Evaluating the Impact of Government Policies and Regulations on M-Commerce in India

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International Journal of Business and Management; Vol. 7, No. 23; 2012 ISSN 1833-3850 E-ISSN 1833-8119 Published by Canadian Center of Science and Education

Evaluating the Impact of Government Policies and Regulations on M-Commerce in India: A System Dynamics Modelling Approach Deepali Sharma1, Diatha Krishna Sundar2 & Rajluxmi V. Murthy3 1 2 3

Deepali Sharma, Broadcasting Corporation of India, India Chairperson-POMA & Chairperson–ERP Center, Indian Institute of Management Bangalore, India Indian Institute of Management Bangalore, India

Correspondence: Diatha Krishna Sundar, Chairperson-POMA & Chairperson-ERP Center, Indian Institute of Management Bangalore, Bannerghatta Road, Bangalore 560076, India. Tel: 91-802-699-3276. E-mail: diatha@iimb.ernet.in Received: July 31, 2012 doi:10.5539/ijbm.v7n23p54 Abstract Mobile Commerce (M-Commerce) is a subset of E-Commerce, which includes all E-Commerce transactions, carried out using mobile (handheld) device(s). With significant uncertainties and complexities due to evolving business and regulatory models, growth of M-Commerce is a function of appropriate and timely policy interventions from the government(s). M-Commerce business growth is further complicated by the involvement of several interrelated stake-holders and various regulatory agencies that are part of the M-Commerce eco-system, which comprises of mobile telecom service providers, banking/financial institutions, content facilitators, retailers, mobile terminal industry, and end users as the major stake-holders. To understand the M-Commerce growth facilitators in India, where M-Commerce is at its infancy, system dynamics simulation models are developed. The simulation models are used to analyze the impact of policy and regulatory interventions on the growth of M-Commerce in India. These models can help policy makers in understanding the inter-play between various independent regulatory/policy approaches and assessing their impact in a holistic manner on the business eco-system. Keywords: M-Commerce, policy interventions, regulation, system dynamics, simulation 1. Introduction The merger of telecom, broadcasting and IT Services has resulted in formation of Global Information Infrastructure (GII) which is capable of carrying any type of information. Wireless technologies and devices have further enhanced the capabilities of GII by facilitating wireless information carriage advancing the concept of e-economy to mobile domain. The counterparts of E-Commerce in the mobile domain are termed as M-Commerce (Sundar et al., 2002; Sundar & Garg 2005a; Sundar et al., 2005b). M-Commerce is convergence of mobile telecom (including network and receiving devices), computing power, internet technologies & applications and content provision (Lehner & Watson, 2001; Mylonopoulos & Doukidis, 2003) and refers to, “any transaction with monetary value that is conducted via a mobile network” (Clarke, 2001). M-Commerce has many advantages associated with it such as reduced transaction costs, wider access on both supply and demand side, improved quality of life through increased security and autonomy, wider choices of entertainment, communication, shopping while on move, location based services, ease and convenience of use and so on. M-Commerce is expected to play an important role in economic and social development of a country (Krishnamurthy, 2001). Growth in M-Commerce brings down transaction costs besides increasing the reach and scope of business. This leads to enhanced productivity of related industry verticals and in turn Gross Domestic Product (GDP) of a nation. Using global telecommunications panel data from 56 countries, a dynamic demand model was estimated for mobile telephony (Madden et al.2004). A direct relationship between average GDP growth and mobile penetration was established based on the data collected from 57 developing countries from Sub-Saharan countries, Latin America, Middle East and Asia Pacific along with 15...
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