Development Informatics Working Paper Series

A2. The Potential Impact of Mobile Telephony

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A2. The Potential Impact of Mobile Telephony

What, then, might be the impact on micro-enterprise supply chains of mobile telephony? To initially respond, of necessity, we draw on broader – often theoretical – literature on information and communication technologies in development

From this, we could conceive the impacts of mobile telephony at different levels (see Figure 1). At the most micro level, mobiles could have a quantitative impact by increasing the speed of communication (i.e. information flow) and by reducing the cost of communication (Norton 1992). They could have a qualitative impact by increasing the quality of information that is communicated for decision making (Bedi 1999).
In turn, this would then be predicted to impact the three trading process characteristics (Saunders et al 1994, Müller-Falcke 2001). Trading could become quicker as the information necessary for trading can be gathered more quickly and as direct trading-related communication occurs more quickly. Trading could become less costly, especially if journeys can be avoided. And trading could become less risky as information uncertainties and asymmetries are removed, and as travel is avoided.
The structure of supply chains could also be altered (Bedi 1999, Eggleston et al 2002). Trading could become less localised as telephonic communication is relatively independent of geography. Equally, intermediaries could be removed as the informational advantages that they offer are undermined or substituted by the mobile phone. Buyers could pay less by dealing direct with producers, and the information asymmetries that benefit intermediaries could be eroded. Micro-entrepreneurs could then be empowered. Finally, at the most macro level, all this should help to increase business investment, allow new businesses and markets to emerge, and contribute overall to economic development.

Figure 1: Conceptualising the Impact of Mobile Telephony on Commerce

These are the potentials but what is the reality of mobile telephony in developing country micro-enterprise? As noted above, the base of literature on this topic has so far been very limited – hence the rationale for the study reported here. Entrepreneurs using mobiles do report a perception that trading increases in speed and reduces in cost, though there is limited detail on how this occurs (Donner 2004). There is some general sense that mobile phones may enable a greater locational spread of micro-enterprise activity (Overå 2006).

On the issue of intermediation, there are some indications that mobile phones are associated with disintermediation (Bayes 2001, Overå 2006) but also with ongoing intermediation (Duncombe and Heeks 2001). Likewise, there is some evidence that mobile phones substitute for travel (Duncombe and Heeks 2001) but other research suggests a mixed picture in which some journeys are substituted but others are not (Souter et al 2005, Overå 2006). Overall, then, we have limited field evidence about the impact of mobiles on micro-enterprise, and what evidence we do have points, in some cases, in slightly different directions.
Finally, and stepping back to an even broader perspective, there is an issue to investigate around the generic role of mobile phones in developing countries. There has been some tendency to assume that role is global – much the same in industrialised as in developing countries – but other analyses, question one-size-fits-all perspectives (Hamilton 2003, Castells et al 2007). They argue that usage models are different in developing countries. For many in industrialised countries, mobile phones are a supplement to fixed-line telephony, and are valued specifically for their mobility. By contrast, there is evidence for some developing country users that a mobile phone is their first link to the network. It may thus be valued for its connectivity and convenience, more than for its mobility. Similarly the "Northern" model of an individually-owned phone purchased by its one user may not apply in the global South where there has been a long history of shared ownership and access models in relation to information and communication technologies (James 2005).

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