- Some Features of Microcredit Schemes
- Why Are Default Rates Not High in Microcredit Schemes?
- What Does This Suggest for E-Service Organizations?
- Can E-Services Help Microcredit Organizations?
- Conclusion and Acknowledgements
What Does This Suggest for E-Service Organizations?
Some of the lessons from microcredit schemes appear to be negative for e-service organizations. Social pressure and collective social assets in an environment with low mobility of population may be an important factor in the dependability of microcredit borrowers. E-services, in contrast, are offered within environments with exceptionally high degrees of population mobility.
It will be necessary to explicitly build mechanisms into the e-service organization through which social assets can be constructed and maintained and in which social pressure can operate.
Use Stable Online Personae
Mechanisms that allow consumers' actions in their interaction with the e-service organization to have future consequences will require a certain degree of personal identifiability of consumers, which goes against the ideal of privacy within e-services. However, it need not necessarily tie a consumer's online identity to an e-service organization in a 1–1 relation with that consumer's offline identity. It may be enough just to allow the creation of stable e-service personae who can build up archived histories of reliable behavior with respect to the e-service organization. This allows reputations and ratings to be built without compromising privacy. In the case of future consequences for the action of e-service providers, the provider typically is an organization rather than an individual, so privacy is not such an issue.
Provide Tools for Communication and Resource Sharing
Current systems for reputation within e-service organizations tend to encode this reputation into points, stars, certificates, and machine-readable summaries. External ratings services such as VerticalZOOM, @rating, and SupplierInsight similarly try to give quick summaries or certificates that will lead to a thumbs-up/thumbs-down decision rather than archiving more qualitative information about the service provider's history.
This kind of assessment is worth doing. However, if these formal summary mechanisms (plus descriptions of what e-services are available) are the only method of communication between different consumers and different providers, this eliminates the potential for some of the features that appear to be especially important in making microcredit schemes successful.
One suggestion arising from the success of microcredit schemes is that e-service organizations should consider building facilities for sharing resources and knowledge between e-service providers, and between customers, to make the system more reliable. Internet technologies provide several useful tools with which to do this. Instead of limiting communications to voting to affect ratings, e-service organizations could provide bulletin boards, mailing lists, Web sites, tie-ins to mobile communications, and so on for providers and consumers of the e-services to communicate among themselves. Internet communications are easily archived, and collective experiences and useful tips could be summarized and stored for future use. Meta–e-services could share resources within the e-service organization.
This suggests a community model of an e-service organization rather than the broker or portal models in which direct communications and shared resources between different elements of the ecosystem are less important (or may even be nonexistent).
Encourage Small Subgroups with Collective Responsibility
What about pooling the financial responsibilities of a small number of e-service producers or a small number of e-service customers, to improve dependability along the lines of microcredit schemes? An e-service organization might follow the Grameen Bank's practice of accepting businesses in groups of five with collective responsibility. The organization would provide communication tools for these groups of five to interact. It also might encourage bulk buys from groups of consumers, again communicating and interacting via the e-service organization.
To discourage price fixing and the formation of destructive producer cartels, e-service provider subgroups could be required to have members all in different businesses. This would also add to collective financial stability of such groups because a downturn in the business of one member would typically be balanced by the situation of other members.
Again, this points to the community model, but at the level of strong subcommunities within the e-service organization (which itself may have community aspects).
Carefully Build on Top of an Existing Community
E-services are not integrated into the rest of the life of the people involved, whereas lending schemes based in local communities are. If I cheat my next-door neighbor in a business transaction, I will suffer negative consequences not just in future transactions in that business, but in my private life, too. E-service organizations that grow on top of existing noncommercial online communities might experience more trustworthy behavior because they have a connection with another aspect of the participants' lives. However, building a commercial organization on top of an existing noncommercial organization requires care and tact. Janelle Brown's related chapter, titled "Three Case Studies," in the book Online Communities (Prentice Hall, 2001; Chris Werry and Miranda Mowbray, editors) describes some mistakes to avoid—and gives examples where insensitive commercialization of an online community resulted in original community members leaving, taking their social assets with them.
Consider Involving Providers and Consumers in Organizational Decisions
In the context of e-service organizations, the advantage of microcredit administrators who live locally translates into an advantage of administrators of the e-service organization who are part of the online community. Whether or not an e-service organization grows out of a noncommercial community, accessible histories of reliable behavior for the administrators of the e-service organization may be useful. The reason why eBay has been more successful than its competitors is that eBay was the first auction site to become an established brand with a known reputation and history. But access to information about the past may not be as effective as participation in the present. The advantage of democratic, participatory decision making for the success of microcredit organizations suggests that e-service organizations might also consider involving e-service providers and consumers in organizational decisions for the e-service organization.
This would fit strongly with the community model and would not fit at all with the common portal model.
Provide "Stepped" Facilities
It makes sense to provide "stepped" facilities within an e-service, to increase dependability. For example, there could be a ceiling on the cost of a service that a newcomer to the system would be allowed to provide or purchase. Or, there could be a ceiling to the financial value of the activity that a newcomer would be allowed to be involved in during a given time period. Once the newcomer had delivered or paid for e-services of a certain value to the satisfaction of the other people or organizations involved, that person or organization's ceiling would be raised.
Look for E-Service Areas with Little Competition
One lesson when judging which types of e-service to operate is to look for ones that do not have too much competition. E-service organizations that offer services difficult to obtain or to sell elsewhere may be used in a more dependable way. This is because they do not have to compete for the most dependable people and organizations involved in producing and consuming this service, and also because the population of the producers and consumers is likely to be relatively stable. People setting up and running e-service organizations who seek dependability of the ecosystem should look for e-services that give buyers opportunities to buy services that they cannot easily get elsewhere and should bring service providers to markets that they cannot easily reach otherwise. They should also look for e-services that encourage repeat business over a long time frame, thus allowing the buildup of a stable group of interacting consumers and providers.