Timely After-Sales Service and Technology Adoption: Evidence from the Off-Grid Solar Market in Uganda

Kundu, A and Ramdas, K (2022) Timely After-Sales Service and Technology Adoption: Evidence from the Off-Grid Solar Market in Uganda. Manufacturing and Service Operations Management, 24 (3). pp. 1329-1348. ISSN 1523-4614

Abstract

Problem definition: Adoption and continued use of novel technologies has the potential to significantly accelerate social and economic development in emerging markets. In this paper, we examine to what extent timely after-sales service i.e., faster resolution of repair tasks impacts technology adoption. In particular, we empirically assess the impact of service wait times on the adoption of solar home systems by first-time users (i.e., adopters of the technology) in off-grid Uganda. Academic / Practical Relevance: Our study sheds light on a previously understudied driver of technology adoption - customers' post-purchase experience related to after-sales service. We also provide evidence on how negative word-of-mouth stemming from long service wait times hampers customer acquisition.

Methodology: We address our research question using detailed customer-level sales and service data from a leading assembler and distributor of solar home systems in Uganda. We develop a fixed effects base specification and two instrumental variables specifications that leverage different sources of exogenous geo-spatial variation - in service task locations, weather and road quality. Results: We find that timely after-sales service experienced by existing customers is a strong driver of adoption by first-time users. A one week increase in average wait time for service decreases adoption by up to 32.4%. The relationship between wait times and adoptions is heterogeneous and depends on the types of pending service cases. We also find that the number of customers acquired through referrals from an existing customer depends on the referring customer's service wait time. This provides evidence of a strong word-of-mouth channel of information sharing.

Managerial Implications: Our findings have direct implications for the customer acquisition strategies of technology firms and for technology investors in emerging markets. Our results are also relevant for policy makers who aim to harness technology to improve the socio-economic lives of people living in these regions. Importantly, we provide empirical evidence of a direct link between after-sales service and technology adoption, which is of relevance to managers outside of emerging markets as well.