Digital yet Human? Platform Value Capture and Agent Trade-offs at the Last Mile

This study examines how local agents—intermediaries that connect organizations, such as digital platforms, to customers in developing contexts—respond in heterogeneous ways to a platform’s shift from value creation to value capture based on their economic and relational trade-offs. The study utilizes a proprietary dataset of over 450,000 transactions between agents and customers from a digital platform that provided essential financial services to customers in rural India, and is supplemented by qualitative interviews. The findings reveal that agents’ responses are shaped by their social ties and community relationships, such that post an exogenous change in platform’s fee, agents transact even less with customers with whom they have strong repeated exchange relations and those from their same social group, while their negative response are attenuated in socially diverse communities. The findings reveal heterogeneity in agent responses influenced by social relations, and have implications for the customer segments reached and the platform’s value capture strategy. As the global economy becomes increasingly digital, organizations cannot ignore the role of social ties and community embeddedness. This study contributes to the literature on intermediation in emerging markets, emphasizing the strategic importance of understanding agent trade-offs and the social fabric in formulating platform strategies.