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A quick update for you. In September, we featured posts from three groups of students who had pursued summer research projects sponsored by Fletcher’s Institute for Business in the Global Context and the MasterCard Center for Inclusive Growth. Yesterday I heard from Trevor Zimmer and Michael Mori, who wrote about their research on Indonesian mobile money. Since then, their report, “Mobilizing Banking for Indonesia’s Poor,” has been published, and MasterCard has posted it on their website. Congratulations to Michael, Trevor, and IBGC!
Tagged with: IBGC
Yesterday I heard from Alison Erlwanger, one of the student leaders of the Africana Club, which is planning “Africa on the Global Stage,” a conference that will take place on Friday, February 20. The second annual Africana Conference is free and open to the public, with support from Fletcher, the Institute for Business in the Global Context, the Jonathan M. Tisch College of Citizenship and Public Service, and the World Peace Foundation.
The Africana Club wants to encourage blog readers who are in the area to attend. Please register online if you’re interested. Student-led conferences are a great way to see a practical reflection of the learning that students have done throughout the year.
Earlier this year, the Institute for Business in a Global Context took a look back at what it has accomplished in its first three years (and what it currently does) in pursuit of its mission to focus “on the interplay between global business and the key forces that shape the context in which enterprises operate.” The result was a nice publication! Take a look!
Our final IBGC post comes from Anisha (currently a second year MIB student) and Julia (who graduated from the MALD program in May 2014). Their research examines the impact of digital innovation in enabling urban mobility in Nairobi, Kenya. Their post was written in July.
Navigating Silicon Savannah: Do Digital Innovation and Urban Mobility Go Together?
Urban mobility is defined as the degree of ease with which people and goods can be moved in an urban center. As an expanding economy and East Africa’s technology hub, Nairobi has seen rapid urbanization in recent years. According to the government of Kenya, population is set to quadruple from 3.1 million in 2014 to 12.1 million in 2030. New construction is sprouting up almost every day. Rural to urban migration continues to be high. Internet and mobile phone penetration have brought along the emergence of digital commerce. With these developments, the demand for urban mobility in Nairobi has increased much faster than in the rest of the country.
The Kenyatta government recognizes the need for urban mobility in Nairobi, and is making improvements to infrastructure, urban planning and regulatory frameworks. Yet, as urban mobility demand outpaces supply, Nairobi’s private sector is creating innovative solutions for problems arising in transport and logistics today.
Our research looks at what digital innovation exists to address issues in transport and logistics, who this digital innovation is benefiting, and how the government and private sector are engaging each other. In this blog post, we’ll discuss our research process so far.
Ask the right question, and get the right answers
Back in January 2014, when we started a literature review of urbanization-related challenges in Nairobi, we identified transport, water and sanitation as our key areas of focus. Early into our fieldwork on the ground, we realized the need to narrow our research question further. Two weeks of informal interviews with subjects from the private sector and technology space showed us the tremendous amount of energy around transport and logistics. Issues in the sector range from usual suspects like traffic and parking management and bad roads, to finding locations physically because Nairobi does not have a numbered addressing system. This experience showed us how important it is to be on the ground and talk with people personally to craft your final research questions.
Trial the methodology, and know how to revise
This period of interviewing also validated the qualitative, in-depth interview methodology we had chosen for our primary research. The rich answers we got from our in-depth interviews were exactly what we were looking for to get insights. At the same time, we recognized that completely open-ended interviews would give us a lot of disparate data that we would not be able to organize into themes. Hence, we used the first two weeks to listen to subjects and construct our structured interview guide that would make data aggregation and analysis easier after the fieldwork.
Listen, and become a better researcher
One of the most critical lessons we learnt early on was to make our subjects comfortable and to listen actively in our conversations. As much as this sounds like a soft skill, it has been crucial to making our research better. We have developed an understanding on how to ask questions and pick up points to probe deeper. We always functioned with one of us as lead interviewer who could keep to the structure of the interview guide, while the other would listen for insightful answers and delve into them.
Network, and get a representative sample
Our research methodology required us to talk with players in the tech ecosystem, and transport and logistics sector. While we diligently surveyed all players and reached out to them through a combination of contacts and cold calling, we found out soon enough how crucial snowball sampling was to our participant recruitment process. We also realized how important it was to meet as many people as we could by going to events, conferences, and spending time at community spaces for tech enthusiasts.
We must note that we were incredibly fortunate that our subjects were forthcoming in providing names of people and organizations to speak to, and went out of their way to make introductions for us. We even had some subjects telling us to talk to their competitors!
Be patient, because there will be highs and lows
Our fieldwork experience has been like Nairobi weather — mercurial. We have had days when none of our contacts have come through, and days when we found ourselves scrambling to squeeze all our subjects into our schedule. It took us the first three weeks to understand the nature of fieldwork, and to be prepared for the highs and lows. Thereafter, we planned in a way that if we had a bonus number of interviews in a short span, we would stretch ourselves to complete them. At the same time, we recognized the value of patience on days when we were unable to have a full schedule or when last-minute meeting cancellations happened.
It also made us realize that fieldwork was a 24/7 job for the brain. Even when we were at social gatherings or dealing with vendors, shopkeepers and the like, we kept our eyes and ears open for information that could help us with our research. We also spent countless hours discussing (and redefining) the exact wording of our research together, often stuck in traffic in Nairobi or when Internet speeds were too slow to be sufficiently productive (the irony was not lost on us).
Hope for an amazing research partner because it makes research a million times better (and fun)!
There have been innumerable times when we have represented each other and our team as whole, to subjects, contacts and other people we have worked with on the project. So, it is really important to have a great level of trust and understanding. This really cannot be underestimated or overemphasized! Our disparate skill sets have fused together nicely to craft a project that has thus far been immensely rewarding and informative.
The second of our IBGC research posts comes from Michael and Trevor (both second-year MALD students), who were based in Indonesia.
What if, in areas underserved by formal financial services, mobile phones could function like debit cards and local corner stores like micro bank branches? In the same amount of time it would take to send a SMS text message, you could check your bank balance, transfer money to a friend, pay your utility bills, or purchase your groceries, all enabled on a mobile handset. The local agents that you use to top-up your mobile airtime could also function as agents contracted by banks or mobile network operators (MNOs), providing you with access points to deposit and withdraw money from your accounts. This is one vision of how mobile money could reshape the way people use money and access financial services.
We have spent the past two months in Indonesia exploring how mobile money might add value to the financial portfolios of low income market segments. (Our research was inspired in large part by the book Portfolios of the Poor, by Daryl Collins, Jonathan Morduch, Stuart Rutherford and Orlanda Ruthven.) Indonesia is the largest market in Southeast Asia and a member of the G20, yet it has one of the largest unbanked and under-banked populations in the world. Formal financial services have the potential to improve livelihoods, protect assets, and provide security from the unexpected. Yet, according to the World Bank Global Financial Inclusion Index, only 20% of Indonesians were fully banked as of 2011.
Indonesia’s geography poses a major barrier to expanding financial access, with its 250 million inhabitants spread across 13,000 islands. The infrastructure investment in brick-and-mortar branches and ATMs that would be required to substantially expand financial access is prohibitively expensive, especially if the access points reach only low-income communities. One promising solution that is receiving widespread attention is using mobile phones as a tool to offer branchless banking services to the underserved. Under branchless banking schemes, financial services are distributed by agents contracted by institutions to process customer’s transactions away from physical bank branches.
Major stakeholders, including the Government of Indonesia, commercial banks, and international development agencies are dedicating considerable resources to foster the nascent mobile-enabled branchless banking market. The Bank of Indonesia (Indonesia’s central bank) and the Financial Services Authority (which is responsible for micro-prudential oversight) have issued a series of increasingly clarifying and progressive regulations to govern the emerging branchless banking and mobile money market. There are a number of interesting mobile money offerings already on the market, notably Telkomsel’s T-Cash, Indosat’s Dompetku, XL’s Tunia, and Mandiri’s E-Cash. Thus far, however, these products have seen only limited uptake concentrated among middle and high-end consumers.
Amidst all of these efforts and the exciting potential, it is easy to lose sight of the most important stakeholder: the end user. Regulatory bodies should be weighing the best ways to maintain a stable financial system while protecting the consumer and promoting financial inclusion. And commercial banks and MNOs ought to be concerned that regulations should enable them to utilize latent networks of agents already imbedded in low-income communities (such as mobile airtime re-sellers or modern mini-market retailers, for example), while also turning a profit. However, all is for naught if the end-users — the customers — do not see sufficient value in mobile money services to make the switch from their current mix of financial management tools.
Our research rests on the presumption that the poor lead complex financial lives. Despite their position on the outskirts of the formal financial universe, low income segments have developed, adopted, and adapted formal and informal tools that help them manage their incomes. Mobile money and branchless banking services must compete, then, with a rich assortment of product offerings that are already socialized, trusted, and tailored to the poor’s specific expectations and needs. So, scaling-up mobile money is more than an access issue. In order to be adopted, products must add value above and beyond those services that the poor are already using to save, insure, borrow, and transfer money.
Our efforts are an extension of previous research conducted by the IFC, TNP2K, Microfinance Opportunities, e-MITRA, and CGAP, among others. We hope to contribute to this body of knowledge by exploring not only how low income segments manage their financial lives, but why they manage them in the ways that they do. Understanding the attitudes, norms and behaviors of end-users, including the perceived strengths and weaknesses of their current mix of financial intermediation tools, can inform more rational regulations, better product design, more targeted marketing, and the establishment and maintenance of an effective sales force of agents.
Over the past two months, we’ve immersed ourselves in three communities in Jakarta, Bandung, and the Ciwidey Regency in order to create ethnographic profiles of each that detail the rhythms of their economic and financial lives. We’ve held focus group discussions, in-depth one-on-one interviews, and ideation workshops, as well as broken fast with members of each community and even farmed in one location. Naturally, we do not seek to generalize insights that are specific to a time and place. Rather, we hope to share how new products can be tailored, marketed, and delivered to specific low income contexts that will ensure adoption and continued usage.
Our efforts will result in a report that will be published in late September. While we’re focused like lasers on the needs of the end-user, we are equally focused on ensuring that our findings are actionable for both regulators and the businesses responsible for designing and deploying profitable mobile money products. We want to know how mobile money might be integrated into or displace existing formal and informal services. It is also our hope that our research concept and design will be of relevance to the wider financial inclusion community.
We are grateful for the opportunity provided to us by The MasterCard Center for Inclusive Growth and The Fletcher School’s Institute for Business in the Global Context. In addition to their generosity, both institutions have pushed our thinking and providing invaluable in-kind support, all while giving us the autonomy to design and execute our research, and analyze our findings. We look forward to sharing our findings soon.
The first of the blog posts from Institute for Business in the Global Context researchers comes from Sarah and Jennie, who studied the business practices and the most challenging constraints of Small and Medium-sized Enterprises (SMEs) in Turkey. Both Sarah and Jennie graduated from the MALD program in May. As background for their post, they note that:
SMEs comprise 99% of Turkish enterprises and employ nearly 80% of the workforce; thus they have the potential to contribute significantly to the long-term growth of the country. Currently, the government, followed by private banks and supporting institutions, have increased attention on SMEs, but there are still considerable constraints in the areas of finance, human capital, and enhancing competitiveness. Through our research, we seek to identify the gaps between existing products and services available to Turkish SMEs and the unmet needs of those businesses, and to uncover potential alternatives to narrow these gaps.
Here’s the post that they wrote midway through their summer.
The Making of a Team
After three weeks of finishing our literature review, piloting and perfecting our interview questions on nearby business owners, and speaking with many knowledgeable representatives of Turkey’s leading banks and supporting institutions, we took our first field trip as an entire research team to begin interviews with the businesses formally participating in our study.
Our research focuses on two regions of Turkey: the Marmara Region and Southeastern Anatolia. Istanbul is the primary city in the Marmara Region and that is where we have been based since mid-June. While we are of course interviewing SMEs in Istanbul, we are also interested in speaking to businesses in other, smaller cities in this region. Therefore, we arranged to interview SMEs in Edirne, a city where Turkey shares its borders with both Greece and Bulgaria.
We met our two research assistants, Mert and Abid, at the bus station, prepared for a three-hour trip, and took an evening for final preparations before our first interviews with business owners. To our surprise, it took over two hours just to get out of Istanbul proper, so the bus ride ended up being five hours, during which we learned that we actually had two interviews lined up that very evening!
We had a contact in Edirne scheduling the interviews for us, so while we knew we’d be interviewing four to six businesses over the three-day period, we didn’t have the exact schedule ahead of time. The realities of field research abruptly hit us as we scrambled to finish final details on the bus. Due to the importance of relationships and networks in Turkey, we realized that we were at the whim of our Edirne contact as to how many interviews we packed into one day, how much time we had between the interviews, and how long the interviews would actually last. While it was amazing to finally start interviews, we were suddenly inundated with many tasks such as transcribing, recording, and analyzing this steady flow of information!
While our inner-American spirits would have preferred more time to feel settled, our newly minted Turkish mindset, coupled with the many hours we had previously spent on interview questions, enabled us to complete very productive and informative interviews that evening and over the next couple of days.
In the midst of it all, however, we did get a chance to see a bit of the city, one of the former capitals of the Ottoman Empire. On our way to one interview, we stopped to explore some historical sites such as Selimiye Mosque, visited a horse stable on the Turkey-Greece border, and one of our research assistants realized his lifelong dream to ride a moped!
All in all, the trip was a rich learning experience and provided some lessons and insights which have already begun to influence the direction of our research. We are discovering that, despite a wide range of both financial and non-financial offerings by Turkish banks, SMEs are mostly concerned with loans, for which they consider the terms (especially high interest rates) to be quite prohibitive.
Furthermore, while the existing literature indicates that access to capital is the greatest constraint SMEs face, we are actually finding that businesses largely lack skills in cash management and financial accounting principles, which prohibits them from effectively using the available capital.
Last, these businesses also cite difficulties in finding, employing, and trusting qualified employees. There is a tension felt by business owners who do not want to relinquish control, yet aspire to expand and professionalize their business. When faced with the decision of whether to hire outside talent, particularly semi-professional managers, more often than not owners prefer to maintain a tight grip on all decisions.
We are now wrapping up our interviews in the Marmara Region, and we will be writing a second post from the opposite corner of the country, Gaziantep!
In August I heard from the folks at the Institute for Business in the Global Context, who asked if the Admissions Blog could feature the writing of students who conducted research this summer. I’m really happy to be able to share the posts that the IBGC students have written, and they’ll run from Wednesday to Friday this week. First, an introduction from Jamilah Welch, the IBGC program coordinator.
This summer, three teams of two students each conducted original research projects around the world for Fletcher’s Institute for Business in the Global Context. The projects, which took place in Indonesia, Turkey, and Kenya, were fully funded as part of an innovative research initiative in partnership with the MasterCard Center for Inclusive Growth.
Drawing upon the Fletcher students’ contextual understanding, the Junior Research Fellowship (JRF) allows them to engage in original research and analysis, resulting in new market insights to encourage more inclusive business growth — everything from SME (Small and Medium Enterprise) development, to mobile money, to services for the poor. Resulting publications will display a rich blend of academic and business-oriented insights that push beyond the reach of traditional market research, but maintain a practicality less often found in academia.
This week, we will hear from our student teams, via their field blogs.
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