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

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., fast resolution of repair tasks — impacts technology adoption in emerging markets. We address this question using detailed customer-level sales and service data from a leading solar distribution company operating in Uganda. We develop a fixed effects base specification and two instrumental variables specifications that leverage different sources of geo-spatial variation — in service task locations, weather and road quality. 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 5.3% to 32.2%. The relationship between wait times and adoptions is highly non-linear. The longer customers have been waiting, the greater the negative consequences of an incremental increase in wait time. 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. 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