Academic journal article Journal of Economic Development

Gender and Technology Use in Developing Countries: Evidence from Firms in Kenya

Academic journal article Journal of Economic Development

Gender and Technology Use in Developing Countries: Evidence from Firms in Kenya

Article excerpt

(ProQuest: ... denotes formulae omitted.)

1. INTRODUCTION

It is difficult to start a firm in Kenya. Recent estimates indicate that in terms of the number of procedures required to start an enterprise, the number of procedures required to register property, and the overall expenses of enforcing contracts, Kenya ranks 136th or lower in a global rank of 188 countries (Doing Business in Kenya, 2010). Moreover, once in existence, firms in Kenya continue to face large operation costs due to regulatory and infrastructural hurdles. These include long delays in gaining access to telephone land-lines, electricity, and water connections, and informal payments that are required to expedite licenses and contracts. When such obstacles to business exist, firms may rely on technology to overcome many of the hurdles faced. Aker and Mbiti (2010) note the inverse relationship between the quality of landline service and adoption of mobile phones in Kenya. This suggests that use of communication technologies such as mobile phones is endogenous to obstacles posed by excessive regulations and poor infrastructure in Kenya.

In dealing with the constraints presented by business obstacles, it may be argued that firms with female owners are at an even greater disadvantage. This is because womenowned businesses in Kenya tend to be more credit-constrained than those run by men (Central Bureau of Statistics, 1999). A contributing factor is that women hold only 1~6 percent of registered land titles in Kenya, the main form of collateral required by commercial banks (World Bank, 2004). Moreover, unlike firms operated by men, women-owned businesses are often isolated from formal and informal networks that provide information and support. Women-run businesses also tend to be small scale. For these reasons, giving gifts or making informal payments may pose a greater hardship for them. Since women-owned firms face higher implicit costs of operation, one would expect different patterns in their reliance on technologies as compared to male-owned businesses.

In keeping with this, Menon (2013) finds that the probability of technology ownership in Kenya is 0.15 higher for firms with female owners, compared to all other firms. Hence there is some evidence that the pattern of technology adoption differs by gender of the firms' owners. Focusing on the use of email, a website, or the internet for communication with clients and suppliers, figures discussed below show that among firms with female headship, about 40 percent rely on these types of technologies. Further, firms with female owners are overrepresented (their proportion exceeds the proportion of firms with only male owners) in industries such as garments, retail and textiles. Retail, in particular, is an industry where use of small-scale technologies such as the internet can have important impacts on sales. In garments, retail and textiles, our data reveal that the pairwise correlation coefficient between sales and the use of the communication technologies we consider is 0.6 among firms with female owners (this is significant at a 1 percent level). If we look at retail industries alone, the comparable estimate is 0.5 (also significant at a 1 percent level). Hence for female-owned firms, there is empirical evidence that productivity as measured by sales may be importantly affected by use of the technologies we consider.

What are the mechanisms through which the use of email, a website, or the internet may improve firm productivity? If there are strict labor laws that favor workers over employers, then relying less on workers for day-to-day activities may reduce costs and boost productivity. There is some evidence for this from India where Amin (2009) finds that retail stores respond to strict labor laws by substituting away from workers to computers. In states with more restrictive labor regulations (that favor workers), retail stores are more likely to own a computer for use in business operations. …

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