both traffic and penetration data, we analyze the text-messaging market in Norway, where the text-messaging take up has been earlier and larger then in most other countries. We find that text-messages were an inferior substitute to mobile voice in the infancy of text-messaging, but now voice and text via the mobile phone are complements in demand. When an emerging service is an inferior substitute to the existing services, but has the potential to become a success it may evolve into an independent service or a complement. The pricing strategies in the infancy in such markets become crucial. Relative high prices of the existing service (mobile voice) may then be necessary to ensure adoption of a service like text-messaging. Consequently, low prices for the existing service, due to strong competition or regulatory obligations, may prevent the adoption of an inferior substitute that later turns into a complement to the existing service.