| dc.description.abstract | My thesis investigates the relationships between technology and firms in lower-income countries. I explore both the economic impacts of technology on firms—how it affects their economic outcomes and their relationships with stakeholders, both within and across firms—and the determinants of technology adoption: what underlying factors impede or drive the uptake of new technologies? I combine a diverse set of methods, including large-scale field experiments, economic theory, and long-term collaborations with local partners to investigate how small firms—such as taxis, retailers, and others—transform their practices and relationships as they adopt new technologies. My work centers on West Africa, one of the world’s poorest regions, where economic research remains limited.
Chapter 1: The first chapter investigates the idea that digital technologies have the potential to increase firm productivity. However, they often come bundled with data observability, which can be a double-edged sword. Observability reduces information frictions and can increase efficiency, but some agents may lose their informational rent and thus resist adoption. I explore this trade-off between observability and adoption through two field experiments conducted over nearly two years. These experiments, guided by contract theory, introduce digital payments to the Senegalese taxi industry in partnership with the country's largest payment company. In the first experiment, I randomize access to digital payments for drivers (employees) and transaction observability to taxi owners (employers). I find that digital payments reduce drivers' cash-related costs by about half but also serve as effective monitoring tools for taxi owners. Transaction observability substantially increases driver effort, contract efficiency, and the duration of owner-driver relationships. However, 50% of drivers—primarily the worst-performing and poorest—decline to adopt digital payments when transactions are observable. The second experiment shows that the adoption rate doubles when drivers are assured that owners will not be able to observe their transactions. I develop a theoretical framework and use the experimental variations to estimate the welfare impacts of policy counterfactuals. I show that removing transaction observability would maintain moral hazard problems but broaden adoption and thus increase overall welfare—an approach ultimately implemented by the payment company. These findings highlight the crucial role of information embedded in digital technologies, as it magnifies gains for adopting firms but can deter initial adoption.
Chapter 2: In the second chapter, I conduct a randomized experiment to study the nationwide technology diffusion of a new digital payment technology in Senegal. By leveraging two novel sources of network data—mobile money transactions and anonymized phone contact directories covering the near universe of the adult population in Senegal—I causally identify three sets of adoption spillovers from taxi firms randomized to receive early access to the technology: intra-industry among taxi firms; inter-industry between taxi drivers and other small businesses; and inter-regional spillovers from the capital city to businesses in other urban centers. I show that spillovers go beyond strategic complementarities, reflecting social learning within firms' social networks, driven by social ties and remote interactions.
Chapter 3: In the third and final chapter, I explore the fact that search and trust frictions have historically made it hard for small firms in lower-income countries to buy inputs from foreign markets. The growth in smartphone ownership and social media usage has the potential to alleviate these barriers. Informed by a dynamic model of relational contracting, we run a field experiment leveraging these technological tools to provide exogenous variation in (1) search frictions and (2) trust frictions (adverse selection and moral hazard) in a large international import market. In our search treatment, we connect a randomly selected 80% of 1,862 small garment firms in Senegal to new suppliers in Turkey. We then cross-randomize two trust treatments that provide additional information about the types (adverse selection) and incentives (moral hazard) of these new suppliers. Alleviating search frictions is sufficient to increase access to foreign markets: in all treated groups, firms are 26% more likely to have the varieties a mystery shopper requests and the goods sold are 30% more likely to be high quality. However, the trust treatments are necessary for longer-term impact: using both transaction-level mobile payments data and a follow-up survey, we show that these groups are significantly more likely to develop the connections into relationships that persist beyond the study. These new relationships lead to increases in medium-run profit and sales. Finally, we use the treatment effects to estimate the model and evaluate counterfactuals where we set various combinations of the frictions to zero, finding that the largest gains come from eliminating adverse selection. | |
