Academic journal article International Journal of Management

Antecedents to Mobile Phone Diffusion in a Developing Economy: The Case of Malaysia

Academic journal article International Journal of Management

Antecedents to Mobile Phone Diffusion in a Developing Economy: The Case of Malaysia

Article excerpt

Mobile phones have gone through rapid diffusion rates in developing countries and have been regarded by many as the information and communication technology (ICT) that will significantly close the digital divide between the 'haves' and 'have-nots' in the knowledge economy. Malaysia, like all other developing countries have introduced a number of policies and plans to increase mobile phone diffusion rate among rural and marginalized communities. This paper studies the level and the key determinants of mobile phone use among diverse rural populations in Malaysia. Using a sample survey of 1020 respondents and the PROBIT model, this study finds that access, type of rural communities, education, gender, encouragement and age are key determinants for mobile phone use in the rural areas in Malaysia. Reasons for not using mobile phones among rural communities were also identified and strategies to increase the mobile phone use among these communities were discussed in this paper.

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Introduction

"The quickest way to get out of poverty right now is to have one mobile phone"1 - Professor Muhammad Yunus, 2006 Nobel Peace Prize for poverty alleviation.

The role of mobile phones as a tool for combating poverty cannot be underestimated as highlighted by Professor Muhammad Yunus, the recipient of the 2006 Nobel Peace Prize for alleviating poverty in Bangladesh. As founder of the Grameen Bank (the bank for the rural people), Professor Yunus has been successful in promoting the use of ICT to inform and empower the rural poor to break away from the vagaries of poverty and hopelessness.

Professor Yunus' model of combating poverty via innovative microcredit system and the creation of a mobile phone company called Grameen Phone have been used around the world to raise the standard of living of the poor and marginalized communities (http:// nobelprize.org/nobeljprizes/peace/laureates/-2006/yunus-lecture-en.html). By selling mobile phones and other ICT services to rural communities, which would normally not be available in rural communities, poor women in the rural areas are able to use the mobile phones purchased via the microcredit financing provided by the Grameen Bank to create a higher standard of living.

Mobile phones are regarded by many policy-makers and scholars as the ICT to bridge the digital divide between the 'haves' and 'have-nots'. Using mobile phones, farmers and fishermen are able to sell their produce directly to the markets by passing intermediaries, thus obtaining better value for their products. They are also able to assess environmental conditions (weather patterns and sea conditions) and take measures to maximize their time, efforts and resources. Further, rural communities do not have to travel long distance to towns to access banking services - they are able to conduct financial transactions using mobile banking services. The above-mentioned examples highlight that mobile phones have the potential of closing the digital divide and wealth gap between rural and more advanced communities.

Empirical evidence from developing and under-developed countries shows that mobile phones have a faster diffusion rate than fixed line telephones over the last decade. For example in Malaysia, the level of mobile phone adoption has outstripped fixed telephone line penetration rate since 2000.

The impact of mobile phones on socioeconomic development is well documented in the literature. For example, Waverman et al. (2005) using the endogenous growth model on 92 selected poor and rich countries from 1980 to 2003, showed that poor countries with weak fixed-line infrastructure benefit more from mobile phones than rich countries with advanced telephone infrastructure. The empirical analysis revealed that an increase of 10 mobile phones per 1 00 people in developing countries will increase their gross domestic product (GDP) by 0.6 percentage points. …

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