The Impact of Interpersonal Relationships and Incentive Structures on the Performance of Actors in Informal Supply Chains
This dissertation examines operational challenges faced by intermediaries in informal supply chains, in which the relational and structural constraints present in traditional supply chains are relaxed. This research is organized into three papers, the first of which (Chapter 2) explores business...
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| Format: | Thesis |
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Massachusetts Institute of Technology
2022
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| Online Access: | https://hdl.handle.net/1721.1/144535 https://orcid.org/0000-0003-1599-7723 |
| Summary: | This dissertation examines operational challenges faced by intermediaries in informal supply chains, in which the relational and structural constraints present in traditional supply chains are relaxed.
This research is organized into three papers, the first of which (Chapter 2) explores business relationships in the context of emerging market retail supply chains. Attempts to distribute durable, life-improving goods to customers at the Base of the Pyramid (BoP) have struggled to succeed at scale. One potential explanation is poor relationship management with informal retailers, which are embedded within communities. By analyzing data from a distributor selling to 331 formal and 493 informal retailers in India, we demonstrate that informal retailers recover more slowly than formal retailers after a sales agent reallocation. This indicates that disruptions to social/business relationships are particularly harmful when selling to retailers in informal markets.
The second and third papers (Chapters 3 and 4) explore incentive design for distributed-task platforms. We use as a case study a supply chain for medical knowledge, featuring “informal” suppliers without formal contracts. Using data on 5,418 crowdsourcing contests for medical diagnosis, we examine how evaluation metrics (Chapter 3) and prize allocation mechanisms (Chapter 4) shape participants’ decisions and performance. Chapter 3 assesses the impact of evaluating participants using the longest “streak” of correct answers, rather than an accuracy-based metric. Streak evaluation increases volume of quality responses and speed of achieving consensus, largely through increased engagement. These findings are relevant in settings where streak-based-rewards are used to boost motivation; we find that they also boost performance.
Chapter 4 studies how changing the source of prize-related uncertainty from the probability of winning to the amount at stake affects decision-making. We evaluate the impact of running a pool contest (in which participants who meet a performance threshold share prizes evenly) instead of a rank-order contest (in which prize distribution is determined exogenously and announced upfront). In pool contests, accuracy increases for average participants but decreases for top performers, suggesting that participants modify engagement levels in response to performance thresholds. This suggests that pool contests with carefully-selected thresholds can incentivize effort from participants with certain performance profiles. |
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