User Perceptions of Mobile Phone Usage in Small ...

Tumelo Omogolo Mapila

20504071

Course Code: 4308

User Perceptions of Mobile Phone Usage in Small, Micro, Medium Enterprises

This thesis is presented in partial fulfillment of the requirements for the degree of Bachelor of Computer and Information Sciences (Honours) at Monash University

By: Tumelo Omogolo Mapila Student Number: 20504071 Supervisor: Tarirai Chani Year: 2011 1|Page

Tumelo Omogolo Mapila

20504071

Course Code: 4308

Acknowledgements Firstly I will like to acknowledge my God for giving me the strength and wisdom during the intensive year.

I will then also acknowledge Tarirai Chani (supervisor) for the

relentless support, patience and guidance that she provided to me during my research. I will also like to acknowledge the milestone guidance I received from Stella Ouma (Monash lecturer) and following which I acknowledge the Head of Faculty of Information technology (Monash South Africa), Dr. Jacques Steyn on behalf of the faculty staff and the university.

My family made this opportunity possible and their motivation kept me focused when things got tough. My colleagues played an important role during the development process of this study, specifically Frank Mbuya Keta Mulunda who worked long hours with me and Chimwemwe Nkhoma who actively took time out to proof read my work when least expected.

The roles all of you played were paramount and it is truly appreciated, this experience cannot be traded for any amount of money. God Bless you all!

Thank you all.

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Tumelo Omogolo Mapila

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Course Code: 4308

Declaration I declare that this thesis is my own work and has not been submitted in any form for another degree or diploma at any university or other institute of tertiary education. Information derived from the work of others has been acknowledged.

Signed: ……………………………… Name: Tumelo Omogolo Mapila Date: 25/ November/ 2011

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Tumelo Omogolo Mapila

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Course Code: 4308

Abstract The study started by critically analyzing literature that discussed user perception of mobile phones in SMME. The literature offered a solid starting point and it revealed that user perception studies of SMME in South Africa are few, with this in mind the study progressed to addressing this research gap. The thesis research topic is aimed at capturing the user perception of mobile phones in SMMEs in South Africa. The study applied some of the constructs of the technology acceptance model and the perception based model to address the research topic. The study found that user perceptions are closely linked to the user experiences. Furthermore the user perceptions of SMME in South Africa indicate that users have positive perceptions of the mobile phone, this assertion was prompted by the users’ comments. One other interesting finding was that, even though the mobile phone is expensive compared to other communication mediums users continued to use it. The benefits outweighed the costs. Such findings are valuable for mobile service provider technology innovation that is tailored for the South African SMME.

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Tumelo Omogolo Mapila

20504071

Course Code: 4308

Table of Contents Acknowledgements ....................................................................................................2 Declaration.................................................................................................................3 Abstract......................................................................................................................4 1

Chapter 1: INTRODUCTION ...............................................................................7 1.1

2

1.1.1

Introduction ...........................................................................................7

1.1.2

Problem Statement ...............................................................................7

1.1.3

Research Objectives .............................................................................7

1.1.4

Research Question ...............................................................................7

1.1.5

Thesis organization ...............................................................................8

Chapter 2: LITERATURE REVIEW .....................................................................9 2.1

Introduction ..................................................................................................9

2.2

The Mobile Phone in Developing Regions ...................................................9

2.3

The Small to Medium Enterprises ..............................................................14

2.4

User Perception of Mobile Phone and Mobile Services ..............................17

2.4.1

A Technology Acceptance Model ........................................................19

2.4.2

A Perceptual Based Model for Technological Innovation in SMMEs ... 20

2.5 3

Research Background and Motivation..........................................................7

Conclusion .................................................................................................24

Chapter 3: METHODOLOGY ............................................................................25 3.1

Introduction ................................................................................................25

3.1.1

Interpretive Study ................................................................................25

3.1.2

Case Study .........................................................................................26

3.1.3

Sample Size .......................................................................................27

3.1.4

Data Collection ...................................................................................27

3.1.5

Data Analysis ......................................................................................27

3.1.6

Ethics ..................................................................................................28

3.2

Approach to Conducting an Interpretive Research .....................................28

3.3

Interpretive Knowledge Generation ............................................................31

3.3.1

Communicative validity .......................................................................31

3.3.2

Pragmatic validity ................................................................................32

3.3.3

Reliability for interpretive research ......................................................32

3.4

Conclusion .................................................................................................32 5|Page

Tumelo Omogolo Mapila

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Course Code: 4308

Chapter 4: FIELD DATA AND DATA ANALYSIS...............................................34 4.1

Introduction ................................................................................................34

4.2

Field Data ..................................................................................................34

4.3

Data analysis .............................................................................................38

4.3.1

Step 1: Code Material .........................................................................40

4.3.2

Step 2: Identifying Themes .................................................................41

4.3.3

Step 3: Construct Thematic Networks .................................................42

4.3.4

Step 4: Describe and Explore Thematic Networks ..............................43

4.3.5

Step 5: Summarize Thematic Networks ..............................................47

Chapter 5: DISCUSSION ..................................................................................49 5.1

Introduction ................................................................................................49

5.1.1 5.2

Step 6: Interpret Patterns ....................................................................49

Conclusion .................................................................................................51

6

Chapter 6: CONCLUSION ................................................................................52

7

REFERENCES .................................................................................................54

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Tumelo Omogolo Mapila

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Course Code: 4308

1 Chapter 1: INTRODUCTION

1.1 Research Background and Motivation 1.1.1 Introduction Over the years research from

authors such as

G. Frempong [1], J. Abor and P.

Quartey [2], J. Donner [3], R. Jensen [4] and S. Jeppesen [5] have discussed and established that SMMEs are a major contributor to the economic and community growth in developing countries. Research conducted by scholars such as V. Hooper, et al, [6] has revealed that with the high number of mobile phones in circulation and now available in all countries allows SMME owners to use the mobile phone a strategic business tool. Further research has been able to identify that the mobile phone usage and benefits vary across the SMME industry sectors [4, 6-9]. The research infers that the benefit that these SMMEs owners gain from the use of mobile phones does influence their user perceptions. Even though the benefits are literal user benefits, researchers and service providers may with haste assume that the user perceptions are all positive.

1.1.2 Problem Statement There is a deficiency of research and analysis of user perceptions, specifically of the mobile phone in South African SMMEs.

1.1.3 Research Objectives •

To identify and investigate the different groups of SMMEs and the benefits that mobile phone use affords.

•

To identify and investigate the user perceptions of the mobile phone in SMMEs.

1.1.4 Research Question •

How do the different categories of SMME use the mobile phone? 

What are the existing categories of SMMEs?



What are the SMME user perceptions (views) of the mobile phone usage? 7|Page

Tumelo Omogolo Mapila

20504071

Course Code: 4308

1.1.5 Thesis organization The thesis lay out is described as follows: Chapter 2 Literature Review discusses the previous literature in detail from the knowledge domain and it brings the background of the study into context for the present study. Chapter 3 Methodology discusses and justifies the methodological approach that was applied to the study. Chapter 4 Field Data and Data Analysis presents the field data from the interviews, and the data analysis is an analysis of the filed data using a thematic network approach. Chapter 5 Discussion draws on the major findings of the study. Chapter 6 Conclusion concludes on the study.

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Tumelo Omogolo Mapila

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2 Chapter 2: LITERATURE REVIEW

2.1 Introduction The lack of studies that aim to capture and analyze the user perceptions of mobile phones in South Africa has motivated the proposed research to focus on collecting user perception of mobile phone users in Small Medium Micro Enterprises (SMMEs). From some of the popular literature [4, 8] it may seem safe to simply assume that all entrepreneurs in developing countries have positive perceptions towards the mobile phone but in academic research assumptions are not grounded enough to make reliable conclusions [10]. User Perception may also be referred to as user attitudes [11], user beliefs [12], user sentiments, user satisfaction, user preferences, and users perspective or views [13]. The proposed study aims to seek a deeper understanding of the user perception of mobile phone users in SMMEs in South Africa. This study aims to understand further user perception of mobile phones in SMMEs. It is essential to understand the user perceptions because technology is inevitably being developed for end users and it is necessary for developers to take a bottom up approach in order to best meet user needs [14]. User perception inferences should be based on research that has focused on unraveling actual user perceptions (views, sentiments, preferences) of a specific matter or technology. Tan and Felix [15], O'Doherty, et al., [16] and Constantiou, et al.,[17] conducted research on user perceptions in Australia, and in Western Europe. Similarly, this study focuses on the user perceptions of the mobile phone in South African SMMEs following the mass adoption of mobile phones in South African businesses.

2.2 The Mobile Phone in Developing Regions Mobile phones were first introduced in South Africa in 1994 [18], with only two licensed network operators Vodacom [19] and MTN [20]. The mobile phone usage increased with more companies incorporating it into their business processes [18]. Mobile phones 9|Page

Tumelo Omogolo Mapila

20504071

Course Code: 4308

give individuals an alternative mode of communication from the traditional fixed line telephone or postage mail. Compared to the fixed line telephone, using the mobile phone made a lot more economical sense because of the lower associated adoption costs, higher convenience, speed and lower maintenance costs [18]. In understanding the demographics of poorer users, mobile phone companies such as Vodacom [19] in South Africa and GrameenPhone [21] in Bangladesh India developed innovative financial business models that allowed more poor people to gain access and benefit from the mobile phone [22]. They achieved this by introducing pre-paid services with smaller denominations of airtime and installment payment plans for functional inexpensive mobile phone (device) alternatives [22-23]. Another Indian mobile phone company Reliance Infocomm, [24] realized a market share growth of 20% within 18 months from implementing the installment payment plan for poor communities [22]. This type of model fuelled the infectious adoption of the mobile phone across Sub Saharan Africa too, with an increase from 16 million subscribers in 2000 to 376 million subscribers in 2008 [25]. With the mobile phone no longer being only available to big enterprises and the aristocrats of the country, it soon became accessible to all people. According to research conducted in 2009 by the International Telecommunications Union [26] , there were ten times as many mobiles as there were fixed line phones in Sub-Saharan Africa. This being partly due to the fact that 60% of the Sub-Saharan African population had network coverage and the introduction of payment models that suited low income earners that made the mobile phone an affordable option [25]. The main rationale behind this large difference in the mobile phone and fixed line subscriptions was because fixed lines take a lot longer to install due to infrastructural limitations and limited service provider resources, in developing countries. For instance in countries such as Kenya it takes about 100 days to get a fixed line connection installed [25]. Also across Tanzania, Uganda and Kenya fixed telephone line problems and interruptions can last for an average of 37 hours [25]. A study conducted in Tanzania has also indicated that the Mobile phone has been adopted even further than just normal users, now enterprise owners have incorporated 10 | P a g e

Tumelo Omogolo Mapila

20504071

Course Code: 4308

their mobile phones into their business operations [27]. One important role that the mobile phone is playing is a key market communications tool [27]. Melchioly and Saebo [27] describe how other African countries, entrepreneurs and consumers are using the mobile phone to subscribe to services from their network service providers that allow users to share real-time information such as market prices, market conditions, and this improves arbitrage in different regions[27]. For instance some SMME owners in the Kenyan Agricultural sector are using a mobile phone service called “Kilimo Hotline” [28] which allows farmers to advertise and receive information on who is selling what, at what cost, who is bidding for what, to send custom advertisements for buying or selling commodities [27]. With the aim of analyzing the impact of mobile phones on the economic development of SMMEs in Ghana, a study by Frempong highlights how the mobile phone was adopted by enterprise owners and managers as a strategic business tool and not simply a voice communication alternative to the fixed line [1]. The study revealed that mobile telephony has become an important business tool and it has great influence on economic development in the economy that a respective enterprises operate in [1]. This impact is depicted in the Mobile Telephony Impact Model, see figure 1 below. The mobile phone has become a key business tool in SMME operations. This makes it important to investigate what the user perceptions of the mobile phone are and with these findings hopefully they can be used to discover possible technological or service innovations.

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Course Code: 4308

Figure 1 Mobile Telephone Impact Model from G. Frempong

The Mobile Telephone Impact Model describes how the mobile phone impacts four key pillars also influenced by industry and trade policies and the market conditions. The pillars are: •

Reduction in costs of doing business

•

Access to markets

•

Access to business information

•

Mobile phone financial services [1].

The Industry and Trade Policies are considered because the SMMEs need to operate in an environment that supports SMME industry growth and the industry and trade policies directly influence the SMMEs [1]. The Market Conditions are also just as important as the industry and trade policies because SMMEs adopt the mobile phone in order to best use the technology to meet market needs and hence improve enterprise strategic advantage [1]. The ‘Reduction in Costs of Doing Business’ is the amount of financial gains from using the mobile phone for business operations. The ‘Access to Market’ is the availability that the mobile phone affords enterprise owners to their respective 12 | P a g e

Tumelo Omogolo Mapila

20504071

Course Code: 4308

market. The ‘Access to Business Information’ is the access to other business and environmental information that can influence decisions within the enterprise. The ‘Mobile Phone Financial Services’ are the financial services that enterprise owners may take advantage of for conducting daily business operations. These four pillars inherently influence the SMME Level of ‘Competiveness’. Lastly the SMME level of competiveness impacts the urban and rural economic development that an enterprise operates in [27]. This model is a very useful high level view of how the mobile phone can directly impact key areas of SMMEs in a country. The model has distinctly broken down some key components of an enterprise that are most impacted by the mobile phone usage. Furthermore, the model breakdown will also be applied to the present study paying particular attention to the four pillars, to support the decision on the case study focus areas. These pillars may prove to be key areas to focus on in interviews. The user perceptions of the mobile phone of SMME owner or managers could be motivated by one or all of the impact pillars. For instance the study would use one of the pillars (Reduction in Costs) to gain data about the user perceptions of the mobile phone and how it has reduced (operation) costs. With all four pillars the SMME owners or managers may be able to further assess the level of competitiveness of an SMME based on the pillars that are inherently affected by the use of the mobile phone. Furthermore the model also gives the study an overview of how the mobile phone impacts an enterprise and economic development, hence the importance of considering SMMEs and user perceptions of mobile phones. A study of mobile phone impact on SMME in South Africa identified that the mobile phone has impacted SMMEs according to very similar pillars in figure 1. The study was conducted in South Africa, Tanzania and Egypt. From a South African sample size of 140 SMMEs the study indicated that 56% of the sampled experienced increased turnover (reduced cost to doing business), 47.1% of the SMMEs are available to clients all the time (access to market), 25.7% of the SMMEs have faster/improved communication (access to business information) and the last pillar was not evident in the study [29]. In addition the study demonstrates that mobile phones have a profound impact on SMMEs in developing counties. This study and others have not captured the 13 | P a g e

Tumelo Omogolo Mapila

20504071

Course Code: 4308

users’ perceptions of SMME owners or managers; this is due to the study’s aim limitations. It will be would be interesting for such studies to also report on the findings that consider and draw on the user perceptions about the mobile phone. The studies and the impact model discussed in this section have blatantly explained the high level impact of mobile phones in SMMEs. The introduction of mobile phone has become more than just another technology but a technology that can positively impact SMMEs of countries in developing regions, such as South African SMMEs. SMMEs have been getting a lot of attention because the ‘leap frog’ technology that seems to have become an integral part of SMMEs simply because it has innovated the way business is conducted. A ‘leap frog’ technology is a technology that may be classified as advanced or state-of-the-art and it has also been adopted because current and previous technologies have not been able to satisfy needs [30]. Mobile phones may be classified as a leapfrog technology because people adopted them because the fixed line phones could not meet the mobility, availability and reliability requirements from users [30].

2.3 The Small to Medium Enterprises Authors that have discussed SMMEs have defined an SMME according to a quantitative and qualitative definition that best appropriately fits their respective research [2, 31]. SMMEs are generally described according to some common metrics such as the number of employees, the amount of annual returns, the total assets, the sales or the annual balance sheet figures [15, 32]. Research conducted by Ayyagari, et al., [32] used data collected from thirteen low income (third world) countries, twenty four middle income (second world) countries and seventeen high income (first world) countries. The findings from that study established that the most widely used metric for SMME classification is the number of employees [32]. Based on this fact this study will thus use the number of employees as the metric to classify SMMEs. Moreover, the fact that other authors (Esselaar et al., [33]) reported that getting reliable data about an SMMEs annual returns, total assets and the annual sales is difficult because participants are usually not entirely sure or they are afraid of exposing themselves to tax evasion [33].

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Course Code: 4308

Esselaar et al., [33] indicated that there are three main types of SMMEs that must be distinguished from one another. These are the informal, semi-formal and the formal enterprises [33]. These SMMEs have fundamental characteristics that may affect the rigor of the study if not considered suitably. An informal enterprise is a business entity that has no official employees, the owners personal and company finances are always combined, there are no official company records kept, owners evade paying tax, and it is not registered with the registrar of companies [33]. The semi-formal enterprise characteristics are that it consists of less than 10 employees, there is no clearly distinguished separation of the personal and company finances, the business entity does not keep accurate records and it has a physical address [33]. Lastly the characteristics of a formal enterprise are that it consists of more than 10 to 59 employees, it keeps accurate company records, it pays tax, it has a completely separate business bank account from personal finances and it is registered with the registrar of companies [33]. For the proposed study the SMME definition is derived from the multiple connotations from authors and the South Africa National Small Business Act [34-36]. The qualitative definition of an SMME according to Olawale and Garwe [36, p. 2] (the schedule of size is simply the categorization used for classification [37]): “A separate and distinct entity including cooperative enterprise and nongovernmental organizations managed by one owner or more, including its branches or subsidiaries if any is predominantly carried out in any sector or subsector of the economy mentioned in the South Africa schedule of size standards can be classified as a SME by satisfying the criteria mentioned in the schedule of size standards”. The quantitative definition of SMMEs according to the South African National Small Business Amendment Act 2003 [34] is depicted in the simplified Table 1 below. The first column lists the industry sector and sub sectors in accordance with the standard South African industry classification. This column of classifications outlines the different industrial sectors based on the core economic focus of an enterprise [5]. The second 15 | P a g e

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Course Code: 4308

column titled ‘size of class’ describes the size of the enterprise according to either medium, small, very-small or micro classes. The size of classes are established from the last column titled ‘total fulltime employees’ which is the number of fulltime employees that the enterprise has on a fulltime basis or employment contract [34, 36]. Table 1. Adopted from the South Africa National Small Business Amendment Act, 2003 Total fulltime Industry Sector or Sub-sector in accordance Size of Class (equivalent of with the standards industrial classification paid employees) Mining and Quarrying, Manufacturing, Electricity,

Medium

200

Small

50

Very-small

20

Micro