The Information Environment of Micro-Businesses in Urban India

The Information Environment of Micro-Businesses in Urban India and Africa 1 June 2006 Jonathan Donner Microsoft Research India

What kinds of businesses are we talking about? Micro-businesses (5 or fewer employees) are the most common kind of businesses in the developing world - 90 million households in India alone (40 m non-agricultural) 15 million Indian retail shops <500 Sq feet (The Economist 5. 15. 06) Most are relatively unproductive and struggle to survive Their communication and information needs are radically different from formal businesses in developed economies We seek a better understanding of how these businesses use ICTs.

The Information Environment of Micro-Businesses Variety of Occupations - Small farmer Retail Services Transport Small manufacturing Inadequate Current Categorizations Complex Communication Behaviors X - Interpersonal - Mediated - Mass X - Rural vs. urban - Formal vs. Informal Sector - Growth vs. Subsistence

Methods – Study in Progress Hybrid Qualitative and Quantitative approach Builds on rapid and remote ethnography techniques by Whitney and Kelkar (Illinois Institute of Design) Target: nonagricultural urban microenterprises 40 cases complete by mid-June

The routine Many interview subjects learned their business from family or friends Long workdays are common - 12 or more hours, 6 or 7 days a week. Many are on their feet most of the day Take-home earnings vary with size and type of business Many businesses are at home or on the street

Where’s the register?

Lots of other ICTs No office, but plenty of paper

Mobile Phones 13 cases so far -- 2 with mobile, 2 w/landline Top 3 reasons for not owning l “Its not necessary” l “I can’t afford it” l “I can’t learn how to use it” (illiteracy) Public phones and shared/family mobiles reduce the need to purchase

Internet/PCs 13 cases so far -- 0 own a PC or visit public kiosks Top reasons for not owning l “Its not necessary” l “I can’t afford it” l “I can’t learn how to use it” (illiteracy) l 3 of 13 had not heard of the internet at all Don’t associate the internet and PCs with businesses of their small size and limited complexity. One wants his children to use PCs

Contrasting PCs/Internet and Mobiles (some implications) Mobiles - local and informal Internet - distant and formal Slater & Kwami, (2005). Embeddedness and escape: Internet and mobile use as poverty reduction strategies in Ghana http: //www. isrg. info/ISRGWorking. Paper 4. pdf Where would a PC fit? Mediated personal activities (photography, instant messages, maps, music and video) might be more appealing than productivity tools. Size of business as proxy for internet need/appeal

Part II So what happens when microentrepreneurs purchase a mobile phone? Findings from Rwanda

Previous research on microentrepreneurs and mobile phones ICTs and SMEs l Duncombe and Heeks (Botswana) Micros and Mobiles l l Molony (Tanzania) Vodafone (Africa) Other l l l Geertz on the Bazaar Fafchamps Mead and Leidholm “Phones are the information-related technology that has done the most to reduce costs, increase income and reduce uncertainty and risk. Phones support the current reality of informal information systems, they can help extend social and business networks, and they clearly substitute for journeys and, in some cases, for brokers, traders and other business intermediaries. They therefore work “with the grain” of informality yet at the same time help to eat into the problems of insularity that can run alongside. Phones also meet the priority information needs of this group of communication rather than processing of information” Duncombe and Heeks (2001) “Information and Communication Technologies and Small Enterprise in Africa: Lessons from Botswana”.

Afsa, a hair braider • Moved to Kigali alone, after losing her family in the Rwandan genocide • Saved for months to buy the phone, so that clients could give her number to more prospects • Mobile helped her business grow from 3 clients a week to 8 -12 per week (each client pays $10) • Plans to open her own salon • Has an emergency fund saved in case mobile is stolen • Also calls her cousins in Gisenyi. “When I got the mobile, I began to see braiding as a business – as work – and could see a future”

Innocent, the neighborhood baker • Makes samosas and cakes for clients around Kigali, Rwanda • Started business with minimal capital: uses a borrowed stove • With the mobile, has expanded his customer base • 30% of his clients are now outside Kigali, and can only contact him using the mobile • He has increased his income and recently moved into a bigger house “I want to be the Mc. Donalds of Baking”

Whom do they call…and why? 2/3 of calls are personal, 1/3 business Call partners (n=1817) Call Content (n=1755)

What happens when a microentrepreneur gets a mobile phone? Estimated Probability that a Call Partner is New to a User’s Network (Among Kigali Microentrepreneurs, 2004) Notes: Estimates from logistic regression, N=1019; 185 mobile-only owners and 92 mobile and landline owners. Regression controls for size of business, year purchased mobile*, age*, gender, and education

Synthesis: The Information Environment of Micro-Businesses Long-term goal: a framework to represent distinct patterns of how micro-businesses approach communication and information processing Steps 1. Build a model around Gathering, Storing, Processing, and Sharing business information 2. Identify distinct segments and personas Sample: Street Traders • No structure, but set up in same place each day • Learns new styles from borrowed magazines and by talking with friends • Keeps all finances in his head • Does not own mobile or PC 3. Use new personas to inform ICT policy, training, and product design NOTEHYPOTHETICAL DATA

Thank You! Jonathan Donner jdonner@microsoft. com http: //research. microsoft. com/~jdonner/

References Donner, J. (2004). Microentrepreneurs and mobiles: An exploration of the uses of mobile phones by small business owners in Rwanda. Information Technologies for International Development, 2(1), 1 -21. Duncombe, R. , & Heeks, R. (2002). Enterprise across the digital divide: Information systems and rural microenterprise in Botswana. Journal of International Development, 14(1), 61 -74. Fafchamps, M. (1994). Industrial structure and microenterprises in Africa. Journal of Developing Areas, 29(1), 1 -30. Geertz, C. (1978). The bazaar economy: Information and search in peasant marketing. American Economic Review, 68(2), 28 -32. Mead, D. C. , & Leidholm, C. (1998). The dynamics of micro and small enterprises in developing countries. World Development, 26(1), 61 -74. Molony, T. S. J. (2005). Food, carvings and shelter: The adoption and appropriation of information and communication technologies in Tanzanian micro and small enterprises. Unpublished Dissertation, The University of Edinburgh, Edinburgh. Vodafone. (2005). Africa: The impact of mobile phones. Retrieved March 9, 2005, from http: //www. vodafone. com/assets/files/en/AIMP_090320 05. pdf Whitney, P. , & Kelkar, A. (2004). Designing for the base of the pyramid. Design Management Review, 15(4), 4147.