Mobile Money Innovations: A case study on entrepreneurs in Kenya

Jacob Lennheden

Student thesis: Master thesis

Abstract

Since the launch of M-Pesa in 2007 Kenya has been one of the worlds leading countries in mobile payments, a fact that often comes as a surprise to many western practitioners and academics. The system works on even the simplest phones and is used by almost everyone in Kenya, rich and poor alike. In addition to enabling people to fast, securely and cheaply send money over distances, M-Pesa has facilitated the establishment a wide range of new businesses leveraging mobile payments. Through a multiple embedded case study of five different startups in Kenya, this thesis explores how this M-Pesa-enabled process of innovation has taken place in the new businesses. A theoretical framework is built by reviewing existing literature on innovation. From this review it is clear that innovation theories and studies, as well as the understanding of innovation, is closely linked to the historical and contextual origin of the literature, and that all theories in some sense can be seen as a response to the societal challenges at that given time. Three overarching themes are selected for the analysis; types of innovation, drivers and directions of innovation, as well as impact of innovation. Data collection for the empirical part is carried out through in-person interviews with five different startups on the ground in Kenya. The stories and insights from the cases are compared, contrasted and synthesized into empirical framework, describing the key findings in the data. Key trends are discovery of opportunity, role of founders and startup mindset. In the analysis, empirical findings are compared and contrasted with existing literature, to see how the existing literature can help explain the process of innovation. It is clear that while the literature does a good job of explaining several aspect of the process, gaps are missing when it comes to understanding the process of innovation of entrepreneurs in creating businesses in markets where there was no existing competition. In the end the strings are tied together by concluding that M-Pesa has enabled innovation among entrepreneurs in Kenya by drastically lowering the cost and increasing the speed of reaching existing, as well as millions of new customers in Kenya. Entrepreneurs have leverages this possibility to create various new business models. The innovations enabled take a wide range of shapes and are present in all parts of society. A lot of the firms try to address a social problem, which is often driven by passion from the founder. Despite its radical success M-Pesa might already soon be technologically outdated as smartphone penetration is growing at an unprecedented speed, opening a whole new set of possibilities. Finally it is noted how these firms, as part of their internalization process, can help increase mobile money usage in other countries.

EducationsMSc in Business, Language and Culture, (Graduate Programme) Final Thesis
LanguageEnglish
Publication date2015
Number of pages86