Modelling and simulating mobile commerce diffusion in China using system dynamics

Wang, W 2007, Modelling and simulating mobile commerce diffusion in China using system dynamics, Doctor of Philosophy (PhD), Business Information Technology, RMIT University.

Document type: Thesis
Collection: Theses

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Title Modelling and simulating mobile commerce diffusion in China using system dynamics
Author(s) Wang, W
Year 2007
Abstract Current deployments of mobile commerce focus mostly on digital content. However, mobile commerce will grow rapidly with the increased use of portable devices such as cellular phones and personal digital assistants (PDA), increased network bandwidth, and the availability of a wider range of mobile commerce services and transactions. As the revenue generated from mobile commerce is expected to skyrocket in the coming years, strategists are turning their attention to untapped emerging markets in the developing countries. Understanding how mobile commerce will develop in countries like China, where huge market potential exists, is of paramount importance in order to develop effective strategies that will positively affect its course.

Modelling the diffusion of mobile commerce in a country is a difficult task due to the non-linear, complex and uncertain nature of its operating environment. A System Dynamics approach is more appropriate to model such a complex system. The main objective of this study is to illustrate the process of developing System Dynamics models for simulating mobile commerce diffusion in China by using a subset of the factors involved.

In order to achieve this objective, the Chinese mobile commerce was modelled as the interaction of three subsystems, namely: population evolution in China; mobile commerce diffusion; and the influence from the provision of mobile commerce terminals (MCT) on mobile commerce diffusion. Each subsystem was modelled by identifying the factors influencing its development as well as the interactions between the factors. The subsystems were calibrated using historical and forecasted data whenever they were available. The validation of the subsystems was also performed through extensive sensitivity analysis. The complete model was used for experimenting with some typical Chinese mobile commerce scenarios for the purpose of analysing mobile commerce trends and designing strategies to exert positive influences on those trends.

The simulation of the submodels provided useful insights into their respective areas for controlling their development. Simulation of the population development submodel showed that, in addition to family planning policies, urbanisation rates and life quality were important factors that significantly influenced population dynamics in China. Simulation of the mobile commerce diffusion submodel showed that the time when mobile commerce is implemented will significantly influence its market expansion speed i.e. the later mobile commerce is implemented, the quicker the market will expand. The existence of floating populations in China will be a big advantage in starting up the rural market. However, if mobile commerce is implemented too late, the penetration in rural areas will be negligible. Simulation of the MCT provision submodel showed the importance of opening the Chinese market to foreign suppliers and the coordination of strategies regarding the design and supply of MCTs with strategies for the growth of mobile commerce in China.

This study is a first attempt to simulate the diffusion of mobile commerce in China using System Dynamics. The results obtained showed that the models developed were useful for understanding and controlling the future diffusion of mobile commerce in China.
Degree Doctor of Philosophy (PhD)
Institution RMIT University
School, Department or Centre Business Information Technology
Keyword(s) Mobile commerce
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