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Quantity Vs. Quality in Online Marketplaces: The Case of Kiva

  • Haim Mendelson
  • Yuanyuan ShenEmail author
Conference paper
  • 13 Downloads
Part of the Lecture Notes in Business Information Processing book series (LNBIP, volume 380)

Abstract

This paper studies Kiva, the world’s largest online, peer-to-peer social lending marketplace. We consider two stages in the development of the Kiva marketplace: a growth stage when Kiva was focused on quantity, and a maturity stage when Kiva shifted to emphasize quality (broadly defined). Our starting point is the common hypothesis that marketplace success is driven by network effects which facilitate growth – a quantity focus. We argue, however, that as a marketplace becomes mainstream, it focus shifts to improving quality – creating additional sources of value for users by adding capabilities and improving the user experience. We test this proposition using data from Kiva. Our proposition is supported: while network effects are strong and significant during the early growth phase of the marketplace, they become weak or disappear as the marketplace becomes mainstream. We study the implications of our findings for the deployment, implementation and management of online marketplaces.

Keywords

Online marketplaces Network effects Peer-to-peer lending Online services Quality 

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Copyright information

© Springer Nature Switzerland AG 2020

Authors and Affiliations

  1. 1.Stanford UniversityStanfordUSA
  2. 2.Microsoft CorporationSunnyvaleUSA

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