Abubakar, Yazid A. (2014) Influence of mobile telephony on entrepreneurship in BRICs and beyond: the mediator role of education. In: 13th International Entrepreneurship Forum (IEF): Entrepreneurship and Development: The Idea of Inclusive Opportunity Creation; 31 Jul - 02 Aug 2014, Bogota, Colombia. (Unpublished)
Abstract
Besides large population and rapid growth (Goldman Sachs 2003) the BRICs - Brazil, Russia, India, China and recently South Africa - have also attracted interest in recent years due to their increased technological diffusion and its impact on domestic entrepreneurship (Saxenian 2002, 2005). The limited studies conducted propose that returning Chinese and Indian migrant entrepreneurs from United States (US) with their ‘foreign’ acquired human capital (defined as education) are accelerating the process of technological diffusion and innovation in their home countries especially in information and communications technology (ICT) industries (Saxenian 2002, 2005). Yet, to date, previous studies have mainly focused on link between foreign education and innovation mostly in BRICs related countries. Thus, the extent to which domestic education level mediates the impact of technology on ‘new business formation rates’ across the developing world remains relatively opaque. Considering that mobile phone is one of the key ICT sectors in developing countries, this study examines whether and to what extent ‘domestic’ education level mediates the relationship between mobile phone diffusion and new business formation rates across the developing world - including BRICs and Non-BRICs Countries. Drawing on Knowledge Spillover Theory of entrepreneurship, the paper posits that due to the recent rise in education in the developing world, mobile phone diffusion will be positively associated with new business formation rates, and education level will facilitate (mediate) the relationship. Utilising Baron and Kenney’s mediation test and Sobel’s Test on country-level panel data on 66 developing countries, the results clearly demonstrate strong positive effects of education level as a mediator between mobile phone diffusion and new business formation rates not just in Developing Countries (Including BRICs) but also in Non-BRICs Developing Countries with the exception of least developed countries (LDCs). In LDCs, although the role of education level was not found to be significant, mobile phone diffusion was nevertheless found to be strongly associated with new business formation rates thereby suggesting that entrepreneurs in LDCs may simply be using mobile phone to start non-knowledge intensive businesses. Implications are drawn for policy.
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