AN INVESTIGATION INTO PASSENGERS’ EXPERIENCES OF A TRANSPORTATION NETWORK FIRM’S ‘RIDE-HAILING’ SERVICES, UBER SONWABO CIBI AND PHUMEZA NDZAMBO Submitted in partial fulfilment of the requirements for the degree BACCALAREUS COMMERCII HONORES in the FACULTY OF BUSINESS AND ECONOMIC SCIENCES at the NELSON MANDELA UNIVERSITY DEPARTMENT OF BUSINESS MANAGEMENT Supervisor: Ms B Gray Date Submitted: October 2019 Place: Port Elizabeth DECLARATION We, Sonwabo Cibi and Phumeza Ndzambo, declare that: • The the entire body of work contained in this treatise, entitled “Passenger experiences of a transportation network firm’s ‘ride-hailing’ services”, is our original work and that no help was provided from other sources except for those allowed; • All sources used or quoted in sections of this treatise have been acknowledged and documented by means of complete references; and • This treatise has not previously been submitted by us or anyone else for a degree at any other tertiary institution. Mr Sonwabo Cibi Ms Phumeza Ndzambo Student number: 220660433 Student number: 219375925 i ACKNOWLEDGEMENTS Sonwabo Cibi First and foremost, I am grateful to the God for the good health and wellbeing that were necessary to complete this treatise. I would like to express my deep gratitude for the unwavering support, contribution and assistance from the following individuals during the course of this research project: • To my research supervisor, Ms Beverley Gray, for her patient guidance, enthusiastic encouragement and useful critiques of this research work. • To my fellow researcher, Ms Phumeza Ndzambo, for her advice and assistance in keeping my progress on schedule. I also express my very great appreciation for her willingness to give her time, the stimulating discussions and for the sleepless nights we were working together before deadlines. • Finally, I wish to thank my family and friends for their support and encouragement throughout this research period. Phumeza Ndzambo To God, for the strength, patience and resilience He so gracefully granted throughout this project. I am grateful for learning ability, interest and knowledge gained. To Ms Beverley Gray, our supervisor, for her counsel and patience. Thank you Ms Gray for the time you invested in our journey of learning. To Sonwabo Cibi, my research partner, for maintaining a calm spirit in times of panic. For driving up and down at ridiculous hours, working tirelessly to meet deadlines despite a hectic work schedule. For challenging me, pushing me and encouraging me. Thanks for keeping your end of the bargain. To my family, friends and colleagues for putting up with my frustrations, fretting and sometimes half presence. I owe this to your unwavering support, faith and positive thoughts. ii ABSTRACT The dawn of the information age has brought about great change in the way things are done. This change has impacted many industries, displacing some and revolutionising others. In the transport industry this impact has come in the form of ride-hailing, a technology driven way of sharing mobility. This involves the use of mobile applications to connect private vehicle owners/drivers and passengers in transactional encounters, where private transport is provided in exchange for a fee. Organisations that offer these ride-hailing services are referred to as transport networking firms (TNF). The world’s market leader in ride-hailing is Uber, an American firm which has fast captured markets in countries around the world. In South Africa, like in many other countries, Uber has faced many challenges. However, despite these challenges, Uber continues to attract more passengers. While there is some literature relating to usage intentions by passengers, very little is known about their experiences after having used transport networking firms. The primary objective of this study is to investigate passengers’ experiences of a transport network firm’s ride-hailing service, namely Uber. In order to archive this objective a comprehensive review of existing literature was conducted. Literature showed challenges and gaps that exist in the transport industry, and specific focus was given to South Africa. The emergence and rise of transport networking firms as a result of insufficient capacity of existing transport systems is the main finding in the literature chapter. The study followed the quantitative research approach, using the descriptive research method. The sample consisted of 58 Uber users in the Nelson Mandela Bay region. The empirical data was collected to address passengers’ experiences using Likert- type scale questions pertaining to the following factors: - Convenience/Ease of use - Economic reward - Social connection - Safety and security iii The findings were that with regards to Convenience/Ease of use, respondents agreed that Uber provides a convenient mode of transport with an easy to use mobile application. On the contrary, the respondents were not fully convinced about the ride- hailing service’s Economic reward. They found it is not cheaper than other forms of transport. They did, however, find that it is valuable and met their expectations considering the amount paid, making it somewhat rewarding. Majority of respondents responded positively to statements asserting that Uber enriches their social lives, by allowing them free movement regardless of the time. Thus, Uber, was reported to have a positive contribution to Social connection. Lastly, Uber was reported to provide better Safety and security than other forms of transport. The Uber mobile app was also viewed as trustworthy. It is the researchers’ recommendation that any business looking to enter or grow in the ride-hailing service industry should have a good pricing model, a solid driver retention strategy, and recruit a highly innovative team that will be able to compete in today’s fast changing technology. Key Concepts • Ride-hailing • Ride-sharing • The sharing economy • Transport network firms (TNFs) iv TABLE OF CONTENTS Page DECLARATION ........................................................................................................... i ACKNOWLEDGEMENTS ........................................................................................... ii ABSTRACT ................................................................................................................ iii TABLE OF CONTENTS ............................................................................................. v LIST OF TABLES ..................................................................................................... viii CHAPTER ONE INTRODUCTION AND BACKGROUND TO THE STUDY 1.1 INTRODUCTION AND BACKGROUND ......................................................... 1 1.2 PROBLEM STATEMENT ................................................................................ 3 1.3 RESEARCH OBJECTIVES ............................................................................. 4 1.3.1 Primary objective ............................................................................................. 4 1.3.2 Secondary objectives ....................................................................................... 4 1.3.3 Methodological objectives ................................................................................ 5 1.3.4 Research questions ......................................................................................... 5 1.4 RESEARCH DESIGN AND METHODOLOGY ................................................ 5 1.4.1 Literature review (secondary research) ........................................................... 5 1.4.2 Empirical investigation (primary research) ....................................................... 6 1.4.3 Research design, paradigm and methodology ................................................ 6 1.4.4 Population, sampling & data collection ............................................................ 7 1.4.5 Design of the measuring instrument ................................................................ 7 1.4.6 Data analysis ................................................................................................... 8 1.5 SCOPE AND DEMARCATION OF THE STUDY ............................................ 8 1.6 CONTRIBUTION OF THE STUDY .................................................................. 8 1.7 DEFINITION OF KEY CONCEPTS ................................................................. 8 1.7.1 Ride-hailing ...................................................................................................... 8 1.7.2 Ride-sharing .................................................................................................... 9 1.7.3 The sharing economy ...................................................................................... 9 v 1.7.4 Transport network firms (TNFs) ....................................................................... 9 1.8 STRUCTURE OF THE RESEARCH ............................................................... 9 CHAPTER TWO THE RISE OF RIDE-HAILING SERVICES IN THE SOUTH AFRICAN TRANSPORT INDUSTRY 2.1 INTRODUCTION ........................................................................................... 11 2.2 THE SOUTH AFRICAN PUBLIC TRANSPORT SYSTEM ............................ 11 2.2.1 Challenges faced by the South African transport system .............................. 12 2.2.2 Government’s role and contribution to public transport .................................. 14 2.3 THE TAXI INDUSTRY IN SOUTH AFRICA................................................... 16 2.4