in Addis Ababa, Ethiopia

438 Pages·2014·4.52 MB·English

Small and Micro Business Enterprises (SMBEs) in Addis
Ababa, Ethiopia: Development and Poverty Reduction
through Information and Communication Technologies
(ICTs), with particular reference to the hotel industry and
associated businesses

This thesis is submitted in partial fulfilment of the requirements of The University of
West London for the Degree of Doctor of Philosophy

London,
August 2014

Wegene Demeke
Declaration
I, Wegene Demeke, affirm that this thesis submitted at the University of West
London is my own work, except expressed or referenced accordingly.

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Abstract
The role of Information and Communication Technologies (ICTs) as a facilitator
and enabler for development and poverty reduction has been increasingly
recognised by many international organisations. ICTs need to be diffused in
society to have their effects realised. The diffusion of ICTs in developing countries
is lagging behind the developed countries creating the digital divide. Although the
divide is reducing in many sub-Saharan countries, in Ethiopia it is increasing. The
purpose of this study is to find the factors that affect the adoption and non-
adoption of ICTs in small and micro businesses in Addis Ababa, Ethiopia. A
number of sectors were explored and the hotel and tour operator sector was found
to have both adopters and non-adopters. The hotel and tour operator business in
Addis Ababa was selected to be the study population. The main research question
was to find the connection between the political, economic, and social factors and
the adoption and use of ICT in this sector.

While cultural, social-economic, political and legal factors affect the adoption of
innovation in both developed and developing countries, these factors are more
pronounced in the developing countries. Rogers’ diffusion of innovation theory is a
good initial theoretical candidate for understanding the ICT diffusion factors.
However, to include the national level factors, a theoretical framework was
proposed based on Rogers’ diffusion of innovation theory.

An exploratory research method was used to shed light on the adoption and non-
adoption factors. It uses mixed methods research methodology in two phases to
collect data from owners/managers. In the first phase in-depth interviews were
conducted with 16 hoteliers who adopted ICT in their businesses. In the second
phase survey questionnaires were used to collect data from 128 hoteliers and 57
tour operators. In this phase both adopters and non-adopters of ICT were
included. Data were analysed using NVivo and Statistical Package for Social
Sciences (SPSS) software packages.
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This study argues that the telecommunications monopoly, the non-affordability of
ICT products and services, the general economic situation, lack of knowledge and
awareness of the technology, and lack of legal protection for small hotels affect the
adoption negatively. On the other hand, network externalities, competition among
hoteliers, and major customers (foreign) act as a facilitator agent and have a
positive impact on the adoption of ICT.

The researcher argues that the political, social, economic, technological and legal
policies are the sources of the adoption and non-adoption factors of ICTs in the
hotel and tour operator business.

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Acknowledgements
A research project of this magnitude is the result of the support provided by many
people. I have been extremely lucky to get support from numerous individuals. I
would like to mention here some of those without whose support this project would
not be what it is today. My sincere gratitude for his assistance, guidance, and
encouragement goes to my supervisor, Dr Anthony Olden, without whose
inspiration and relentless support this thesis would not been what it is today.

I am grateful for the support of my second supervisor, Dr Jose Abdelnour Nocera. I
would also like to take this opportunity to say thank you to Dr Stephen Roberts for
his encouragement and support throughout my research period.

I also would like to thank the research office staff for the support I have received
over the years, I would particularly like to thank Maria Pennells for her support and
help. I would like to thank the School of Hospitality and Tourism as well, for
supporting and allowing me to pursue this research, and for their continuous
support and advice on the hotel and associated sector businesses. I would like to
thank Professor David Foskett and Ms Liz Plant for their help. I also would like to
say thank you Barbara Stryjak for copy editing my thesis.

I would like to give credit to friends and colleagues that help to make my life
easier, discussed my research, and gave me encouragement. I would like to say
thank you to my research assistant, Mr Girma Leggese, for helping me to collect
data in Addis Ababa, I have learned from his twenty years of data collecting
experience, thank you. I would like also to thank Mr Birhanu Hailmariam for his
support in getting data during the initial stage of the research. My thanks also go to
Eskinder Getachew, in checking the translations of the interviews.

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I also would like to thank the research participants, without whose cooperation,
sometimes in difficult conditions, it would not have been possible to complete my
research.

Finally, I would like to thank my family, especially Hannah Demeke and Sujeong
oh, for providing me with nourishment and love, during the research period. Thank
you, I greatly appreciate your support.
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Dedication
This thesis is dedicated to my mother, Kesela Woldemariam, who passed away a
few months before the completion of this thesis. Her unwavering support, love,
and memories are a source of energy and continue to be so. It is also dedicated to
my father, Demeke Woldetsadik, his love, dedication and family commitment will
always be with me.

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Table of Contents
Declaration ...........................................................................................................................................ii
Abstract ............................................................................................................................................... iii
Acknowledgements ............................................................................................................................v
Dedication .......................................................................................................................................... vii
Table of Contents ............................................................................................................................ viii
List of Figures .................................................................................................................................... xv
List of Tables .................................................................................................................................... xvi
List of Charts .................................................................................................................................. xviii
List of Acronyms and Abbreviations ............................................................................................... xx
CHAPTER 1 INTRODUCTION ................................................................................................................ 1
1.1 INTRODUCTION ....................................................................................................................................... 1
1.2 INFORMATION AND COMMUNICATION TECHNOLOGIES (ICTS) .............................................................. 4
1.3 THE ROLE OF ICT FOR DEVELOPMENT, POVERTY REDUCTION AND EMPOWERMENT OF THE POOR .... 4
1.4 IDEA DEVELOPMENT AND RESEARCH PROCESS ..................................................................................... 5
1.5 RESEARCH BACKGROUND ...................................................................................................................... 7
1.6 PROBLEM IDENTIFICATION ..................................................................................................................... 7
1.7 RESEARCH QUESTIONS .......................................................................................................................... 8
1.8 RESEARCH AIMS AND OBJECTIVES......................................................................................................... 9
1.9 THEORETICAL FRAMEWORK DEVELOPMENT ........................................................................................ 11
1.10 RESEARCH METHOD........................................................................................................................... 12
1.11 DATA COLLECTION AND DATA ANALYSIS ............................................................................................ 13
1.12 SCOPE AND COVERAGE ..................................................................................................................... 13
1.13 LIMITATIONS OF THE STUDY ............................................................................................................... 14
1.14 SIGNIFICANCE OF THE STUDY ............................................................................................................ 14
1.15 STRUCTURE OF THE THESIS .............................................................................................................. 15
1.16 CONCLUSION ...................................................................................................................................... 16
CHAPTER 2 RESEARCH BACKGROUND AND CONTEXT ............................................................ 18
2.1 INTRODUCTION ..................................................................................................................................... 18
2.2 OVERVIEW ............................................................................................................................................ 18
2.3 SOCIAL AND ECONOMIC OVERVIEW...................................................................................................... 19
2.4 DEMOGRAPHY ...................................................................................................................................... 21
2.5 HUMAN DEVELOPMENT......................................................................................................................... 22
2.6 POLITICAL OVERVIEW ........................................................................................................................... 23
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2.7 INTERNATIONAL AND REGIONAL DISCOURSE ON THE ROLE OF ICT FOR DEVELOPMENT AND POVERTY
REDUCTION ................................................................................................................................................. 24
2.8 THE ROLE OF SMBES FOR DEVELOPMENT AND POVERTY REDUCTION IN AFRICA ............................. 28
2.9 SMBES AND THE USE OF ICT IN ADDIS ABABA .................................................................................. 29
2.10 RATIONALE FOR THE STUDY OF THE ADOPTION OF ICT .................................................................... 30
2.11 THE MAIN FOCUS OF THE RESEARCH AREA ....................................................................................... 32
2.12 THE HOTEL SECTOR AND ASSOCIATED BUSINESSES IN ETHIOPIA .................................................... 34
2.12.1 History ....................................................................................................................................... 34
2.12.2 The role of hotel sector for development and poverty reduction ...................................... 35
2.13 TELECOMMUNICATION IN ETHIOPIA ................................................................................................... 36
2.13.1 History ....................................................................................................................................... 36
2.13.2 State of information and communication technology in Ethiopia ..................................... 37
2.13.3 The cost and affordability of ICTs ......................................................................................... 42
2.13.4 Available content and applications ....................................................................................... 44
2.13.5 ICT policies .............................................................................................................................. 44
2.13.6 Telecommunications sector regulation ................................................................................ 46
2.14 THE “DIGITAL DIVIDE” ......................................................................................................................... 48
2.14.1 What is the “digital divide”? ................................................................................................... 48
2.14.2 Current state of the “digital divide” ........................................................................................ 51
2.15 MEASURING DIFFUSION OF THE INTERNET IN ETHIOPIA .................................................................... 56
2.15.1 Diffusion of the Internet in Ethiopia ...................................................................................... 58
2.16 CONCLUSION ...................................................................................................................................... 59
CHAPTER 3 LITERATURE REVIEW ................................................................................................... 60
3.1 INTRODUCTION ..................................................................................................................................... 60
3.2 SOCIETY AND TECHNOLOGY ................................................................................................................ 60
3.3 THE EARLY ADOPTION AND DIFFUSION RESEARCH (CLASSICAL DIFFUSION STUDY) ........................... 63
3.4 FURTHER DEVELOPMENT OF DIFFUSION RESEARCH ........................................................................... 65
3.5 SOURCES OF ADOPTION AND NON-ADOPTION FACTORS ..................................................................... 68
3.6 INTERNAL DETERMINANT FACTORS ...................................................................................................... 70
3.6.1 Organisational level factors ..................................................................................................... 70
3.6.2 The role of owners/managers in the diffusion of innovation ............................................... 72
3.6.3 The role of the workers ............................................................................................................. 74
3.7 EXTERNAL FACTORS ............................................................................................................................ 74
3.7.1 Sectoral (industry) level factors ............................................................................................... 75
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3.7.2 National level factors ................................................................................................................ 76
3.7.2.1. Telecommunications policy .............................................................................................................. 77
3.7.2.2. Political factors ................................................................................................................................... 80
3.7.2.3. Cultural and socio-economic factors .............................................................................................. 84
3.7.2.4. Technological factors ........................................................................................................................ 87
3.7.2.5. Environmental factors ....................................................................................................................... 90
3.7.2.6. Legal factors....................................................................................................................................... 92
3.7.3 International level factors ......................................................................................................... 93
3.8 CONCLUSION ........................................................................................................................................ 94
CHAPTER 4 THEORETICAL FRAMEWORK DEVELOPMENT ....................................................... 96
4.1 INTRODUCTION ..................................................................................................................................... 96
4.2 DO WE NEED A THEORY? ..................................................................................................................... 96
4.3 THE ROLE OF THEORY IN RESEARCH: WHY DOES IT MATTER? ............................................................ 97
4.4 THEORIES ON SOCIETY, SCIENCE AND TECHNOLOGY .......................................................................... 99
4.5 SOCIAL CONSTRUCTION OF TECHNOLOGY (SCOT) ......................................................................... 100
4.6 TECHNOLOGY ACCEPTANCE MODEL (TAM) ..................................................................................... 101
4.7 ACTOR-NETWORK THEORY (ANT) .................................................................................................... 102
4.8 ROGERS’ DIFFUSION OF INNOVATION THEORY .................................................................................. 104
4.8.1 The innovation ......................................................................................................................... 105
4.8.2 Communication channels ....................................................................................................... 108
4.8.3 The social system .................................................................................................................... 113
4.9 SELECTION OF THEORETICAL FRAMEWORK ....................................................................................... 114
4.10 REASONS FOR THE ADOPTION OF ROGERS’ DIFFUSION OF INNOVATION THEORY .......................... 115
4.11 LIMITATION OF ROGERS’ DIFFUSION OF INNOVATION THEORY ........................................................ 117
4.12 ASSUMPTIONS OF ROGERS’ DIFFUSION OF INNOVATION THEORY AND ITS IMPLICATIONS .............. 117
4.13 RATIONALE FOR NEW THEORETICAL FRAMEWORK .......................................................................... 117
4.14 DEVELOPMENT OF A THEORETICAL FRAMEWORK............................................................................ 119
4.15 PROPOSED THEORETICAL FRAMEWORK FOR DIFFUSION STUDIES .................................................. 121
4.16 CONCLUSION .................................................................................................................................... 121
CHAPTER 5 RESEARCH METHODOLOGY .................................................................................... 123
5.1 INTRODUCTION ................................................................................................................................... 123
5.2 PHILOSOPHICAL UNDERPINNING OF KNOWLEDGE GENERATION ....................................................... 123
5.3 MIXED METHODS DESIGN STRATEGY ................................................................................................. 126
5.4 RESEARCH APPROACHES .................................................................................................................. 126
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