Entrepreneurs' mobile phone appropriation and technical efficiency of informal firms in Dakar (Senegal)

Abstract

AbstractIn Africa, entrepreneurship remains predominantly informal, but the rapid spread of mobile phone and Internet use is often viewed as an opportunity to boost the productivity and output of informal firms. Yet little is known on how informal entrepreneurs use these technologies for their business. The purpose of this paper is to open the black box of ‘mobile usage’ and investigate its effects on the performance of informal micro and small enterprises. To do so, we develop an original conceptual framework of mobile usage and apply a three‐step empirical approach based on a unique dataset of informal firms in Dakar. The first step allows us to identify rich ‘mobile usage’ measures that examine the different economic functions supported by mobile phones (coordination, finance and management) and the multiple dimensions of use (range and intensity). The second step identifies four user profiles with specific forms of appropriation: disconnected entrepreneurs, networkers, Internet explorers and digital entrepreneurs. The third step uses a stochastic frontier approach to investigate whether these profiles increase the economic efficiency of informal firms. Our findings suggest that while the most advanced uses of mobile phones have an incremental impact on sales efficiency, the potential for improvement remains limited. Only networkers' coordination uses show a significant impact on value added and profit, while the ways in which Internet explorers and digital entrepreneurs use a mobile phone have only a limited impact.