Nurturing resource availability of ridesharing platforms by priming goal-oriented operational effectiveness

Abstract

Ridesharing platforms test incentive schemes with variable commissions where drivers are compensated proportionate to their inputs. The operational effectiveness implications of these incentives, however, remain largely unexplored. We test the differential effects of operational effectiveness parameters of drivers’ service quality, service failure, and monetary value on drivers’ referral and churn behaviors. At a process level, we demonstrate the beneficial effects of goal-oriented (versus informational) feedback on drivers’ monetary value and service performance outcomes. Further, we investigate the moderating role of drivers’ organizational justice perceptions on these relationships. Using exogenous data from a cluster-randomized field experiment with 1,698 ridesharing drivers across 8 cities, we show that goal-oriented feedback improves operational effectiveness parameters. Additionally, these parameters improve the platform’s resource availability with drivers’ higher referrals and lower churn. Comprehensively, platforms can derive benefits in operational effectiveness and resource availability by priming drivers using goal-oriented feedback in tandem with a variable commission.