Journal of the Academy of Marketing Science

https://doi.org/10.1007/s11747-021-00778-y

ORIGINAL EMPIRICAL RESEARCH

How does the adoption of digital payment technologies

influence unorganized retailers’ performance? An investigation
in an emerging market
Anirban Adhikary 1 & Krishna Sundar Diatha 2 & Sourav Bikash Borah 3 & Amalesh Sharma 4

Received: 3 November 2019 / Accepted: 7 March 2021

# Academy of Marketing Science 2021

Abstract
Unorganized retail dominates the retail landscape across emerging markets (EMs) and is undergoing rapid digitali-
zation. However, the extant literature has not explored the impact of digital payment system adoption on unorga-
nized retailer (UR) performance. By conducting three related studies and relying on the tenets of the resource-based
view of firms, we show that digital payment technologies’ adoption increases economic performance (i.e., revenue)
for a sample of 403 EM URs. This effect is enhanced by such retailers’ prioritization of technological investments
and attenuated by their credit facilities. We find that card-based and app-based technologies positively impact UR
performance. URs can maximize their performance by adopting two technologies, and there is a synergistic effect
between card-based and account-based technologies. On average, adoption increases a UR’s economic performance
by 9.6%. We present a nuanced understanding of whether, how much, and which digital payment technologies
should be adopted by EM URs.

Keywords Digital payment technologies . Unorganized retailers . Emerging market . Resource-based view . Multimethod

Introduction

According to the World Payments Report (2018) published by

Capgemini and BNP Paribas, the bulk of digital payment
technology growth occurs in emerging markets (EMs), for
Marnik Dekimpe served as Area Editor for this article. example, by 36.5% in Russia and 33.2% in India per year.1
Anirban Adhikary, Krishna Sundar Diatha, Sourav Bikash Borah and The target markets for digital payment technologies are unor-
Amalesh Sharma contributed equally to this work. ganized retailers2 (URs) in EMs (EM URs), which constitute
approximately 60–80% of such markets (Kumar et al. 2015).
* Amalesh Sharma As such, consulting reports suggest that digital payment tech-
asharma@mays.tamu.edu
nologies will penetrate new EMs at a rate of 19.6% per year,
Anirban Adhikary three times the rate seen in developed markets.3 Multiple fac-
anirban.adhikary@iimu.ac.in tors, including a young population, fintech innovations, gov-
Krishna Sundar Diatha ernment interventions, and the rise of e-commerce, likely con-
diatha@iimb.ac.in tribute to this exemplary growth. The academic literature
Sourav Bikash Borah
souravb@iima.ac.in
1
https://worldpaymentsreport.com/wp-content/uploads/sites/5/2018/10/
1
Indian Institute of Management Udaipur, Udaipur, India World-Payments-Report-2018.pdf
2
Unorganized retailing is the conventional format of low-cost retailing. It
2
Indian Institute of Management Bangalore, Bengaluru, India includes local Kirana shops and restaurants, general and provision stores,
3 and even hand carts and pavement vendors (https://retail.economictimes.
Indian Institute of Management Ahmedabad, Ahmedabad, India
indiatimes.com/news/industry/an-ode-to-the-unorganized-retailer/56064312).
4 3
Mays Business School, Texas A&M University, College https://www.prnewswire.com/news-releases/emerging-economies-are-
Station, TX, USA expected-to-drive-the-digital-payment-utilization-819069323.html

argues conceptually about the importance and potential effects
of digital payment technologies for EM retailers (Kumar et al.
2019). However, there is little evidence about the actual im-
pacts of adoption (defined as the first time a retailer begins to
use digital payment technology) (Risselada et al. 2014) on EM
UR performance.
Investigating this issue is critical, as both the litera-
ture on EMs and recent articles in the popular press
have cast doubt on the relationship between the adop-
tion of digital payment technologies and UR perfor-
mance. The extant literature has argued that the cost
of infrastructure required for digital transformation, the
management of payment technologies, and the existence
of informal credit systems that affect customer demand
(Sheth 2011) may create challenges to achieving posi-
tive returns from digital payment technologies. It has
also been highlighted that EM URs may lack technolog-
ical, financial, and managerial (such as digital literacy)
capabilities (Sinha et al. 2015), which may pose addi-
tional challenges to adopting such technologies. This
issue is further complicated because most customers in
EMs fall within the bottom strata of society. These
users may not use such technologies for reasons such
as access to banking services or the internet (only 40%
of consumers in India and 57.7% in China are active
internet users). Moreover, as there are multiple digital
payment technologies, customers may adopt only a few
but ignore others. This may reduce the utility of adop-
tion for URs.
Building on the above discussion, it is not clear whether the
adoption of digital payment technologies will affect EM URs’
performance. This issue is particularly important for URs in
EMs who survive hand to mouth. To explore the potential
impact of digital payment technologies on URs’ performance
in the changing retail landscape of EMs (Bronnenberg and
Ellickson 2015) and to provide strategic recommendations
for EM URs, we conducted three related studies. In Study 1,
we used semi-structured interviews with 31 URs to explore
the challenges and benefits of adopting digital payment tech-
nologies. This qualitative study reveals a lack of consensus
among URs about digital payment technologies’ effect on
their performance. This finding is particularly important, as
uncertainty and ambiguity about benefits can hinder URs’
adoption decisions. It reinforces the caution in widely read
reports by various organizations and the media about the pen-
etration and success of digital payment technologies in EMs.4
Moreover, this qualitative study also indicates two potential
moderators of the relationship between adoption and UR per-
formance: the degree to which URs prioritize technological
investments and the amount of credit they provide to
4
https://bfsi.economictimes.indiatimes.com/news/fintech/google-pay-set-to-
tap-into-12 mn-kirana-stores-in-india/70887071
J. of the Acad. Mark. Sci.
customers. Furthermore, URs were not aware of important
differences in digital payment technologies and did not know
how to choose an optimal combination of technologies.
Insights from Study 1 led us to seek answers to the following
research questions (RQs):
RQ1: Does the adoption of digital payment technologies en-
hance the economic performance of EM URs? If so,
what might strengthen or weaken such an effect?
RQ2: What are the effects of different types of digital payment
technologies on UR performance?
RQ3: How many and which combinations of digital payment
technologies should URs adopt to optimize perfor-
mance?
To answer RQ1, we lean on the tenets of the resource-based
view (RBV) and the literature on EMs to develop an overarch-
ing research framework. Our qualitative interviews and litera-
ture review identify four categories of digital payment technol-
ogies: card-based technology (CBT), account-based technology
(ACBT), app-based technology (ABT), and social security–
based technology (SBT). In Study 2, we empirically validate
the framework and answer RQ2 and RQ3. We collected data
from 403 URs across nine districts from seven states (Orissa,
Bihar, West Bengal, Rajasthan, Karnataka, Kerala, and
Maharashtra) and one union territory (Delhi) within the Indian
retail market. We surveyed respondents about the types of tech-
nology adopted, average customer visits, average customer
transaction values, types of products sold, inventory, invest-
ments in technology, advertising, promotions, use of cash and
other modes, and credit provided by the UR to customers.
Through a robust empirical analysis that accounted for
endogeneity in adoption behavior, we find that the adoption
of digital payment technologies positively influenced EM
URs’ economic performance (measured as monthly average
revenue), thereby supporting the conceptual findings of
Kumar et al. (2019). Furthermore, the positive effect of adop-
tion on performance was enhanced by URs’ prioritization of
technological investment and attenuated by their provision of
credit to consumers. As such, in our sample of 403 URs,
adoption leads to an increase in INR 49,705.31 (approximate-
ly USD 700) on average for URs (Study 2). Regarding RQ2,
we find that while ABT and CBT had a positive effect on
performance, ACBT had a negative effect, and SBT had an
insignificant effect. Regarding RQ3, our results reveal that an
average of two types of digital payment technology is optimal
for economic performance. Combining insights from RQ2
and RQ3, adopting CBT and ACBT together will be benefi-
cial to EM URs, as CBT and ACBT share a synergistic rela-
tionship. We discuss the reasons behind such synergy in a
later section.
J. of the Acad. Mark. Sci.
In Study 3, to support the findings of Study 2 and
establish whether the adoption of digital payment technol-
ogies is the driver of EM URs’ economic performance, we
conducted a randomized field experiment with 36 URs in
both control and treatment conditions. Through a general-
ized difference-in-difference (DID) analysis, we find that
adoption increases retailers’ economic performance and
overall customer satisfaction. A back of the envelope cal-
culation from Study 3 data suggests that URs gain, on
average, 9.6% in revenue as a result of digital payment
technology adoption.
This paper makes multiple contributions to the litera-
ture. First, we extend the existing literature on how dig-
ital payment technologies’ adoption affects EM URs’ per-
formance by building on RBVs and showing digital pay-
ment technologies to be valuable, rare, inimitable, and
nonsubstitutable (VRIN) resources. Second, we also con-
tribute to RBV scholarship in the field of marketing. We
address all four dimensions of VRIN, some of which
have been neglected by previous scholars (Kozlenkova
et al. 2014). Additionally, through our moderators, name-
ly, URs’ prioritization of technological investment (which
enhances the benefit of digital payment technologies) and
the provision of credit (which attenuates the effect), we
show the complementary and noncomplementary nature
of resources. While research has been conducted on re-
source complementarity (Morgan et al. 2009), there is a
dearth of research investigating resource non-complemen-
tarity. Third, we fill an existing gap in the literature by
providing a context-specific classification of digital pay-
ment technologies, enabling us to identify differential ef-
fects on URs’ performance. Fourth, our methodological
approach and data are noteworthy; we collected data from
403 URs (although doing so is challenging in EMs be-
cause of unreliable transportation and lack of electronic
documentation among URs), thereby providing an in-
sider’s view of EM URs and demonstrating a relationship
between technology adoption and URs’ performance
through randomized experimental data. Managerially,
we offer recommendations for URs concerning the num-
ber and types of technologies they should adopt to strike
the optimal balance between investment and customer
value. We also recommend implementable strategies from
a policy perspective. Table 1 presents our unique contri-
butions to the marketing literature.
Relevant literature
Our study falls at the intersection of the adoption of
digital payment technologies and unorganized retailing
in EMs. While a few studies have investigated the im-
pact of digital technologies across multiple disciplines,
such as entrepreneurship, primary education, health care,
and teaching within developed market contexts (e.g.,
Roberts et al. 2015), there is little research on the impact
of adoption on EM URs’ performance. This section
briefly discusses recent developments in the two litera-
ture streams and shows how our study differs from and
expands upon the extant literature.
Digital payment technologies and their adoption
The extant literature has examined the technical aspects of
digital payment technologies (Yu et al. 2002) but has largely
overlooked their adoption’s managerial impacts. There are
two evolving streams of research on digital payment technol-
ogies. The first focuses on retailers’ and firms’ use of such
technologies, and the second on consumers’ use and accep-
tance of them. In the first stream, scholars have shown that a
retailer’s decision to adopt requires a holistic evaluation of
their current portfolio to determine transaction costs and
working capital requirements (Grüschow et al. 2016). Some
technologies diffuse slowly; for example, mobile payment
systems require providers to build retailer and consumer net-
works simultaneously. Similarly, scholars have shown that e-
retailers are more likely to adopt “pay in advance” instru-
ments, such as debit cards, to lower the risk of delayed pay-
ments or nonpayment (Van Hove and Karimov 2016).
However, the average UR may struggle to assess risk, as
many different digital payment technologies exist, and re-
tailers may not be aware of the risks associated with each
(Taylor 2016). Kumar et al. (2019) conceptually investigated
the impact of m-wallets on URs’ performance in EMs and
found an S-shaped relationship between m-wallet adoption
and customer engagement. Table 1 in the Web Appendix
(WA-Table 1) presents representative literature on digital
adoption.
The second stream considers factors that affect consumers’
adoption of digital payment technologies and focuses on dig-
ital wallets (Shankar and Datta 2018). Research in this stream
investigates how usage, value, risk, tradition, image, and con-
sumer demographics (e.g., gender, age, and income) influence
whether consumers adopt or reject internet and mobile pay-
ment systems (Laukkanen 2016). Our research most closely
aligns with the first stream of research, as we are interested in
the impact of digital payment technologies on EM URs’ per-
formance. Beyond the relative paucity of evidence, this stream
of literature also suffers from the lack of proper digital pay-
ment technology classifications. We introduce a classification
scheme in a later section.
Retailing in EMs
There is a growing acceptance among scholars that retailers in
EMs differ from those in developed markets, and this is
 J. of the Acad. Mark. Sci.

Table 1 Contributions to the extant literature

Study Type of article Context Adoption of digital Revenue Multiple Potential Methodological
(Conceptual/ (Developed/ payment technologies implication of payment Contingencies Nuances
Qualitative/ Emerging (customers’/retailers’ technologies technologies (Endogeneity)
Empirical) Markets) perspective) adoption considered

Nysveen et al. (2005) Empirical Developed Customer No No No No

Petrova and Wang (2013) Qualitative Developed Retailer No No No No
Ashraf et al. (2017) Empirical Emerging Customer No No No No
Casado-Aranda et al. (2018) Empirical Developed Customer No Yes No No
Kumar et al. (2019) Conceptual Emerging Retailer No No Yes No
This Study Qualitative and Emerging Retailer Yes Yes Yes Yes
Empirical

particularly true concerning the dominance of URs in EMs
(Kumar et al. 2015). Research in this space has demonstrated
that while modern retailers have made inroads into some EMs,
plans to do so remain at a nascent stage in many EMs
(Bronnenberg and Ellickson 2015). Multiple environmental
factors, including customer level factors (such as customer
income, time, availability of transportation, and storage), the
regulatory environment (e.g., openness to foreign invest-
ments, stability in government policy, and infrastructure in-
vestment), and firm-level factors (some examples are
distribution know-how, presence of local competition, and
understanding local tastes and preferences) may affect retail-
ing systems in EMs (Bronnenberg and Ellickson 2015;
Reinartz et al. 2011). The key source of competitive advantage
for URs in EMs lies in providing the convenience of time and
location, a personal touch, suggestive selling, and high service
levels (Sinha et al. 2015; Reinartz et al. 2011).
Lenartowicz and Balasubramanian (2009) highlighted
that EM URs are located in clusters (as consumers may
not be able to travel long distances because of poor in-
frastructure), sell goods that are debulked into the
smallest possible units (stock keeping units, or SKUs),
and are socially embedded. In comparison to organized
and online retailers, these URs may not have extensive
collections or wide assortments and may also lack tech-
nological, financial, and managerial capabilities (Sinha
et al. 2015). However, their knowledge of their customers
and market makes these URs highly competitive and able
to operate effectively in EMs. As these URs provide
goods and services on credit, consumers develop deeply
rooted connections with them. Despite these positives,
these URs must make difficult resource allocation deci-
sions due to their small sizes and may not have the re-
sources to invest heavily in technology and marketing
simultaneously (Lenartowicz and Balasubramanian
2009). Thus, URs develop long-term relationships with
customers by providing credit (Lenartowicz and
Balasubramanian 2009) and convenience (Jerath et al.
2016), which is their source of competitive advantage.
However, the changing nature of customer demand due
to rapid urbanization, increases in income heterogeneity,
and preference differences (Bronnenberg and Ellickson
2015) among younger customers compared to older con-
sumers (Reinartz et al. 2011) create potential challenges
for retailers attempting to serve their customer base
effectively.
Another source of competitive advantage for URs is
associated with cost-efficiency. Cost-efficiency in EMs is
derived from low labor costs (which makes the delivery
of products and services in a small local market less
expensive), low advertising costs, and small store sizes
(Sinha et al. 2015). However, there are challenges asso-
ciated with efficiency, including inventory and demand
management, which affect URs’ strategic planning and
control (Sinha et al. 2015).
While technology adoption remains sluggish in EMs,
the process has been accelerated by the growing number
of modern supermarkets, the fintech revolution, and gov-
ernment interventions (Agarwal et al. 2018). While aca-
demic scholars (Kumar et al. 2019) and articles in the
popular press have documented an increase in the adop-
tion of digital payment technologies by URs in EMs, little
research has systematically evaluated the effect of such
adoption on URs’ performance. This question is vital.
On the one hand, adoption may enhance efficiency and
increase performance; on the other hand, if consumers in
EMs continue to use cash as a primary transaction mode
(Agarwal et al. 2018), adoption may not yield enough
benefits to overcome its cost to URs. Additional compli-
cations arise because there are multiple payment technol-
ogies, and positive outcomes may require integrating mul-
tiple modalities (Kumar et al. 2019). It is unclear whether
EM URs can perform the seamless integration required
for success. Thus, it remains questionable whether they
will derive profitability from adopting digital payment
technologies.
Given the rate at which digital payment technologies
are expected to penetrate EMs, we intend to narrow the
gaps in the extant literature by exploring the implications
of this technological advancement on URs’ performance.
J. of the Acad. Mark. Sci.
Due to the paucity of research on this topic and in line
with the recommendations of Reinartz et al. (2011), we
started our inquiry with a qualitative study to understand
whether answers to our RQs would have any strategic
implications for URs.
Study 1: Qualitative study
This qualitative study’s objective was to explore the bene-
fits and challenges faced by URs during the adoption of
digital payment technologies and to develop meaningful
RQs that would suggest practical actions for URs. We in-
vestigated unorganized, unbranded retailers, commonly
known as Kirana stores, which make up the bulk of the
retail market in India and many other EMs (e.g., China,
Indonesia, and Brazil). Data for Study 1 were collected in
two phases. Phase 1 was conducted between September
2016 and November 2016. However, to ensure that the
business practices of URs did not change between Study
1 and Study 3, phase 2 data collection was carried out post-
November 2016.
We contacted 200 URs by gathering a list from multiple
local sources and then contacting each retailer in person, by
phone, or by email. “Local sources” refers to employees work-
ing for municipal corporations of the town or city business
committees (known as “bazar committees”) and the village
heads (known as “mukhia” or “sarpanj”). Collectively, these
URs span a variety of product categories, such as grain, dairy,
consumer processed goods (CPG), and general merchandise.
Of the 200 selected URs, we received initial responses from
46; after we communicated our study’s aim and privacy com-
mitment, 31 agreed to provide feedback. Our interviews were
semi-structured (Borah et al. 2020) and conducted in multiple
languages (Tamil, Assamese, Bengali, Hindi, Kannada,
Malayalam, and Odia) to maximize the comfort of the respon-
dents. We engaged an external agency and language experts to
translate and check the translations’ accuracy, respectively.
One author and an independent coder separately reviewed
each interview, prepared a memo, and identified themes based
on the codes in the memo (Borah et al. 2020).
We relied on template analysis (King 1998) to code the
interviews and asked three central questions: (1) How do
URs perceive the benefits of adopting digital payment tech-
nologies? (2) Are all technologies equally profitable? (3) Do
URs believe that digital payment technology will enhance
profitability in the future? The qualitative data yielded the
following themes.
Benefits of adopting digital payment technologies
There is considerable disagreement among URs about the
benefits of digital payment technologies, with some arguing
that the effects are not always positive. One UR pointed out,
“All my competitors have adopted such tools. If you don’t
have them, some customers may go to the competitors.”
Others highlighted the negative effects of digital payment
technologies, as reflected in the comment, “I read in the news-
paper that if I allowed credit cards and debit cards, more cus-
tomers would come. I did that for one year. I lost money. I had
to invest money to get them, and I have yet to see the bene-
fits.” There is also a lack of consensus about which technolo-
gies may yield positive returns. One respondent argued that
“m-wallets are helpful, but credit cards are of no use to me.”
Given this lack of consensus about the effectiveness of digital
payment technologies, an investigation is necessary to ascer-
tain whether adoption is beneficial to URs and identify which
factors might influence this benefit (or lack thereof).
Furthermore, it is not apparent which technologies yield the
most significant benefits; thus, we took a deeper look at their
differential effectiveness.
Effectiveness of digital payment technologies
URs raised several concerns about adopting multiple dig-
ital payment tools. The primary issue was the cost asso-
ciated with these technologies. One UR commented, “All
of the systems have different charges. The POS machine
for credit cards charges a 1% commission along with a
fixed fee. The mobile wallets charge approximately
1.5%. With my income, if I keep on paying money like
this, how much am I going to make?” URs have also
expressed concerns about the benefits of multiple tech-
nologies due to customer-centric challenges. As one
commented, “I use multiple technologies, but most cus-
tomers come with cash as they think that I will not have
any such technology. For some customers, they want to
pay with something that requires technology that I do not
have. Finally, we settle on cash.” Unfortunately, this po-
tential mismatch was a concern for many: there are many
different digital payment technologies, and they all use
different systems. The lack of standardization has both
made it difficult for URs to decide on specific technolo-
gies and decreased any one technology’s profitability.
Thus, there is a need to classify the existing digital pay-
ment technologies, explore each category’s effectiveness
and complementarity concerning URs’ economic perfor-
mance, and identify the number of technologies required
to maximize performance.
The future of digital payment technologies
While most URs were uncertain about the exact effectiveness
of digital payment technologies, most believed that such tech-
nologies would yield some benefits in the long run. One ar-
gued, “Many young customers use digital systems. I think it

will be big in the future. I will adopt technology that costs me
less and attracts customers.” Another commented, “Currently,
there is not much benefit. However, it is increasing.” A few
URs felt that the technology would be successful only for
some stores; i.e., “My customers purchase mostly on credit.
I don’t see this changing. However, if you have more cus-
tomers who pay immediately, these tools may be more help-
ful.” Regarding the requirements associated with higher levels
of technological investments, one UR noted, “We have two
stores. My father runs one in the old city. His focus is minimal
technology. I am different. I have adopted many technologies
already. I have computers to do bookkeeping. It is no problem
for me.” However, others felt that they were much better off
not investing in such systems and instead investing in adver-
tising and promotions. One retailer stated, “I have spent mon-
ey on advertising and have not set up an m-wallet. There are
fewer digital transactions.”
Apart from highlighting URs’ beliefs about the future of
digital payment technologies, this theme also reflected consid-
erable heterogeneity among the customers served and each
UR’s preference for investing in technology versus activities
such as marketing. This preference may enhance or attenuate
the effects of digital payment technologies on economic
performance.
Study 1 aims to investigate the impact of adoption on
EM URs’ performance and the moderating effects, name-
ly, the prioritization of technological investment, the
amount of credit provided, and the determination of
whether digital payment technologies increase economic
performance. Further, it illuminates a need to classify the
various digital payment technologies so that we may
stratify the options by their expected effect on economic
performance. Hence, we classify digital payment technol-
ogies in the next section.
Classification of digital payment technologies
The term “digital payment technologies” covers various
payment mechanisms evolving rapidly, with new technol-
ogies emerging and existing technologies receiving fre-
quent and often substantial modifications (Kou 2013).
The extant literature has focused on understanding digital
payment technologies from the perspectives of both cus-
tomers and retailers (see Yu et al. 2002, Kou 2013, and
Kumar et al. 2015 for details); however, there has been
little consistency in the classification of these technolo-
gies. Critically, the rationale for the classification of each
technology is lacking. This failure to explicitly state the
basis for classification has led us to propose a context-
specific classification scheme based on the extant litera-
ture and qualitative research.
Prior research has argued that classification should be mu-
tually exclusive and collectively exhaustive (Hunt 1983).
J. of the Acad. Mark. Sci.
Additionally, one must evaluate the usefulness of a classifica-
tion scheme by comparison with other available classifica-
tions, its utility for developing law-like generalizations, and
its helpfulness for managerial decision making (Hunt 1983).
Given our focus on EM URs, we must consider the unique
challenges associated with emerging (versus developed) mar-
kets, as these may alter URs’ adoption decisions. Building on
the existing classification schemes in the literature and our
qualitative interviews, we classify digital payment technolo-
gies using two criteria: a. cost of adoption for URs and b.
value to customers. The cost of adoption for URs may include
the infrastructural costs of establishing digital infrastructure
and variable costs to be paid to digital payment technology
service providers. The same was reflected in our interviews,
which highlighted that the need to invest considerably to cre-
ate new infrastructure heavily influences URs’ decisions to
adopt payment technologies. In some cases, even if adoption
is relatively inexpensive, maintenance may create ongoing
strain (e.g., commissions to financial institutions, internet
costs, cost of the point of sales (POS) device, and mobile
devices for accepting payment). On the other hand, consumers
may derive value from the ease of use, convenience, loyalty
rewards, and security. However, some digital payment tech-
nologies require consumers to have access to bank accounts,
devices such as mobile phones, and the internet, which may
challenge adoption and the use of such technologies among
consumers.
Consistent with insights from the field and the literature
(Yu et al. 2002), we developed a categorization scheme.
Two authors coded various digital payment technologies
adopted by the URs we interviewed based on the cost to
URs and value to customers. The categorization scheme is
robust, with intercoder reliability of more than 90%. WA-
Table 2 depicts the categorization scheme.
It is critical to explain how our classification improves on
existing ones. First, it explicitly identifies the basis for clas-
sification (i.e., cost of adoption for URs and value to cus-
tomers). This classification can encompass any new technol-
ogy that may emerge and explain changes in existing tech-
nologies because of its broad structure and focus on cus-
tomers and retailers. For example, if prepaid cards become
more secure, they should enhance customer value, but URs’
costs may not change. Thus, our scheme can accommodate
evolution as well as the addition of features to a technology.
Second, as the classification scheme is based on the cost to
URs and value for customers, we can make predictions about
which technology may enhance EM URs’ performance that
may form the basis of law-like generalizations (Hunt 1971).
Finally, as EM URs’ decision to adopt technologies is driven
by costs incurred and value generated to customers, our
scheme can be a guiding tool. Thus, it satisfies the usefulness
criterion for classification (Hunt 1983). Below, we outline
our classification scheme.
J. of the Acad. Mark. Sci.
Card-based technologies (CBT) This category includes debit
cards, credit cards, smart cards, and prepaid cards, representing
the most common digital payment technologies. The value for
these is derived from strong security features, anonymity (Yu
et al. 2002), and ease of transactions. CBT offers high value to
customers, as the consumer does not have to have internet ac-
cess or any additional device apart from the card itself. On the
other hand, retailers must invest in POS machines to operate
CBT, which incurs both fixed and variable fees. Therefore,
retailers incur high costs when adopting CBT.
Account-based technologies (ACBT) These technologies pri-
marily rely on bank accounts to make digital transactions
(Kumar et al. 2019). There is a low cost to retailers, as such
technologies require little or no investment. Customers also
gain value due to strong security features as well as the ease of
making transactions. However, customers require the internet,
a digital device such as a mobile or laptop, and a bank account
to access these services. Due to poor digital and financial
infrastructure and a lack of electricity in many EMs (Sheth
2011), such technologies may be difficult to adopt and use
by customers there. Thus, the value to customers is moderate.
App-based technologies (ABT) This category includes mobile
wallets and unified payment interfaces, enabling a single mo-
bile application to integrate multiple bank accounts. For URs,
most ABTs require little investment in digital infrastructure
(e.g., QR codes), but they may incur costs in the process of
integrating the technology with existing business processes
(Kumar et al. 2019). Moreover, they may face ongoing, vari-
able commission fees based on the number of transactions.
Overall, there is a moderate cost associated with ABT, and
many URs adopt them for that reason. For consumers, ABTs
are easy to use for transactions and provide high mobility
(Kumar et al. 2019). However, similar to ACBT, these technol-
ogies require internet access and mobile phones, which may
diminish their value to customers. In addition, multiple ABTs
may operate independently without integration. For example, in
India, it is difficult to transfer funds from one wallet to another.
In sum, ABT provides moderate value to customers.
Social security–based technologies (SBT) This is a new addi-
tion to digital payment technologies, especially in India. This
category includes the Aadhar Enabled Payment System
(AEPS) and micro ATM; it requires country-specific identifi-
cation codes or social security numbers. For URs, there is a
low cost associated with the infrastructure as the government
bears the cost. However, the technology itself requires more
effort for customers—usually a retina or fingerprint scan—
which decreases the value.5 In addition, these technologies
5
https://www.bloombergquint.com/business/the-dangers-of-aadhaar-based-
payments-that-no-one-is-talking-about
rely on bank intermediaries, and customers may have limited
access. Thus, for customers, there is low value. WA-Table 3
provides complementarity and differences across these pay-
ment technologies. In the next section, we provide a theoret-
ical background and build our hypotheses.
Theoretical background and hypothesis development
We lean on the tenets of RBV (Barney 1991) to investigate the
relationship between the adoption of digital payment technol-
ogies and URs’ performance and the moderators that may
affect this relationship. Drawing on RBV, we build on the four
VRIN empirical indicators (Barney 1991) that reflect the po-
tential for an EM UR’s resources to generate sustainable com-
petitive advantages and influence organizational performance.
We propose that the adoption of digital payment technologies
positively impacts URs’ economic performance.
The RBV posits that to obtain sustainable competitive ad-
vantages, a firm should have access to VRIN resources.
Valuable resources are those that increase a firm’s effective-
ness (increase in revenue) and efficiency (cost reductions)
(Barney 1991). A firm may either exploit opportunities in
the market or neutralize a threat by exploiting these valuable
resources (Barney 1991; Kozlenkova et al. 2014). We argue
that, in the context of EM URs, digital payment technologies
are valuable resources. First, from the perspective of effective-
ness, digital payment technologies provide EM URs with bet-
ter knowledge about customers and markets. This helps these
retailers create more effective customer engagement strategies
by providing better promotions, suggestive selling that is more
effective, and a more personalized experience (Kumar et al.
2019). Effectiveness is also enhanced, as these retailers may
adapt to changing needs and preferences that help them serve
heterogeneous customer groups, such as different age groups
(younger and older consumers preferring different products)
and income segments. Thus, the adoption of digital payment
technologies may help URs develop better relationships with
multiple heterogeneous segments of customers. Such relation-
ships are a source of relational assets that are difficult to rep-
licate by rivals due to the resource’s intangible nature
(Srivastava et al. 2001). A food retailer commented the fol-
lowing in this context: “I have started using mobile payment
services; now I do not lose young customers. Before, young
customers used to come but did not have cash; hence, they
could not buy. Now, mPayment has solved the problem.”
Similarly, digital payment technologies may enhance efficien-
cy, as the data available about customers will help these re-
tailers practice better inventory and demand management
(Kumar et al. 2019).
While having a valuable resource is important for a UR,
merely being valuable is of limited use if multiple competitors
(other URs) have access to similar resources. If valuable re-
sources are not rare, they will result in competitive parity

(Kozlenkova et al. 2014). From the rarity perspective, we
argue that most URs may not adopt these technologies be-
cause of a lack of financial, managerial (such as lack of digital
literacy), and technological capabilities (Sinha et al. 2015).
Thus, a small proportion of URs may be able to adopt digital
payment technologies, making them a rare resource.
For a sustainable competitive advantage, a resource should
be imperfectly imitable (Srivastava et al. 2001) by competi-
tors. A resource is imperfectly imitable “if it is substantially
costly to obtain or develop for competing firms” (Kozlenkova
et al. 2014, p. 3). We argue that digital payment technology is
an imperfectly imitable resource for an EM UR. EM URs
serve a small local population; thus, they are strategically po-
sitioned to develop personalized strategies. For any organized
retailer serving a large population, it is difficult to devise such
strategies due to a loss of efficiency. Again, URs have devel-
oped emotional relationships with customers over time, some-
times spanning generations (Sinha et al. 2015). Emotional
relationships developed over a significantly long period allow
EM URs to create unique experiences for customers that are
difficult for organized retailers to mimic, even with substantial
technological and financial capabilities. Thus, unique histori-
cal conditions and social complexities (Barney 1991) make
digital payment technologies imperfectly imitable.
Furthermore, not all URs may be able to adopt digital payment
technologies due to financial, managerial, or technological
constraints. Thus, URs who can adopt digital payment tech-
nologies have access to resources inimitable by competition.
As one UR highlighted, “We accept all cards and Paytm. This
helps me cater to customers who may not carry cash.
Previously, customers used to take credit or did not buy if they
didn’t have cash. We give credit to regular (loyal) customers,
but those who are not regular we cannot give credit to. Now
with this system, we can cater to all. Customers also buy more
products (large basket size). Another store that is 3 kilometers
from here does not have these systems. We also get some of
their customers.”
Finally, digital payment technologies are not easily substi-
tutable. Substitutability focuses on other firms in the industry,
creating strategically equivalent resource bundles that may
mitigate competitive advantages derived from a valuable, rare,
and imperfectly imitable resource. Such substitutability may
occur by substituting another resource that may help a firm
implement similar strategies (Barney 1991). However, substi-
tutability is about relative rather than absolute substitutability
(Barney 1991). We argue that digital payment technologies
are not perfectly substitutable. First, from the legal environ-
ment perspective, developing and implementing solutions in
EMs becomes challenging due to unstable governments, pro-
tectionism, and infrastructural challenges (Bronnenberg and
Ellickson 2015). Second, EM URs lack managerial, financial,
and technological know-how (Sinha et al. 2015), which makes
creating a unique resource bundle as a substitute for digital
J. of the Acad. Mark. Sci.
payment technologies challenging. Finally, digital payment
technologies provide a network advantage where institutional
voids and an underdeveloped financial structure are conducive
for digital payment technologies to thrive (Kumar et al. 2020).
As more customers and URs adopt such technologies, cus-
tomers may not switch immediately; thus, even if other re-
tailers develop a unique resource bundle, it is unclear whether
the bundle can entirely be a substitute for digital payment
technologies.
H1: The adoption of digital payment technologies is positively
related to EM URs’ economic performance.
While we argue for a positive relationship between digital
payment technology adoption and performance, some URs
may be better positioned to exploit resources than others be-
cause they may possess resources complementary to digital
payment technologies. “Complementarity means that the ben-
efits from one resource are leveraged by the presence of an-
other” (Kozlenkova et al. 2014, p. 11). Complementarity
among resources makes it difficult for competitors to imitate
and provide the synergies and competitive advantages that
help a firm enjoy a sustainable competitive advantage
(Morgan et al. 2009). For EM URs, resources that are com-
plementary to digital payment technologies may come from
their prioritization of technological investment, consistent
with our qualitative study. By “prioritization of technological
investment,” we mean the degree to which retailers invest in
technological resources over other organizational investments
(e.g., advertising and promotion). The prioritization of tech-
nological investment (e.g., using high-speed internet or
installing computers to keep track of accounts) enables re-
tailers to facilitate faster, error-free digital payments to serve
customers more efficiently and increase customer engagement
(Kumar et al. 2015). This makes the resource more valuable
for URs.
Furthermore, as URs lack technological capabilities, tech-
nology prioritization is rare among most EM URs. Imitation is
difficult, as URs that prioritize technology investment develop
technological capabilities over a prolonged period (Wade and
Hulland 2004). Imitation becomes even more challenging for
URs, as they lack both managerial and financial resources.
Thus, URs who have developed technological capabilities
by prioritizing technological investments are better positioned
to leverage digital payment technologies. Because resource
complementarity occurs between the prioritization of techno-
logical investment and digital payment technology adoption
for EM URs, we argue that:
H2: The prioritization of technological investment strengthens
the relationship between EM URs’ adoption of digital
payment technologies and economic performance.
J. of the Acad. Mark. Sci.
Our second moderator is the amount of credit provided to
customers. Qualitative research has suggested that most URs
enact policies to provide credit to customers. From the per-
spective of RBV, we argue that providing credit to customers
is an organizational policy that helps build relationships with
customers and thus serves as a critical relational resource.
Credit availability is unique to EMs, such as India, where
many URs provide customers with some credit so that they
can obtain the products they need and pay at a later time,
perhaps after receiving their salary at the end of the month.
Some scholars argue that providing credit is a major source of
sustainable competitive advantage for URs in EMs and is an
important relational resource (Sinha et al. 2015). However, we
argue that providing credit to customers weakens the relation-
ship between digital payment technology adoption and eco-
nomic performance, as digital payment technology will cease
to exist as a VRIN resource. First, digital payment technolo-
gies may not be valuable in the presence of credit availability,
as customers buying on credit may not adopt such technolo-
gies. When customers rely on credit, they are less motivated to
adopt digital payment technologies themselves; hence re-
tailers incur costs with little benefit (e.g., rent for a POS ma-
chine, internet service, or mobile bills). One retailer stated, “I
provide credit to all my customers. This helps me nurture
personalized relationships and increase my business. I have
adopted digital payment tools over the last two years. They are
of no use to me as most consumers do not use them. They pay
me the total at the end of the month in cash. As such, I am
incurring costs for maintaining these systems.” Second, an
increase in the credit amount provided leads to digital inertia,
which mitigates against adopting new technologies. The de-
velopment of customers’ frames of reference regarding pay-
ment on credit may hinder the effects of the adoption of digital
payment technologies on URs’ performance. Recent research
has shown that inertia is an important factor determining the
likelihood of adopting digital payment technologies (Kumar
et al. 2020). Thus, the presence of credit may diminish the
value of digital payment technologies. Hence, we argue that:
H3: The credit amount offered by EM URs attenuates the
positive effect of the adoption of digital payment technol-
ogies on their performance.
Figure 1 represents the research framework of the study.
Differential effects of adopting digital payment
technologies on UR performance
Although our research framework informs us of the theoretical
reasons for the effect of adoption on performance, it is critical to
know why some technologies are adopted more frequently than
others and why they may have different effects. We interviewed
a few URs (10) and customers (14) to gain their perspective on
their decisions to explore this. We found that most URs were
optimistic about CBT and ABT. As one explained, “I have to
adopt Paytm as most young customers currently do not come
with cash and they want to pay with their mobile. I pay lower
fees for app-based transactions than for card-based transac-
tions.” Another retailer noted the following: “I have been
accepting debit cards, credit cards, mPayment, and digital wal-
lets. Consumers generally like to pay by wallets.” Finally, one
retailer mentioned, “I have to adopt because my nearest retailer
has adopted. Although we sell different categories of products
and my sales are not driven by his business, consumers come to
me asking if I accept a card or Paytm. To keep my business
relevant and perceptions good, I have to offer both types.”
Similarly, our conversations with customers revealed a trend
toward CBT and ABT transactions. One of the customers in-
formed us the following: “I use Paytm and cards for my day-to-
day transactions. They are secure and easy to use. I prefer to
visit a retailer who accepts all these types of transactions.”
Another customer noted, “My wallet was stolen three times,
and I lost cash. Now I use cards. I can block them if they are
stolen.” Our interviews reflect that URs’ adoption decisions
depend on a few key factors: (a) costs and benefits of adoption,
(b) customer demand, and (c) competition and perception.
These factors are consistent with Inman and Nikolova (2017).
We expect that different technologies should have different
effects on URs’ performance. This is driven by a combination of
the customers’ perception of a particular technology and the
URs’ cost of adopting it. For example, the adoption of CBT
should have a significant positive effect on UR performance, as
this type of technology has the highest penetration in the Indian
market across customers.6 As reflected in our classification, this
technology also yields high value to customers in EMs, as it does
not require internet access or a device. While it poses a high cost
of adoption to URs, these technologies also have great potential
to increase performance. Similarly, ABT yields moderate bene-
fits for customers and requires a moderate investment from URs.
Therefore, ABTs are highly likely to be adopted by retailers and
customers, which yields a positive effect on UR performance.
On the other hand, we argue that ACBT and SBT may have a
negligible impact on performance, or they may influence perfor-
mance only due to some form of synergistic effects with CBT or
ABT. First, penetration and financial literacy are low among
customers in the Indian market; thus, adopting this technology
may not yield positive returns. Second, as highlighted earlier,
SBTs are inherently difficult for consumers to use because of
retina and fingerprint requirements, so they offer low value.
Similarly, ACBTs require the internet, devices, and bank ac-
counts, and customers may not have access to one or more of
6
https://www.financialexpress.com/economy/debit-card-shines-in-era-of-
upi-mastercard-tells-why-you-should-carry-card-to-shop-in-digital-india/
1903060/

these. Therefore, while these technologies may require little in-
vestment from URs, they are of moderate value to customers and
are unlikely to improve UR performance.
Study 2: Empirical investigation
Data
Our sampling is based on customers’ monthly per capita expen-
diture (MPCE), a standard metric used by India’s government7 to
understand unorganized retail. There is no way to track the size
and composition of URs; hence MPEC indirectly reflects the
degree of heterogeneity among them. A high MPEC, reflecting
high per capita consumption, may suggest larger retail stores. We
used the probability proportional to size method and, keeping
geographic representation in view, selected three districts from
each of the three categories: low MPCE, average MPCE, and
high MPCE (see WA-Table 4 for details). Our sample consisted
of URs from nine districts across seven states and one union
territory and reflected low, average, and high MPCE districts
(WA-Table 5 highlights region composition). We traveled with
a professional agency to each location for data collection, we
explained our research objective to specific URs, and we asked
them if they would be willing to share data with us. If they
refused, we moved to the next retail store. We visited more than
800 URs and collected data from 405; we omitted two outliers,
for a final sample size of 403.8 Our sample was representative of
the population (see WA-Part A for details), and we did not ob-
serve any nonresponse bias (see WA-Part B for details).
To check the usefulness of the factors identified in Study 1,
we conducted a pilot survey with 90 URs by the end of 2016.
The pilot survey gathered information about whether URs
adopted digital payment technologies, the types of technology
adopted (if any), and their economic performance. Through
correlation analysis, we explored whether the adoption of dig-
ital payment technologies, in general, was related to economic
performance and whether each type of technology had a sig-
nificant relationship with economic performance. We found
that adoption was positively related to economic performance;
this was driven by technology type, while other types did not
have a significant effect. We started collecting data for our
main study in the last week of January 2017 and finished
mid-April 2017. In terms of store format, in the pilot study,
7
https://data.gov.in/keywords/monthly-capita-expenditure
8
When we went into the field for data collection, 11.6% of the URs who had
adopted the technology had done so between October 2015 and January 2016,
and the rest adopted between January and May 2016. Because the retailers did
not all adopt at the same time, this could cause discrepancies in the results;
however, the risk is low, given that only 11.6% had an imprecise adoption
time. To mitigate these concerns, we tested our results on a subsample (202
retailers) who adopted in January or February 2016. We find directionally
consistent results (see WA-Tables 20 and 21).
J. of the Acad. Mark. Sci.
75 of the 90 URs were single stores, 15 were part of family-
owned businesses, and 310 URs in the main study were single
stores. Figure 2 Panels a, b, c, and d present representative
URs who participated in the data collection process. The URs
are from West Bengal, Maharashtra, Rajasthan, and Kerala.
Figure 2 Panels e and f show the typical transactions of two
URs at two different points in time and in two different lan-
guages. WA-Table 6 presents a typical transaction between a
UR and a customer (of course, the list may change each day
for each customer).
Variable operationalization
Dependent variable We operationalized each UR’s economic
performance as average monthly revenue in Indian rupees
(INR), and we assumed that there were six working days per
week. Notably, we constructed this variable from the daily
averages provided by the URs. In addition, we added a robust-
ness analysis with three additional dependent variables that
reflect retail productivity.
Independent variables Adoption of digital payment
technologies is a binary variable set to 1 if the UR was using
any digital payment technology and 0 otherwise (Hu and Van
den Bulte 2014). To answer RQ2, we created a binary variable,
types of digital payment technologies adopted, for each of the
four categories of digital payment technologies. The total num-
ber of digital payment technologies adopted is the sum of all
types of technologies adopted by each UR.
Moderators Prioritization of technological investment is the
ratio of the amount spent on technology over the amount spent
on advertising or promotions (Saboo et al. 2016). Average
credit amount is the average value of the credit offered by
the UR to each customer.
Control variables We controlled for several other variables
that may impact UR performance. We controlled for product
diversity (the number of different SKUs available from the
UR), years in operations (the number of years the UR had
been doing business in the same facility), retailer size (the
total number of employees working in the retail store), retailer
liability (the total amount of the loans taken out by the UR for
business purposes), total promotional tools (the number of
special benefits, such as gift vouchers and membership cards,
that URs offer to their regular customers), payment accep-
tance (cash) (a binary variable, set to 1 if the UR accepts cash
and 0 otherwise), payment acceptance (others, e.g., checks) (a
binary variable, set to 1 if the UR accepts noncash, nondigital
payment methods, and 0 otherwise), and average inventory
holding period (the average number of weeks for which a UR
holds its inventory). WA-Table 7 represents the
operationalization of all of the variables.
J. of the Acad. Mark. Sci.
Fig. 1 Research framework
Adoption of Digital
Payment
Technologies by
URs
Method
To investigate whether the adoption of digital payment
technologies affects URs’ economic performance and to
identify possible modifiers of this relationship, we built a
regression model that accounted for potential endogeneity
in their adoption behavior. URs are strategic in their adop-
tion decisions; cost-benefit analysis depends on the be-
havior of similar URs in the neighborhood, changes in
the retail environment, and consumers’ acceptance and
adoption of technology. Furthermore, technology adop-
tion also requires investment; thus, the decision must con-
sider the financial status of the UR. Thus, multiple vari-
ables that are unobservable to researchers can lead to en-
dogenous adoption behaviors. Informed by Ebbes et al.
(2016), we account for potential endogeneity with two
instruments that satisfy the exclusion and relevance
criteria: (Percentage Adopt i ), the percentage of URs
(within 20 km from the ith UR) who have adopted digital
payment technologies; and (Neighbori), the adoption of
digital payment technologies by the nearest neighboring
UR who deals with a different dominant product category
(e.g., if the ith UR is a fruit and vegetable UR, then the
nearest neighbor can trade in dairy products). We used the
latitude and longitude of the ith UR to determine both
components (see WA-Part C, WA-Table 8 for details).
Our selection of Percentage Adopti as an instrument was
driven by diffusion theory, as synthesized in Karshenas and
Stoneman (1993). They hypothesize that a firm’s profit gain
from adopting new technology will depend on the number of
other adopters (stock effects). We argue that as neighboring
URs increasingly adopt the technology, the ith UR will per-
ceive that the market is changing and be more likely to mimic
that change, consistent with the industry recipes theory
(Spender 1989). However, the percentage of URs who adopt
digital payment technologies should not affect the ith UR’s
performance; given the lack of proper transportation infra-
structure, consumers are unlikely to travel to make purchases.
This is also evident in the instrument’s significant correlation
with the endogenous variable and insignificant correlation
with the dependent variable (ρ = .05). The selection of this
Prioritization of
Technological
Investment URs’ Economic
Performance
(+) (+)
(-)
Credit Amount
Provided
Control
Variables
instrument is consistent with Germann et al.’s (2015) use of
CMO prevalence among peer firms (p. 8) as an instrument for
the presence or absence of CMO in the ith firm (dependent
variable (DV) = firm performance), as well as Leenheer
et al.’s (2007) selection of the general inclination to join a
loyalty program (p. 36) as an instrument for membership in
the loyalty program (DV = consumer’s share of wallet).
Similarly, we argue that adoption by the nearest neigh-
bor (Neighbori) who deals with a dissimilar product cate-
gory should influence the ith UR’s adoption decision, as
the retailer needs to live up to customers’ expectations,
consistent with the arguments of Inman and Nikolova
(2017). However, the neighbor’s behavior should not affect
the ith UR’s performance as they deal in different product
categories. The selection of this instrument is in line with
Dinner et al.’s (2013) selection of advertising expenditures
of non-competing firms (p. 534) as an instrument for ad-
vertising (DV = demand). The instrument has a significant
correlation with the endogenous variable but does not have
any significant relationship with the dependent variable. We
estimate a probit selection model with adoption as the de-
pendent variable, a set of control variables, and the two
instruments as the independent variables. We then use the
inverse mills ratio (IMR) from the probit model as the
additional independent variable to investigate the effect of
digital payment technology adoption on URs’ economic
performance (control function approach; Petrin and Train
2010).
Adoptioni ¼ α þ βPA Percentage Adopt i þ βNB Neighbori
N
þ ∑ β p Control ip þ ϵi ð1Þ
p¼1
Controlip is the set of control variables that affect the adop-
tion decision of the ith UR.
Eq. 2 captures the effect of adoption on URs’ eco-
nomic performance and the potential moderating roles
of URs’ prioritization of technological investment (ETi)
 J. of the Acad. Mark. Sci.

and the amount of credit provided (CAi), while IMRi To find the number of digital payment technologies that
represents the inverse mills ratio obtained from Eq. 1. optimizes a UR’s economic performance, we first summed
the total number of digital payment technologies (TADi)
adopted by each UR and then corrected for endogeneity, as
EPi ¼ αEP AD
þ βEP AD
Adoptioni þ β EP E ET i shown in Eq. 5. Following the logic above (in Eq. 1 and Eq.
3), Eq. 5 uses analogous instruments: the average number of
þ β EP CF
CAi þ β EP AD E
ET i X Adoptioni technologies adopted by URs within 20 km of the ith UR
N (Avg_techi) and the number of technologies adopted by the
þ β EP AD CF
CAi X Adoptioni þ ∑ βp Control ip nearest neighboring UR who deals with dissimilar products
p¼1
from the ith UR.
þ β EP AD IMR
IMRi þ ϵ EP
i ð2Þ
TADi ¼ α þ βNB Neighbori þ βPA Avg techi
N
To describe each type of payment technology’s effect, we þ ∑ β p Control ip þ ϑi ð5Þ
p¼1
estimate Eq. 4, in which each payment technology is opera-
tionalized as a binary variable. For instance, if a UR had We estimate Eq. 6 with the residual from Eq. 5 as an addi-
adopted ABT, then we operationalized it as ABTi = 1; 0 oth- tional independent variable. The first derivative of Eq. 6
erwise. Prior to this, however, we accounted for the equating to 0 gives us the optimal number.
endogeneity in the URs’ adoption of each type of digital pay-
ment technology, as we did for the overall adoption decision EPi ¼ αEP TAD
þ βEP TAD
TADi þ βEP SQ TAD
TAD2i
above. Specifically, for each jth category of technology, we N
ENDO b
identify the percentage of URs (within 20 km of the ith UR) þ ∑ β p Control ip þ β EP ϑi þ ϵ EP
i ð6Þ
p¼1
who adopted that jth technology and the adoption of that jth
technology by the nearest neighboring retailer who deals with
a dissimilar product category from the ith UR.
Results
Types of Technology Adoptionij

¼ α j þ βPA We provide descriptive statistics and the bivariate correlation

j Percentage Adopt ij þ β j Neighborij
NB
in Table 2. We tested for multicollinearity and found that max.
N VIF = 1.21 (mean VIF = 1.09). In Table 3 (M1), we present
þ ∑ βpj Control ip þ ϵ ij ð3Þ
p¼1 the results of Eq. 1. As shown in Table 3, the percentage of
URs within 20 km who adopted technology (β = 2.40, p < .1)
We estimate four probit models (with the adoption of the jth and adoption by the nearest neighboring UR dealing with a
digital payment technology by the ith UR as a dependent variable) dissimilar product category (β = .31, p < .05) had a significant
and use the IMRs from the four models as independent variables impact on the adoption decision of the ith UR. Table 3 (M2)
in Eq. 4. We did not use a multinomial logit specification, as a also presents the results of Eq. 2; we find that the adoption of
retailer may adopt multiple technologies simultaneously. digital payment technologies positively influenced URs’ eco-
nomic performance (β = 49,705.31, p < .1), thus supporting
H1. URs’ prioritization of technological investment strength-
EPi ¼ αEP þ βCBT CBT i þ βACBT ACBT i þ β ABT ABT i ened this relationship (β = 63,717.69, p < .1), and increases in
the average credit amount weakened it (β = −43.79, p < .05),
þ β SBT SBT i þ β IMR CBT
IMR CBT i thus supporting H2 and H3, respectively. Furthermore, eco-
þ β IMR ACBT
IMR ACBT i þ β IMR ABT
IMR ABT i nomic performance was influenced positively by size (β =
10,932.48, p < .01), negatively by the total number of promo-
þ β IMR SBT
IMR SBT i þ βCBT ACBT
CBT i X ACBT i tional tools (β = −19,625.39, p < .01), positively by noncash
and nondigital payment acceptance (β = 42,780.09, p < .1),
þ β CBT ABT
CBT i X ABT i þ β CBT SBT
CBT i X SBT i and positively by the average inventory holding period (β =
þ β ACBT ABT
ACBT i XABT i 23,672.00, p < .01). We provide the results of Eq. 3 in WA-
Table 9. From Eq. 4 (see Table 4, M1), we found that the
þ β ACBT SBT
ACBT i X SBT i þ βABT SBT
ABT i X SBT i adoption of CBT (β = 31,135.79, p < .05) and ABT (β =
N 63,760.12, p < .05) positively impacted URs’ economic per-
þ ∑ βp Control ip þ ϵ EP
i ð4Þ formance. At the same time, ACBT negatively affected their
p¼1
economic performance (β = −89,237.14, p < .05), and the
J. of the Acad. Mark. Sci.

Table 2 Correlation and summary statistics

Variables (1) (2) (3) (4) (5) (6) (7) (8) (9) (10) (11) (12) (13) (14) (15) (16)

(1) Economic Performance 1

(2) Adoption .06 1
(3) Prioritization of Technological .07 .04 1
Investment (ET)
(4) Credit Amount (CA) .04 −.00 −.05 1
(5) Product Diversity .17 −.09 −.00 .06 1
(6) Years in Operations .05 −.05 −.01 .03 .11 1
(7) Size .20 −.05 .00 .02 .06 .05 1
(8) Retailer Liability −.06 −.05 .08 −.04 −.07 −.05 .00 1
(9) Total Promotional Tools −.02 .03 −.03 .00 −.01 −.01 .29 .06 1
(10) Payment Acceptance (cash) .02 .08 .03 .03 .00 −.06 .01 −.20 −.13 1
(11) Payment Acceptance (others, .13 −.10 .04 −.06 .17 −.05 .15 .03 .05 −.32 1
e.g., cheque)
(12) Average Inventory .21 −.03 .00 .04 .08 .01 .11 −.06 .12 −.08 .06 1
Holding Period
(13) Card-based Technology (CBT) .09 .49 −.00 .00 .04 −.06 .08 −.12 .14 .05 .08 .03 1
(14) Account-based Technology .08 .41 .07 −.06 .04 −.04 .09 −.02 .03 .05 .14 .02 .31 1
(ACBT)
(15) App-based Technology (ABT) .03 .28 .06 −.05 −.07 −.00 −.07 .18 −.09 −.05 −.06 .01 −.36 .24 1
(16) SS-based Technology (SBT) −.17 .25 −.01 .04 −.08 .01 −.16 −.07 −.07 .06 −.14 −.10 −.25 −.20 .01 1
Mean 131,922.60 .80 .46 1250.58 161.20 11.31 2.13 18,548.39 .52 .97 .09 1.95 .50 .41 .24 .20
SD 96,188.75 .40 .28 436.14 418.96 10.33 1.78 40,617.92 .60 .18 .29 .78 .50 .49 .43 .40

Note: All correlations with |r| > .10 significant at p < .05 (two-sided). Sample size: 403

effect of SBT was insignificant. We present the estimates with
bootstrapped standard errors across all the models. As per our
speculation, we find that URs should have a selective adoption
strategy: not all technologies improve performance.
Finally, our estimation of Eq. 6 (see Table 5 for the results
of Eq. 5 and 6) shows that while a retailer can adopt CBT and
ABT independently, as both have a positive effect on econom-
ic performance, given that the optimal number of technologies
on average is two (see Fig. 3), by combining the results from
Eq. 4 and Eq. 6, and after finding the significance level of total
effects of adoption of each combination (see the significance
level in WA-Table 10), it is seen that if a retailer needs to
adopt two technologies, then a fair combination over others
will be to adopt CBT and ACBT (due to their synergistic
effects). Even in the case of alternate dependent variables,
adopting CBT and ACBT together brings more value over
other combinations.
Explanation of the synergistic effects
Our results indicate that the synergy between the ACBT and
CBT is more positively related to retailers’ performance com-
pared to other synergies. First, both technologies are highly
secure and are frequently offered by the same bank, as banks
and financial institutes attempt to cobrand to provide customer
value in Ems.9 For customers, such a synergy enhances value
and convenience because they only need to interact with one
9
https://www.pwc.com/gx/en/financial-services/publications/assets/pwc-
emerging-markets-12-July.pdf
service provider (the bank). Additionally, it brings a sense of
security and ease of transactions. Second, URs also derive
synergies as the cost of coordination decreases, as URs need
to coordinate only with banking intermediaries rather than
multiple different intermediaries (e.g., wallet providers in the
case of ABT), which is not the case with other technologies
that involve different service providers. The resource comple-
mentarity between the ACBT and CBT drives EM URs’
performance.
Alternative dependent variables
We tested our models with an alternative operationalization of
performance: retail productivity. Although the literature pro-
vides multiple operationalizations (Kamakura et al. 1996), we
operationalize “retail productivity” in three ways:
a. Sales per employee: the ratio of sales to the number of
employees
b. Inventory turnover: the ratio of sales (at retail value) to
average inventory value (at retail value)
c. Sales per square foot: the ratio of sales to the square foot-
age of the selling space
For Eq. 2, as shown in Table 3 (M3, M4, and M5), we
obtain directionally consistent results. Adoption is positively
related to retail productivity measures, and this relationship is
affected positively by the prioritization of technological in-
vestments and negatively by the amount of credit provided.
Similarly, for Eq. 4, we find that ACBT negatively and ABT
 J. of the Acad. Mark. Sci.

Table 3 Parameter estimates (digital payment technology adoption)

Probit Model (M1) DV=Economic DV=Inventory DV=Sales per DV=Sales per

performance (M2) turnover (M3) employee (M4) sq. feet (M5)

β (SE) β (Bootstrap SE) β (Bootstrap SE) β (Bootstrap SE) β (Bootstrap SE)

Percentage Adopt 2.40* (1.24)
Neighbor .31** (.15)
Adoption 49,705.31* 46,537.12*** 49,053.45** 7559.22
(28,229.33) (16,289.44) (18,977.77) (7123.05)
Prioritization of technological investment (ET) −31,589.67 −17,849.51 −7237.49 −4894.41
(28,103.79) (19,772.78) (19,341.14) (6526.19)
Credit Amount (CA) 42.42** 29.61* 31.81*** 9.60**
(17.06) (16.40) (10.98) (3.91)
ET X Adoption 63,717.69* 38,895.80* 18,121.33 18,113.36**
(36,943.40) (22,582.59) (24,962.99) (8714.65)
CA X Adoption −43.79** −39.65** −40.52*** −10.46**
(21.22) (16.21) (12.48) (5.02)
Product Diversity −.00 32.47** 18.51 23.14** 10.80***
(.00) (16.08) (11.30) (9.54) (3.10)
Years in Operations −.01 488.27 473.95 −77.56 199.15
(.01) (605.51) (406.13) (246.43) (163.64)
Size −.05 10,932.48*** 8294.31*** −14,427.49*** 2176.31***
(.04) (3681.27) (2415.61) (2111.22) (684.32)
Retailer Liability −.00 −.04 −.01 .02 −.01
(.00) (.14) (.09) (.11) (.03)
Total Promotional Tools .17 −19,625.39*** −16,812.83*** −17,984.37*** −7187.08***
(.13) (6897.84) (5072.07) (6620.72) (2274.26)
Payment Acceptance (cash) .36 14,041.66 8968.03 9407.09 −1427.62
(.40) (27,260.31) (15,361.83) (19,390.65) (6884.36)
Payment Acceptance (others, e.g., cheque) −.33 42,780.09* 16,897.02 11,941.28 4114.60
(.25) (22,245.40) (11,037.01) (13,216.55) (4230.41)
Average Inventory Holding Period −.06 23,672.00*** −35,097.50*** 18,626.86*** 3813.79**
(.10) (6447.35) (5526.13) (4483.71) (1924.22)
IMR −45,329.57 −30,161.39 −42,904.72 −14,865.84
(59,548.62) (32,738.08) (52,751.61) (16,144.54)
Intercept −1.29 2366.73 89,018.15*** 47,883.72 10,770.93
(1.10) (43,827.04) (25,585.05) (32182.00) (12,588.01)
AIC 402.47 10,359.38 10,133.55 10,082.52 9284.02
N 403 403 403 402 403

Note: Standard errors are listed in parentheses below the parameter estimates | * p < .1, ** p < .05, *** p < .01 |

positively influence inventory turnover and sales per square
foot, respectively. Moreover, the interaction between CBT
and ACBT positively influences inventory turnover and sales
per square foot, respectively (see Table 4; M2, M3, and M4).
Mediation effect of customer engagement
much broader concept, and our operationalization may not cov-
er all nuances. We leave proper operationalization and analysis
to future research. As shown in WA-Table 11, we find a sig-
nificant mediation effect: 38.8% of the relationship between
technology adoption and economic performance was explained
by customer engagement.

We tested the effect of customer engagement as a mediator. We Additional robustness checks

operationalized customer interaction or engagement as the av-
erage time spent by a customer (including shopping, waiting, We estimated Eq. 2 and Eq. 4 with logarithmic-transformed
and billing) at the store per visit. Customer engagement is a economic performance as the dependent variable and obtained
J. of the Acad. Mark. Sci.

Table 4 Parameter estimates (type of digital payment technology adoption)

DV=Economic DV=Inventory DV=Sales per DV=Sales per

Performance (M1) Turnover (M2) employee (M3) sq. feet (M4)

β (Bootstrap SE) β (Bootstrap SE) β (Bootstrap SE) β (Bootstrap SE)

Card-based Technology (CBT) 31,135.79** 11,930.03 16,432.04 −104.97
(15,067.17) (9102.95) (12,578.57) (3412.64)
Account-based Technology (ACBT) −89,237.14** −59,616.09** −27,284.97 −22,051.00**
(34,857.51) (24,369.91) (36,461.39) (9581.34)
App-based Technology (ABT) 63,760.12** 53,553.17* 17,860.61 23,180.30**
(24,742.06) (30,098.21) (18,287.97) (9502.75)
SS-based Technology (SBT) −731.49 3719.07 −15,399.87 −548.62
(14,691.09) (12,854.84) (10,648.91) (3900.38)
IMR_CBT 80,743.00 77,422.99 39,315.48 9188.97
(77,249.66) (70,786.39) (59,923.30) (21,442.79)
IMR_ACBT −37,451.74 −5539.52 −47,823.27* −8535.90
(36,905.74) (21,334.73) (25,530.62) (10,424.65)
IMR_ABT −69,225.70*** −45,093.30** −36,456.19** −15,917.47***
(25,443.07) (18,325.83) (17,777.29) (5577.10)
IMR_ SBT −81,307.44** −44,954.20 −65,881.61*** −21,238.38**
(33,383.70) (27,639.49) (23,399.08) (8295.51)
CBT X ACBT 87,037.95*** 61,583.37** 17,043.44 23,257.13**
(33,041.95) (24,156.14) (34,204.18) (9342.95)
CBT X ABT −137,903.41*** −80,660.04*** −72,107.70** −35,064.23***
(29,487.58) (23,984.20) (29,884.27) (9039.56)
CBT X SBT −43,437.03** −32,226.12** −13,567.19 −4437.25
(21,607.69) (16,340.07) (15,978.29) (4908.82)
ACBT X ABT 47,576.71 22,336.43 20,145.60 4922.03
(32,514.61) (25,003.67) (31,753.25) (7593.54)
ACBT X SBT 24,318.07 26,285.31 22,517.55 15,915.57
(36,998.49) (39,790.75) (29,901.81) (10,358.79)
ABT X SBT −62,431.89* −57,664.87* −30,428.28 −25,576.98***
(31,915.01) (36,957.76) (24,085.99) (9596.47)
Product Diversity 66.77*** 40.92*** 46.15*** 18.73***
(15.12) (13.53) (10.22) (3.97)
Years in Operations −404.27 −292.57 −567.84 −25.64
(654.56) (381.66) (396.64) (160.64)
Size 21,751.46*** 15,048.29** −6867.41* 4944.96***
(5528.58) (5902.26) (3721.32) (1464.17)
Retailer Liability −.36 −.34 −.08 −.07
(.28) (.26) (.21) (.08)
Total Promotional Tools 12,314.19 10,307.19 −675.75 −768.88
(16,682.20) (14,409.06) (13,267.84) (4492.96)
Payment Acceptance (cash) 50,585.86 54,228.13 13,210.29 7199.37
(47,564.09) (38,710.49) (29,045.14) (11,151.09)
Payment Acceptance (others, e.g., cheque) 115,503.77 73,995.68* 54,151.17** 21,806.95**
(44,538.60) (40,798.20) (26,409.28) (10,366.83)
Average Inventory Holding Period 27,254.10*** −33,535.11*** 21,269.88*** 4885.31**
(7512.74) (5941.91) (5334.16) (1956.20)
Intercept 137,267.30 111,725.57 201,374.53** 51,639.38
(132,018.30) (84,314.18) (97,115.65) (33,833.80)
AIC 10,344.88 10,126.54 10,076.08 9267.93
N 403 403 402 403

Note: Standard errors are listed in parentheses below the parameter estimates | * p < .1, ** p < .05, *** p < .01

directionally consistent results (see WA-Table 12 and WA-
Table 13). While analyzing the descriptive statistics of the
variables in our data, we realized that some of the control
variables (product diversity, years in operation, size, and re-
tailer liability) in our model had skewness >2. We log-
transformed them such that skewness decreased to .53, .12,
1.1, and 1.1, respectively. We re-estimated Eq. 2 and Eq. 4
and obtained consistent results, as presented in WA-Tables 14
and 15. We also estimated Eq. 4 with CAi as an additional
variable. As represented in WA-Table 16, the results for the
proposed relationship remains consistent.
Reduced number of observations
Our original sample consisted of family-owned businesses
that owned more than one outlet. Furthermore, they may not
 J. of the Acad. Mark. Sci.

Table 5 Parameter estimates

(number of technology adoption) First Stage Model (Eq. 5) Second Stage Model (Eq. 6)

β (SE) β (SE)
Neighbor .15*** (.05)
Avg_tech .05 (.07)
No. of Digital Payment Tech. Adopted (TAD) 59,383.10
(39,045.35)
Sq. TAD −14,084.69***
(4932.03)
Product Diversity −.00 30.75***
(.00) (10.77)
Years in Operations −.00 336.80
(.00) (511.13)
Size −.01 10,180.80***
(.03) (3714.11)
Retailer Liability −.00 −.06
(.00) (.12)
Total Promotional Tools .06 −15,703.76**
(.08) (7570.42)
Payment Acceptance (cash) .39 9428.11
(.26) (28,892.86)
Payment Acceptance (others, e.g., cheque) .19 32,421.00
(.16) (20,551.64)
Average Inventory Holding Period −.01 22,851.60***
(.06) (6206.97)
Endogeneity −18,247.69
(36,220.34)
Intercept .68** 10,387.09
(.33) (45,621.50)
AIC 1040.31 10,358.25
N 403 403

Note: Standard errors are listed in parentheses below the parameter estimates | * p < .1, ** p < .05, *** p < .01

be classified as URs because they are large in size, although
no literature or regulations clarify this distinction. To
ensure that our sample captured URs exclusively, we
conducted a subsample analysis with retailers whose
shop space was less than 500 square feet, and the find-
ings were consistent with the full sample analysis (see
WA-Tables 17 and 18b; WA-Table 18a represents
endogeneity correction). We used 500 square feet as
the cutoff because it captures 96% of India’s unorga-
nized retail outlets (Singh and Singla 2011).
Although we find evidence that the adoption of digital pay-
ment technologies is positively related to economic perfor-
mance, the results obtained in Study 2 are correlational and
thus cannot claim that adoption caused, or was the only cause
of, the increase in economic performance. As such, we con-
ducted Study 3, a field experiment, to evaluate the link be-
tween adoption and performance.
Study 3
We randomly selected 150 URs that had not yet adopted
digital payment technologies at the beginning of the ex-
periment window and were located in Indian states that
were not part of data collection in Study 2 (so the field
experiment data would not overlap). The study was con-
ducted from June 2018 until December 2018. We paired
up the URs based on similarities in revenue, operating
location, size, and nature of business (e.g., fruit, general
merchandise, and dairy). When matching URs, we applied
multiple criteria, such as shop location (town vs. village),
product diversity (SKUs available at the store), shop floor
size, and revenue. Two URs were considered similar if the
revenue of one lay within 20% of the other, they had
similar floor areas and SKUs, they operated in the same
area of business, and they were located in the same type
of area (e.g., a town or a large village). We provide a
representative table that shows the matching criteria (see
WA-Table 19). We believe that a 20% deviation in reve-
nue in a pair indicates a similarity between two URs. We
also conducted a t-test of revenue (the average 3-month
value before they were selected) between two groups of
paired URs and found that they were not significantly
different (t-stat = −1.32; p = .19).
We were able to create 36 pairs and monitored both
groups for six months. For the initial three months (T1),
there was no intervention for either group. At the end
of the third month, we recommended that the treatment
J. of the Acad. Mark. Sci.
Fig. 2 Representative URs and
transactions
group adopt at least one digital payment technology.
We verified the adoption by, for example, tracing the
POS machine in cases of CBT and random mobile
transactions for ABT. We measured each UR’s perfor-
mance twice, averaged at the end of the third and sixth
months. We collected information for both groups on
certain control variables. We then deployed a DID ap-
proach to tease out the effect, as explained in Eq. 7:
EPit ¼ α þ β1 post t þ β2 treatment i
N itively influenced satisfaction (β = 3.14, p < .01).
þ β3 post t x treatment i þ ∑ β p Control ipt þ εit
p¼1
where post t indicates whether the intervention (i.e.,
adoption of digital payment technologies) has occurred,
and treatmenti indicates the treatment or control group.
Eq. 7 reflects the effect of adoption on economic
performance. As shown in Table 6, the adoption of
digital payment technologies was responsible for an in-
crease in the URs’ economic performance. This effect
remained significant with the inclusion of the covariates.
We also asked the treatment group URs to survey their cus-
tomers about their satisfaction pre-and post-adoption. We pro-
vided a questionnaire with a few questions regarding cus-
tomers’ demographic details and satisfaction with the pay-
ment options provided by the UR (7-point scale: 1 = not at
all satisfied; 7 = highly satisfied). We find that adoption pos-
ð7Þ
Economic impact
While our results show that adoption can increase URs’ eco-
nomic performance by an average of INR 49705.31, it is
worth considering the economic values of moderating
 J. of the Acad. Mark. Sci.

Fig. 3 Relationship between

number of digital payment
technologies adoption and 70000
economic performance. Note: 60000
Economic performance is

Economic Performance
captured through the monthly 50000
average revenue 40000

30000

20000

10000

0
0.5 1.5 2.5 3.5
Number of Digital Payment Technology Adoption

variables. Using the estimates from our proposed models in Discussion

Study 2, we find that by decreasing credit facilities by one
standard deviation from their respective mean, a UR can in-
crease the effect of adoption on performance by 34.87%.
Similarly, by increasing the prioritization of technology from
its respective mean by 10% of one standard deviation, a UR
can increase the economic impact of adoption by 6.09%.
Finally, a back of the envelope calculation from Study 3 data
shows that URs gain approximately 9.6% in revenue merely
due to adoption.
This paper investigates the impact of the adoption of digital
payment technologies on EM URs’ economic performance
and describes the moderators of this effect. We identify the
most effective technologies and determine the total number of
technologies a UR should adopt to optimize economic perfor-
mance. We rely on RBV and the literature on EMs to develop
a research framework, categorize digital payment technolo-
gies into four groups, and develop three related studies to

Table 6 Parameter estimates

(Study 3) DV=Economic Performance

β
(SE)
Treatment-Control (TC) −3978.97***
(993.54)
Pre-post (PP) 3237.03**
(1377.96)
TC X PP 36,076.54***
(5977.61)
Years in Operations 151.26
(230.49)
Size −.30
(570.32)
Retailer Liability .05
(.06)
Total Promotional Tools −512.14
(2247.72)
Payment Acceptance (cash) −4744.53
(7861.94)
Payment Acceptance (others, e.g., cheque) −8365.78**
(4125.92)
Intercept 97,142.27***
(6779.67)
R-square 46.98%

Note: Standard errors are listed in parentheses below the parameter estimates | * p < .1, ** p < .05, *** p < .01
J. of the Acad. Mark. Sci.
answer the RQs. As such, we make multiple contributions to
the literature.
Contributions to the literature
First, we extend the existing literature on the effect of digital
payment technologies on UR performance. Relying on the
RBV, we find a positive relationship between URs’ adoption
of technology and their economic performance in an EM.
Furthermore, we find that customer engagement has a media-
tion effect and may be a mechanism that explains the relation-
ship. This paper highlights that digital payment technologies
may enhance performance by serving as a VRIN resource for
EM URs. We show that the tenets of RBV are equally crucial
for EM URs.
Second, we contribute to RBV scholarship in marketing.
Prior researchers have criticized existing RBV scholarship in
marketing by highlighting that most research in marketing
only addresses whether a resource is valuable without delving
into the dimensions of rarity, imperfect imitability, and
nonsubstitutability, thus arguing that such research should be
a priority for marketing scholars (Kozlenkova et al. 2014).
Through our moderators, we make an important contribution
to RBV scholarship in marketing. Unlike research on resource
complementarity (Morgan et al. 2009), there is a dearth of
research investigating resource non-complementarity, and
there is a call for such investigations (Kozlenkova et al.
2014). We try to fill this gap in the literature. In this paper,
we have shown that credit provided to customers may lead to
non-complementarity, while prioritizing technological invest-
ment leads to complementarity, thereby extending the RBV
literature in marketing by highlighting the role of resource
non-complementarity.
Third, our classification enables stratifying different tech-
nologies based on their cost, value, and effect on performance.
Most research in this space has focused on understanding a
particular digital payment technology, such as m-wallets
(Kumar et al. 2019); little research has commented on whether
all technologies are equally effective at enhancing URs’ per-
formance. We find that the synergistic effect between CBT
and ACBT is positively related to UR performance. Each
technology’s effectiveness depends on the value provided to
the customers and the amount of investment required by URs.
There are inherent trade-offs present in some categories that
detract from their overall effectiveness.
Finally, our methodological approach and data are also
noteworthy—we provide an inside look into the informal re-
tail sector in EMs and demonstrate a relationship between
adoption and URs’ performance through a field experiment.
Again, our qualitative research reveals that prior research,
which has examined the adoption of payment technology
from only the customer’s perspective, may not be adequate
to explain the associated effects on URs’ performance. Using
multiple methods, we address criticism from earlier scholars
that most marketing articles present an inadequate understand-
ing of a complex phenomenon (Hamilton 2016).
Contributions to practice
First, our findings suggest that URs should adopt digital pay-
ment technologies to improve their economic performance.
Our sample shows that the adoption of digital payment tech-
nologies increased the performance of EM URs by 9.6% (in
revenue) on average. Second, not all URs stand to benefit
equally from adopting digital payment technologies: those
who offer significant credit to regular customers will not gain
significant profitability by adopting digital payment technol-
ogies. For those URs, we suggest that they provide incentives,
such as store promotions, to transition some of these cus-
tomers to digital payment technologies. URs also need to pri-
oritize investment in technological infrastructure over tradi-
tional value creation activities. This may be difficult on a
small discretionary income, but it seems important for gener-
ating positive returns from digital payment technologies.
Third, we suggest that when considering their technology op-
tions, URs should strive to optimize the balance between re-
quired investment and customer value and understand syner-
gies across technologies. While CBT requires high investment
from URs, they also provide high value to customers; thus,
they have a significant, positive impact on economic perfor-
mance. Similarly, ABT requires moderate infrastructure in-
vestments and yields a positive effect. If a UR wants to adopt
only one technology, CBT or ABT is the choice.
Finally, from a policy perspective, our study offers insights
for policymakers regarding digital infrastructure construction.
Given that the synergy between CBT and ACBT is positively
related to URs’ performance, policymakers may decide to
waive taxes or change investment decisions such that the tech-
nologies achieve higher penetration and can contribute overall
to advances in digital infrastructure, retail infrastructure, and
welfare.
Limitations and future research directions
While the paper sheds light on the effects of digital payment
technology adoption on the performance of URs, it has certain
limitations. First, our data come from only one EM, namely,
India, and are cross-sectional. Future research may use panel
data from multiple EMs to uncover additional insights.
Second, although we provide a practical rationale for the dif-
ferential effects of various technologies on UR performance,
we do not use a theoretical lens. Future research may build on
our practical insights and validate such a lens. Third, some of
the control variables in our model may be endogenous. Future
researchers may collect additional data and account for any
endogeneity biases. Fourth, we computed the adoption

probability of each technology by estimating a probit model.
As a UR can adopt multiple technologies simultaneously, we
could not deploy a multinomial logit specification. However,
such issues of multiple discreteness can be handled by using a
multivariate probit specification. Moreover, we correct
endogeneity using the nearest neighbor’s adoption behavior
dealing with different product categories than that of the focal
retailer as one of the instruments. Such an instrument ignores
income constraints. Future research may address this issue by
using different instruments that consider income constraints.
Fifth, it is important to understand how synergies across the
value chain may govern digital payment technology adoption.
Sixth, there are multiple avenues to dig deeper into the syner-
gistic effects and negative interaction effects, such that we
bring more insights into theory and practice. Seventh, our data
for Study 3 do not come from a pure randomized experiment.
One of the interesting avenues will be to conduct a random-
ized experiment with a large number of retailers, such that any
additional nuance regarding adoption can be uncovered.
Eight, one noteworthy limitation of our study is the lack of
consideration of multiple digital business models across dif-
ferent EMs. For example, there may be pure rental models in
some EMs, which our data do not reveal. However, future
research may investigate how different business models
across countries alter our findings. Finally, due to poor digital
infrastructure in EMs, URs may face multiple service failures
with digital payment technologies. Such failures may lead to a
significant negative effect (such as long queues) on customer
experience. It will be interesting to see how URs with limited
resources manage such scenarios. Future research may ex-
plore these challenges in greater detail.
Supplementary Information The online version contains supplementary
material available at https://doi.org/10.1007/s11747-021-00778-y.
Acknowledgments Some parts of this work are conducted in Digital
Innovation Lab, Indian Institute of Management Bangalore, as a part of
its ongoing funded research projects. The data used in this paper has not
been used in whole or in parts in any other published academic work.
Digital Innovation Lab, Indian Institute of Management Bangalore retains
the rights to use the data in the future. We thank the external agency that
has helped us in data collection. The authors would like to thank the
review team of the Journal of the Academy of Marketing Science, partic-
ipants of 2020 AMA Winter Marketing Conference and Aditya Moses for
their valuable feedback in an earlier version of the manuscript. Finally, we
thank the retailers who participated in this study.
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