Digital Enterprise, Digital Labour

Microenterprise in the platform era—identifying new ‘platform practices’

Daniel, a shopkeeper and online freelance writer

The platform era is undoubtedly transforming the way goods, labor, services, and attention are exchanged around the world. But to what extent will platformitized markets change the livelihoods of millions of self-employed workers and small and informal enterprises in the developing world? 

Recently, the Partnership for Finance in a Digital Africa (FiDA) —an initiative of the Mastercard Foundation coordinated by Caribou Digital—conducted a study about how platformization is impacting micro- and small enterprises (MSEs) and the self-employed, offering its findings as a set of interlocking essays and video profiles. The study drew on qualitative interviews with micro-entrepreneurs in Kenya about how they use social media, e-commerce marketplaces, and online freelancing websites. Instead of a narrow focus on adoption, we identified emerging “platform practices”—four distinct ways in which MSEs are changing their workflows to adapt to the platform age:

We also found two overarching themes requiring further discussion:

A brief video of Dorcas, one of five entrepreneurs featured on the report site

This post for DIODE focuses on the implications of our research for the digital development community. It is a shorter form of our research implications essay, and is best conveyed as four imperatives:

Broaden the research focus from mobiles and ICTs to platforms

One line of research nearly 20 years strong looks at microenterprises’ use of ICTs. Yet the bulk of this work, whether focused on mobile phones specifically or on ICTs in general, isn’t calibrated to today’s changing internet landscape. Two forms of platformization are becoming more relevant, and need extensive study:

  • Individual micro-entrepreneurs use social media platforms for informal and real-time coordination with suppliers and customers. We aren’t talking about specialized “WhatsApp for business”, or Facebook for business, or even paid digital advertisements here. Wyche, Forte & Schoenebeck illustrate how these consumer-facing omnibus communication platforms have become the lingua franca of commerce in digital Kenya, our new research further underscores the remarkable ways in which micro-entrepreneurs have appropriated these platforms for their own purposes. MSEs have adapted these social media platforms into toll-free numbers, customer relationship managers, billboards and direct mail, pre-sales advertising, and after-sales support, all rolled into one.
  • The same markets are also being platformitized by the entrance of transaction platforms: websites designed to host multi-sided markets between buyers and sellers. These sites have scrambled the traditional means of finding, transacting with, and supporting customers. However, although they increase MSEs’ exposure, they also increase competition. Our work only scratches the surface of how this new visibility and competition impacts the profitability of small enterprises, and illustrates how more research is needed to assess whether transaction platforms work for small-scale producers, especially in developing countries.

Ask “how”, not just “whether”

The FiDA platform lens—by dividing platform functions into aggregation and discovery, transaction support, credibility, and ancillary data—enables us to see both whether and how platforms are altering prospects for small enterprises. We think this approach has merit for future studies, and we suggest that researchers zero in on specific models of change to ask how the platforms they study, be they Facebook and WhatsApp, or specialized transaction platforms like OLX, are transforming the markets they enter. It’s also important that we get to granularity. Specific affordances matched with specific functions on specific platforms matched by specific platform practices (i.e., user behaviors) is where the rubber meets the road.

Specify and replicate

A close read of our findings should quickly underscore the need for (1) replication beyond Nairobi, (2) specificity of various market segments and types of microenterprise, and (3) complementarity of methods. Our largely qualitative interviews could be expanded via quantitative study of how and whether platform use changes the profitability and sustainability of these businesses. Our study also suffers from survivorship bias: we have only spoken to active microenterprises; we have yet to investigate whether and how platformization is driving some micro-entrepreneurs from their markets.

Avoid detaching studies of digitized, platformized markets from the physical world

Our two blurring essays, on tech and touch and digital side hustles, illustrate the material component of digital pursuits. The realities of doing business in resource-constrained contexts may require more face-to-face time, more trust-building, and more creative ways of bridging the last mile in goods and services than those of less constrained markets. These dynamics are best unpacked with the type of ethnographic or qualitative work we were able to do in this study. At the same time, the very concept of “side hustles” challenges what we mean by a “job” or “a livelihood.” Digital side hustles, such as online essay writing or virtual assistant work, blur the lines between taking charge of one’s own fate and being captive to someone else’s algorithm. The Fair Work Foundation is developing a body of evidence around digitized platform work in the Global South. Our study highlights those individuals who keep one foot in a job or material micro-business and another moonlighting in the digital space.

Next Steps

We’re grateful for the opportunity to share this work with DIODE. Another helpful exchange has been with our co-travelers in the Mastercard Foundation community of practice, specifically BFA’s FiBR project, which has been looking at platforms used by micro-entrepreneurs in Tanzania, and Mercy Corps’s research into agricultural platforms in Africa. As a set, these studies shed light on changing practices and market conditions in East Africa and beyond.

We are particularly excited about the prospects for platforms to build on what they’ve already started, becoming digital spaces in which participants acquire a variety of skills and digital literacies required to thrive in the platform era. We call this “transformational upskilling” and will spend much of 2019 looking at this topic in a more comprehensive way.

Have questions, feedback, or ideas for further research on MSEs and platform practices? Please contact us at ideas@financedigitalafrica.org or @FiDAPartnership on Twitter.

Digital Economy, Digital Enterprise

Data Marketplace as an Enabler for Data-Driven Innovations in Developing Countries

In today’s digital era, data have become a valuable resource for digital enterprise to innovate and stay competitive in the market. This also applies to developing countries, where start-ups offer new digital products and services and transform everyday lives. One way to realize data-driven innovations is by sharing data among parties and even competitors to generate new insights and improve the quality of products or services.

In this context, data marketplaces are emerging, which are described as platforms that bring multiple parties together to exchange data with each other. Data marketplaces could play a key role in enabling data-driven innovations for digital enterprises in developing countries since they face a significantly different challenges in terms of resources and capabilities than digital enterprises in developed countries. More importantly, data marketplaces might generate value for digital enterprises in developing countries, because new insights can be generated by analyzing data from multiple sources.

Various initiatives and pilots on data marketplaces are available (e.g. OpenDataSoft, Azure Data Market, Data Market Austria). However, they often struggle and fail to survive. This is mainly due to lack of trust, fear of losing competitive advantage when sharing data, or the risk of violating strict privacy regulations (e.g. GDPR). To tackle these challenges, in the Safe-DEED project (Safe Data-Enabled Economic Development) we focus on developing new privacy-preserving technologies to enable firms to expose data via data marketplaces without giving access to actual data. We are also conducting multi-actor business model research in order to bring those technologies to the market in a sustainable way so that digital enterprises can generate value from such a platform.

How is this relevant to the digital economy and development? There are several possible use cases within the digital economy and development context. For instance, SMEs could benefit from accessing data and information provided by other SMEs in data marketplaces to support market research, so that they can formulate a better strategy to reach their target market. Digital enterprises providing on-demand transportation services could also expose their data via data marketplaces, and support the government in developing traffic policies without revealing sensitive information. Furthermore, a peer-to-peer lending platform focusing on providing loans in rural areas can also expose data to conventional banks via data marketplaces to get a better picture of unbanked population in a country so that they can collaborate in achieving financial inclusion.

Of course, there are several challenges in realizing data marketplaces that are safe and secure, such as convincing the first couple of firms to join the data marketplace platform, the impact of such an innovation on trust, ethics, security, and finding a sustainable business model for the data marketplace itself. Hopefully, answers to these challenges will be available by the end of this project.

More information:

  1. Safe-DEED website: https://safe-deed.eu
  2. Finding a Business Model for Decentralized Data Marketplaces: https://safe-deed.eu/finding-a-business-model-for-decentralized-data-marketplaces
  3. Safe and secure data marketplaces for innovation: https://www.tudelft.nl/en/tpm/research/projects/safe-and-secure-data-marketplaces-for-innovation
Digital Economy, Digital Enterprise

Surviving in the Digital Era – Business Models of Digital Enterprises in a Developing Economy

A new paper on Digital Business Models of Digital Enterprises in a Developing Economy has been published by the DIODE Ghana Team.

This study aims to explore the business models and strategies of digital enterprises in a developing economy context to understand the nature of their operations, as well as their survival tactics. A review of literature on digital enterprise models led to the adaptation of a 16 business model archetype for analyzing digital enterprises in Ghana. Using a critical realism perspective, survey data from a sample of 91 digital enterprises were used for the study.

The findings suggest that among human, physical and intangible assets, financial assets were the least used assets in the operations of the digital enterprises. This stems from the fact that the online financial business sector is still in its nascent stages in most developing economies. The findings further suggest that all digital enterprises leverage accessible and low-cost social networking services as part of their operations and use them as an avenue to engage with their target customers. The findings from this study provide guidelines to entrepreneurs who wish to venture into the digital ecosystem of Ghana, particularly with regard to the economic, financial and technological factors that enable digital enterprises to survive in the competitive digital economy.

 

The findings also suggest that it is important for governments to realize that there is an increasing rise in digital enterprises in the developing economies and these enterprises are creating jobs and providing business solutions locally that would hitherto be sought from developed economies. There is therefore the need for the requisite legal infrastructure and financial support that will cushion these enterprises from the fierce competitions that stagnate their growth.

The study provides a mapping of the digital business models of Ghanaian digital enterprises. This knowledge is arguably the first of its kind in the context of a developing economy. Hence, it serves as a stepping-stone for future studies to explore other areas in the digital economy, especially from a developing economy perspective.

Access Publication:

Eric AnsongRichard Boateng, (2019) “Surviving in the digital era – business models of digital enterprises in a developing economy”, Digital Policy, Regulation and Governancehttps://doi.org/10.1108/DPRG-08-2018-0046

Digital Enterprise

From Silicon Valley to Silicon Savannah? Tech Hubs in the Global South

by Yingqin Zheng & Andrea Jimenez Cisneros

For decades, as an ICT4D intervention, telecentres have been built across many regions in the global south, with the aim to bridge the digital divide and bring socio-economic benefits to local communities. The result is mixed to say the least. Many telecentres were not sustainable due to a number of reasons.

In recent years an upgraded and “sexier” version of telecentres, tech hubs, have been rapidly diffusing in the global south. In 2018, GSMA reported 442 tech hubs in Africa and 565 in Asia Pacific (Giuliani 2018).  They are spaces that not only provide co-working space and Internet connection, but also claim to foster collaboration, entrepreneurship and innovation. This is a model that seems to have stemmed from industrialised regions and diffused to developing countries, as part of the digital and mobile boom, and promise to produce ‘local innovations by local people’ (Afrilabs). GIZ’s 2013 report describes this movement as “from Silicon Valley to Silicon Savannah”, indicating the high expectation projected to Tech Hubs to boost innovation and economic growth.

Zheng Tech Hubs

Source: Giuliani (2018)

Many hubs are designed to mirror their Western counterparts. iHub in Kenya, one of the oldest and most prominent hubs in Africa got the inspiration from “successful co-working spaces across the world”, and “the team went to work transforming the sterile office block into an interactive hive. They threw bright green paint on the walls, installed a snappy Internet connection, and imported a slick Italian espresso machine” (Sanderson 2015, p.6).

Although there is plenty of research in organisational studies that argues materiality of physical space shapes human behaviour and organisational practices, our research which compares a Tech Hub in central London with one in Lusaka (Jimenez & Zheng 2016, 2017) shows that the physical design of the hub may not be directly related to how the space is used by the members and what value is generated from it. Members in the London hub, a global chain boasting extensive networks of entrepreneurs, greatly appreciate the aesthetics and design of the hub as a co-working space, but there is limited sense of a collaborative work.  As one member stated: “[f]or shared workspace I think it’s a great place, apart from the intention of trying to get people to collaborate which I don’t think it happens that much.” It was found that despite the open design of the space, strict rules are applied on how segments of the space are used thereby imposing a structured, disciplined order in the Hub.

In contrast, the Lusaka hub, while at the time not being able to afford to become a franchise of the London hub, is located in a standard office space with compartmentalised rooms and rigid walls. Yet there is a higher level of interaction and collaboration among members, improvisation and serendipity in their activities, and a stronger sense of community and identity. One member commented:

 “So you find people around here could really help you. If I ask him how do I go about with this because sometimes I am stuck, people come and help me.

Nevertheless, while the Lusaka hub had an innovative and learning culture and clearly was highly valued by local entrepreneurs, it struggled to show evidence of market-based innovation success.

In contrast, another study on Tech Hubs in central Manila shows that while it physically resembles the colourful, open design of coworking spaces in the West and provides high speed Internet that is not widely available in the Philippines, the membership fee to use these spaces were not affordable to local entrepreneurs (Tintiangko & Soriano 2018). They therefore become spaces for international expats and local elites, in effect excluding the grassroots entrepreneurs who could benefit from the hubs the most.

So far, we only have some broad ideas of the emerging landscape of Tech Hubs across the globe (Friederici 2018), and limited understanding beyond selective in-depth case studies (Sambuli & Whitt 2017, Haikin 2018, Littlewood & Kimbuyu 2018) of what actually happens in the Tech Hubs, the impact they may have on local community and how they evolve over time. We believe that behind the homogeneous branding of Tech Hubs all over the world as “spaces for innovation”, there are almost certainly heterogeneous modes of enactment of the spaces that give rise to multiple, or limited, values to local communities.

References

Friederici, N. (2018) Grounding the dream of African Innovation Hubs: two cases in Kigali. Journal of Developmental Entrepreneurship, 23(2) https://doi.org/10.1142/S1084946718500127

GIZ (2013) From Silicon Valley to Silicon Savannah, GIZ, Bonn https://10innovations.alumniportal.com/technology-hubs/from-silicon-valley-to-silicon-savannah.html

Giuliani, D. (2018) 1000 tech hubs are powering ecosystems in Asia Pacific and Africa, Mobile for Development (GSMA), 20 Mar https://www.gsma.com/mobilefordevelopment/programme/ecosystem-accelerator/1000-tech-hubs-are-powering-ecosystems-in-asia-pacific-and-africa/

Haikin, M. (2018) Voices of the Silicon Savannah: Key Challenges facing Kenya’s Social-Tech Ecosystem – Views from Within. https://matthaikin.com/2018/10/08/voices-of-the-silicon-savannah-released/

Jimenez, A. & Zheng, Y. (2017) A spatial perspective of innovation and development: innovation hubs in Zambia and the UK. In P. J. Choudrie J., Islam M., Wahid F., Bass J., ed. Information and Communication Technologies for Development. ICT4D 2017. Springer, 12-14.

Jimenez, C. & Zheng, Y. (2016) A capabilities approach to innovation: a case study of a technology and innovation hub in Zambia, paper presented at Twenty-Fourth European Conference on Information Systems (ECIS), Istanbul, 12-15 Jun.

Littlewood, D.C. & Kiyumbu, W.L. (2018) “Hub” organisations in Kenya: What are they? What do they do? And what is their potential?, Technological Forecasting and Social Change, 131, 276–285. https://www.sciencedirect.com/science/article/pii/S0040162517313173

Sanderson, O. (2015) On Hubs, BRCKs, and Boxes:The Emergence of Kenya’s Innovation and Technology Ecosystem, Tufts University, Medford, MA. https://dl.tufts.edu/catalog/tufts:sd.0000269

Sambuli, N. & Whitt, J.P. (2017) Technology Innovation Hubs and Policy Engagement, Making All Voices Count Research Report, IDS, Brighton, UK https://www.makingallvoicescount.org/publication/technology-innovation-hubs-policy-engagement/

Tintiangko, J.T. &  & Soriano, C.R.R. (2018) Coworking spaces in the global South: local articulations and imaginaries, paper presented at 68th Annual International Communication Association Conference, Prague, 24-28 May

Digital Enterprise

Incentivizing Digital Entrepreneurs in India: Policies and Practices

The IT/ITES sector in India has been driven mainly by large vendors in urban areas and most revenue is generated from, in and around, the metropolitan areas of Bengaluru, Chennai, Delhi NCR, Hyderabad, Kolkata, Mumbai and Pune. In recent years both State and Central governments are promoting IT outsourcing for start-ups and other social enterprises by providing seed funding and other incentives for starting IT/BPO/ITES companies away from these metros/cities, in Tier 2 and Tier 3 towns and villages.

Way back in 2009, the State Government of Karnataka, pioneered a rural BPO policy by funding entrepreneurs to set up enterprises in rural areas and provide employment to disadvantaged youth. This policy was said to be an exemplar given its focus on rural outreach and for its effort to bridge the digital divide. The initial strategy was to give subsidy of Rs. 4,000,000 (approx. US$ 60,000) to companies to set up 100-seater units which would employ rural unemployed youth.  However, out of the 31 companies that applied for this programme, only about 13 of the bigger players commenced operations while many smaller players who had received the initial funding could not sustain their operations. A revised rural BPO policy was drafted in 2014 with the aim of supporting smaller social enterprises and NGOs by lowering the criteria for entry.  It was envisaged that entrepreneurs would be permitted to apply to enter the market with a minimum number of 30 seats/employees and would receive a subsidy of Rs. 2,000,000 (approx. US$ 30,000) over a period of three years.  The plan was that this subsidy would be tagged to the number of employees hired measured in terms of Provident Fund[1] contributions made by the rural BPO.

Realities on the Ground

Together with a colleague from the LSE, Dr. Shirin Madon, we conducted a longitudinal study for a period of approximately six years at three such rural BPO centres that were set up with State funding (Madon and Ranjini, 2016). Entrepreneurs whom we met felt that it was an excellent opportunity and that there was immense potential to deliver on par with global standards, so long as some of their problems were addressed by the government. Similarly, employees too were very optimistic about their prospects and growth. As one visually-impaired employee trained in a rural BPO that focusses on differently-abled youth who later went to secure a permanent job in a nationalised bank said:

‘I am very happy to say that it was because of the training at Samarthanam (rural BPO) that I realised that I will be able to work and stand on my own.  Samarthanam not just gave me job training and taught me how to handle customers, but it gave me the confidence that I can do anything and achieve anything’.

A team leader from another rural BPO centre commented:

‘Since Simply Grameen had established its centre in Maddur, for the first time we girls have the possibility of getting employment locally which is culturally acceptable by the household.  I worked in Bangalore before joining here and it was a harsh existence working for an urban BPO both in terms of the high cost of living and because of the lack of a social support network for women’. 

Despite the close proximity of the centre to Bengaluru, attrition rates at another rural BPO had been held constant at 8% per annum.  When probing as to why this was so, the Centre Manager there remarked:

Employees valued the prospect of combining the opportunities they were obtaining from RuralShores with pre-existing household income sources from agriculture.  In particular, employees found that they were less reliant on local money lenders as it became easier to obtain personal loans from banks as a result of their formal employment with RuralShores’.

We analysed the implication of this policy initiative beyond revenue and profit generation or number of people employed. For the young men and women who work here at these BPOs it has had a huge impact on their careers and lives. Many lessons can be learnt from the Karnataka Government’s RBPO policy initiative, although it has been discontinued. Below is a summary of our analysis:

Benefits to Employers and Employees

Reduced operational costs The operational costs like real estate rentals, transportation, and facilities management are substantially lower compared to urban centres. This is an important factor for enterprises to move out of urban localities.
Language Most of the employees have multi-lingual and vernacular language capabilities that is an asset in penetrating regional and rural markets. For example for banks and telecom companies.
Reverse migration Most of the employees prefer to work closer home as it facilitates their involvement in household activities and agriculture
Training Employees value the training they receive in their respective domain as well as training in soft skills and communication.
Formal employment Employees perceive regular income in a firm increases their status in society
Career development Career growth, clear career path and goals is a motivating factor. Opportunity and encouragement to pursue higher and distance education.
Cost of living Since cost of living is comparatively less than urban areas, lesser salary is acceptable
Financial benefits Insurance and Provident Fund benefits. Access to loans from banks
Gains for Women Proximity of employment has enabled women to join workforce, particularly for those who could not migrate to cities. Split shift enables women to balance domestic chores and child care.
Other benefits Study leave, and opportunity to live with family and parents and work-life balance

 Challenges and demands by entrepreneurs

Criteria for entry Some say eligibility requirements for entering into Government schemes is high and cannot be met by small players and rural start-ups.
Developing talent pool and training Although the workforce is engaged and committed, training them on-the-job for specific tasks takes time and huge effort
Attrition Attrition is comparatively low, however, it is still a matter of concern
Electricity Use of generators due to long power cuts increases operational costs. There is a demand that the government should support ongoing expenses through monthly subsidies for electricity.
Connectivity Entrepreneurs demand reduction in tariff for telephone and internet.
Infrastructure Roads, transportation and other basic services indirectly affect the functioning of these centres.
Handholding Initial years is a challenge with limited projects and not so well-trained workforce. Entrepreneurs suggest that the government should consider sub-contracting its own e-governance and related projects to these centres.
Ease of doing business Since many companies failed despite receiving funding, evaluation by government agencies and paper work increased.
Other challenges Availability of skilled labour pool, their retention, sustainability and scalability remain a huge challenge

India BPO Promotion Scheme

While the Karnataka State policy explicitly incentivized setting up of enterprises in backward taluks (rural sub-districts) and for socio-economically and physically disadvantaged groups in order to redress regional imbalances, this central scheme has shifted the focus to more developed taluks and smaller cities. The Government of India’s Ministry of Electronics & Information Technology has recently floated an all-India BPO Promotion Scheme providing incentives for small to medium organisations in both towns and rural areas to commence operations. The scheme provides financial support up to Rs. 1lakh/seat in the form of Viability Gap Funding, with special incentive for units providing employment to women, persons with disability and for units providing employment beyond the target. With a total budget outlay of Rs 493 crores (approximately 70 million USD) the scheme has a target to provide a total of 48,300 seats. As on November 2018, about 45,480 seats have been allocated to different states (Meity.gov.in/IBPS, 2018). Following is the data on number of enterprises that have commenced operations in different States and seats distribution based on population % as per 2011 Census of India.

State Number of Enterprises Number of Seats
Andhra Pradesh 22 5660
Bihar 10 2,110
Chandigarh 1 100
Chattisgarh 2 200
Gujarat 1 500
Himachal Pradesh 3 250
Jammu and Kashmir 7 350
Jharkhand 4 850
Karnataka 5 700
Kerala 1 100
Madhya Pradesh 4 1000
Maharashtra 9 2430
Odisha 13 1601
Puducherry 1 100
Punjab 6 1700
Rajasthan 3 400
Tamil Nadu 23 3600
Telangana 2 400
Uttarakhand 3 300
Uttar Pradesh 9 2480
West Bengal 1 100
Data as on 22 September 2018. Compiled by Ranjini C.R. Source: https://ibps.stpi.in/unitlists.php

Conclusion

Our exploratory study was situated in a single region and now with this pan India scheme there are opportunities for researchers to examine broader themes and conduct comparative analysis.

To conclude, incentivizing BPOs presents an opportunity for peripheral regions to benefit from IT outsourcing activity. However, it is crucial to extend support beyond seed funding such as subsidies and handholding in the initial years. Well established players can also support new entrepreneurs though their CSR activities, mentoring and by sub-contracting work.

(This paper published in Information Systems Journal provides further details about our study.)

References

Madon and Ranjini (2018) Impact Sourcing in India: Trends and Implications, Information Systems Journal, pp 1-16.

Madon and Ranjini (2016) The Rural BPO Sector in India: Encouraging Inclusive Growth Through Entrepreneurship in Nicholson B, Babin R, Lacity M., ed. Socially Responsible Outsourcing. Global Sourcing with Social Impact. Palgrave Macmillan.

Meity.gov.in/IBPS, 2018

[1] This is a term used to mean pension fund