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Silicon Savannah“ Building ICT Entrepreneurship Eco- Systems in Resource-Scarce Contexts and Mobile Technology‘S Potential to Tackle Unemployment

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Dissertation The Emergence of Kenya‘s „Silicon Savannah“ Building ICT Entrepreneurship Eco- systems in Resource-Scarce Contexts and Mobile Technology‘s Potential to Tackle Unemployment Johannes Ulrich Bramann Email: [email protected] Abstract This dissertation investigates the evolution of Kenya’s Internet communication technology (ICT) ecosystem and explores the barriers and subsequent enabling processes encountered when gro- wing an ICT ecosystem in a resource-scarce context. Drawing upon 12 in-depth case studies of Kenyan tech entrepreneurs and 45 interviews with technology experts this dissertation provi- des a holistic perspective on the barriers and enablers that Kenyan technology entrepreneurs encounter across the areas of culture, human capital, finance, policy, entrepreneurial support systems, and markets. Together with relevant theory on how ecosystems emerge and advance the thesis develops a model that explains how ICT ecosystems can emerge in resource-scarce contexts. The model shows how locally available enabling processes may be drawn on to substitute and establish mis- sing condition factors. Furthermore, this dissertation analyzes mobile technology‘s potential to tackle unemployment in Kenya and provides a critical evaluation of the embedded economic and developmental opportunity. The Emergence of Kenya's "Silicon Savannah" Building ICT Entrepreneurship Ecosystems in Resource-Scarce Contexts and Mobile Technology’s Potential to Tackle Unemployment Dissertation submitted in partial fulfillment of the requirements for the degree Doctor of Economics (Dr. rer. oec.) at HHL Leipzig Graduate School of Management Leipzig, Germany submitted by Johannes Ulrich Bramann Leipzig, September, 05, 2016 First Assessor: Prof. Dr. Arnis Vilks HHL Leipzig Graduate School of Management Chair of Microeconomics Second Assessor: Jun.-Prof. Dr. Vivek Velamuri HHL Leipzig Graduate School of Management Rolf Schrömgens Professorship in Entrepreneurship and Technology Transfer Acknowledgements First of all, I wholeheartedly thank my supervisor Prof. Dr. Arnis Vilks and my co-supervisor Prof. Dr. Vivek Velamuri, who guided me through the entire thesis writing process with invaluable feedback an encouraged me with their enthusiasm for the complexities around technology entrepreneurship in resource-scarce contexts. Moreover, I express my deep appreciation to all interview partners who despite their full schedule made time for a personal interview with me. Without their help this study would not have been possible. In addition, I would like to thank my dear friends for their patience during the tireless discussions about my research, the challenges of development and the potential of ICT technologies for development in Kenya. Above all, I am very much indebted to my parents and my sisters for their limitless support during my studies and especially for the insightful feedback on my doctoral thesis. Thank you Extended Abstract Over the past decade the mobile phone and its unfolding possibilities have dominated development discourses. The mobile for development stream (M4D) has investigated applications in numerous fields, such as finance, education and healthcare. The first part of this dissertation evolves a new M4D field, mWork. It investigates the mobile phone as a tool that enables poor people in resource-scarce contexts to find and execute work. Through empirical case study research conducted in the continent’s internet communication technology (ICT) vanguard Kenya, this research surfaces 12 mWork case studies that demonstrate potential realms of utilization. The research further critically assesses the challenges that mWork firms could face, their possible economic feasibility as well as their potential contribution towards development. While this study finds that at the time of the study mWork in Kenya was still at a relatively early stage, several economically and developmentally promising applications have surfaced. For instance, the use of feature phones as tools for market research, crowd journalism and courier services, were shown to provide jobs and developmental assets. Further, this research observes that mobile recruiting applications may offer a viable alternative to personal network recruiting and hence eradicate a key recruiting obstacle. Arguably, some of the surfaced challenges and strategies of successful mWork firms are applicable to a wider set of M4D initiatives in other resource-scarce contexts. M4D scholars, technology entrepreneurs, as well as development practitioners may therefore find the provided discussion particularly insightful. The second part of this dissertation investigates the evolution of Kenya’s ICT ecosystem and explores the barriers and subsequent enabling processes encountered when growing an ICT ecosystem in a resource-scarce context. Establishing ICT entrepreneurship ecosystems in resource-scarce contexts is complicated, as these contexts lack important pre-conditions, such as financial resources, established ICT sectors and relevant human capital. Current theoretical perspectives and policy prescriptions about them stem mainly from the Global North and provide little insight into how to create these conditions “from scratch.” Drawing upon the insights of the conducted mWork case studies and in total 45 interviews with experts and entrepreneurs, the second part of this dissertation provides a holistic perspective on the barriers and enablers that Kenyan technology entrepreneurs encounter across the areas of culture, human capital, finance, policy, entrepreneurial support systems, and markets. Together with relevant theory on how ecosystems emerge and advance, these insights are used to propose a model that offers an explanation of how ICT ecosystems can emerge in resource-scarce contexts. The model shows how locally available enabling processes may be drawn on to substitute and establish those missing condition factors. Entrepreneurship support institutions, for instance, emerge as essential enablers that can kick-start industry emergence processes, train human capital, and help establish conducive socio-cultural norms. In addition, the establishment of initial market demand through developmental stakeholders and the inflow of expatriate entrepreneurs further emerged as enablers. The dissertation ends with a call for critically needed research and specific recommendations for development stakeholders, governments, and practitioners in tackling current barriers in order to help develop ecosystems in resource-scarce countries beyond their nascent phase. TABLE OF CONTENTS Acknowledgements ......................................................................................................................... II LIST OF FIGURES AND TABLES ........................................................................................................ IV LIST OF ABBREVIATIONS ................................................................................................................. V 1. INTRODUCTION ........................................................................................................................ 1 1.1 THE POTENTIAL OF MOBILE TECHNOLOGY TO TACKLE UNEMPLOYMENT IN KENYA .......................................... 1 1.2 KENYA’S EMERGING “SILICON SAVANNAH” ............................................................................................ 4 1.3 INTRODUCTION TO THE RESEARCH CONTEXT ......................................................................................... 10 1.3.1 Country Context: Kenya the East-African economic hub and its unemployment challenge 10 1.3.2 The “Silicon Savannah”: Kenya’s ICT entrepreneurship ecosystem ..................................... 14 2. LITERATURE CHAPTER ............................................................................................................. 17 2.1 BASIC THEORETICAL CONCEPTS ........................................................................................................... 17 2.2 MOBILE FOR DEVELOPMENT .............................................................................................................. 26 2.2.1 Mobile for development fields ............................................................................................. 27 2.2.2 Critics of the M4D stream .................................................................................................... 32 2.2.3 Contextual challenges faced by M4D initiatives .................................................................. 32 2.3 MOBILE FOR WORK (MWORK) ........................................................................................................... 35 2.3.1 The Virtual Economy: A market for virtually traded scarcities ............................................ 35 2.3.2 Mobile Micro Work .............................................................................................................. 39 2.3.3 Mobile for Recruitment ........................................................................................................ 43 2.4 THE ECOSYSTEM VIEW ON ENTREPRENERUSHIP ..................................................................................... 47 2.4.1 Theoretical basis: Cluster Theory and Regional Innovation Systems Theory ....................... 49 2.4.2 Distinguishing features of Entrepreneurship Ecosystem functioning .................................. 50 2.4.3 Emergence and development of ICT entrepreneurship ecosystems over time .................... 59 2.4.4 The role of Policy in fostering EE
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