Survival Strategies in the Digital Economy of a Developing Country: The Case of a Digital Enterprise

Survival Strategies in the Digital Economy of a Developing Country: The Case of a Digital Enterprise

Eric Ansong (University of Ghana, Ghana)
DOI: 10.4018/978-1-7998-2610-1.ch005

Abstract

Firms are in constant competition for dominance and survival. Knowledge of how firms use information systems to improve operational efficiency is limited, especially in developing economies. This chapter, therefore, explored a firm's digital strategic actions for dealing with the competitive forces in the digital economy of a developing country. This chapter adopted a qualitative case study approach. A digital enterprise in a developing economy was selected as a case. Using Porter's five competitive forces model, an analysis of the environment and the strategic actions of the firm was carried out. Findings from this chapter serve as a stepping-stone in expounding the digital strategic actions of firms in dealing with the market forces in the digital economy. This study is, arguably, one of the first to examine the competitive forces and survival strategies of a digital enterprise in the digital economy of a developing country.
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Introduction

The digital economy includes that sector of the economic output solely or primarily derived from business models with digital technologies based on digital goods and services (Bukht & Heeks, 2017). The digital economy is, therefore, an emerging phenomenon which has had a very significant impact on the annual growth rate of countries (World Economic Forum, 2015). Even though economics and politics have been the driving forces behind the development of nations, the role of innovations in digital technologies cannot be downplayed (Heeks, 2017). For instance, transformations in the economies of countries in the 1990s were mainly attributed to the internet evolution. This evolution continued into the 2000s and the 2010s with the introduction of Information and Communication Technologies (ICTs) which has been the bedrock of economic transformations. These ICTs include but not limited to electronic devices with connected embedded sensors (the internet of things); and new digital models such as digital platforms, cloud computing and digital services. Others include new sophisticated end-user devices and gadgets such as smartphones, laptops, netbooks, 3D printers, among others. Also, there has been an increase in the usage of data through the application of concepts such as big data analytics and algorithms for decision making (Organisation for Economic Co-operation and Development, 2015).

These new technologies have given rise to the concept of digital affordances which Heeks (2017) refers to as “potential actions an individual or organisation with a purpose can undertake with a digital system within the context of the environment within which they function.” These actions may include datafication, digitisation, virtualisation and generativity (Heeks, 2016). Virtualisation refers to the act of physically disembedding processes. Generativity also applies to the recombination and reprogramming of electronic devices and data, which leads to a function which was not the initially planned purpose for the device or data. Digitisation is also the transformation of every unit in the value chain of information from the analogue mode into the digital mode. Another modern term introduced by Victor Mayer-Schöenberger and Kenneth Neil Cukier in 2013 is Datafication (Strauß, 2015). Mai (2016) assert that datafication deals with the conversion of personal human life information into a digital form which is of value to businesses. The impact of datafication extends to Human Resources data which helps to identify potential employees and their specific characteristics such as risk-taking profile and personality obtained from the usage of social media, personal phone usage and apps. This technique has been predicted to replace the traditional personality tests associated with recruitments and also in customer relationship management (Moore, 2017).

The foregoing arguments show that the impact of these digital technologies on existing economies have been disruptive. Thus, it has reshaped the behaviour and purchase patterns of consumers, business models and processes and even in human interactions (Dahlman, Mealy, & Wermelinger, 2016). Instances of these transformations can be seen in almost all the sectors of the economy of countries. For example, in the transportation industry, “Uber” which is one of the world's largest taxi firms rides on the back of the digital technologies. In social media, Facebook, which is also the world's largest social media company thrives on digital technologies. In marketing, Alibaba and Amazon also dominate. In the hospitality industry, Airbnb, which is also the world's largest hotelier depends on digital business technologies.

On the other hand, digital enterprises such as Nokia and Dell are struggling to identify the appropriate digital business strategy to implement (Keen & Williams, 2013; Weill & Woerner, 2015). Businesses in the digital economy face a major challenge which is related to their ability to manufacture products and services that benefit from the available digital resources while integrating well with other platforms and environments (Bharadwaj, El Sawy, Pavlou, & Venkatraman, 2013; El Sawy & Pereira, 2013). Thus, these digital enterprises are expected to develop specific strategies around digital technologies to survive and grow.

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