4.3 GENERATIVE MECHANISM OF CREDIT MARKET FOR THE UNBANKED

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CHAPTER 2 PHILOSOPHICAL UNDERPINNINGS

Philosophy helps humans to gain knowledge about their environment and their belief systems. Therefore, it suffices to say that philosophy helps humans to understand the belief systems of others. Our view of reality underpins what we consider valid knowledge, which in turn informs our theoretical perspective and methodology. A person’s philosophy may affect what the individual regards as reality or not reality, what is seen and not seen. It also helps to show what shapes people’s view of reality.
As noted in the introduction, current financial inclusion efforts in Ghana using e-zwich have not been very effective at moving people from the informal to the formal sector. Financial inclusion efforts are often interpreted in relatively “shallow” terms, with an understanding that ICT-based access to financial services will be the solution. However, an adoption of a critical realism-based approach has the potential to reveal different results. From this perspective, there exist deeper causes – understood in Critical Realism (CR) terms as generative mechanisms – that underlie financial exclusion. Unless those deeper mechanisms can be engaged and altered, ICT-based initiatives will have relatively limited success in delivering true financial inclusion.
While CR has attracted much interest as a philosophy and social theory, the empirical work based on the CR philosophy is limited (Bygstad & Munkvold, 2011). McGrath, (2013) argues that the most important potential contribution of CR to the IS field is through the concept of generative mechanism, which can contribute to the development of mid-range theories. This research work is informed by CR to uncover the root cause of financial exclusion.

Critical Realism

Critical realism (CR) is a scientific philosophy that argues that science is not just about recording constant conjunctions of observable events, as empiricism and positivism will have us believe, but is about objects, entities and structures that exist (which may be unobservable, spiritual or non-physical) and generate the events that we observe. CR argues that neither empiricism nor idealism can successfully explain these unobservable occurrences, thus necessitating some form of realist ontology. In other words, there must be some intransitive domain of objects and events, that are independent of our perceptions of them, which can indeed become objects of our knowledge (Bhaskar, 2008). CR also recognises that the production of knowledge is very much the work of humans, and therefore occurs in the transitive domain (Mingers et al., 2013). As far as the empiricist is concerned, that which cannot be perceived cannot be. For the conventionalist, limitations of our knowledge of being are taken to be limitations on being itself. In contrast, the Critical Realist asserts the primacy of ontology; the world would exist whether or not humans exist. The empiricist identification of causal laws with empirical regularities thus involves a double reduction—that of laws to events and events to experiences of those events (Mingers et al., 2013).
CR offers a discourse that shifts attention toward the real problems confronted by humans and their underlying causes; to this end, focus is shifted away from data and methods of analysis. It offers a robust framework that allows the use of a variety of methods in order to gain a better understanding of the meaning and significance of Information Systems in the contemporary world (Mingers et al., 2013).
CR offers a three-layered stratification of reality, namely real, actual and empirical. The real refers to social structures, natural objects, material artefacts, and conceptual entities such as theory, language, opinions, and goals that exist independent of our perception of them. The real generates events, experiences or outcomes that constitute the actual layer. These events, experiences or outcomes may or may not, however, be observable. The empirical, consists of the portion of the actual that is observed. CR explains that our perception of the real is necessarily fallible as it depends on our interpretations of what we see (Bhaskar, 2008). This means that the Critical Realist researcher needs to understand the organizational effects or outcomes associated with introducing new structures (e.g. new information systems). How events occur can be viewed as understanding the generative mechanisms associated with these structures. The mechanisms can be uncovered using abduction or retroduction, a process of working backward from the empirical events we observe to the underlying mechanisms that could logically have produced those events (Volkoff & Strong, 2013). For example, understanding the generative mechanism of a credit economy may assist in explaining the causes of financial exclusion and the requisite solution to the problem of financial exclusion.
The second core principle of CR is the distinction made between agency and structure; structure and agency have very different characteristics and powers. Structures are assumed to pre-exist actions, and create the conditions for those actions. Therefore, causal explanations must account for processes that occur through time. However, action can produce new emergent structures, but those emergent structures necessarily post-date the associated actions. People, who act as agents, have characteristics such as self-consciousness, reflexivity, intentionality, cognition, and emotionality. Agents can formulate plans and pursue objectives, possessing the power to maintain or modify the structures around them by doing things (Volkoff & Strong, 2013). For example, for a long time Ghanaians have been paying for their needs using mostly cash; cash transactions do not attract any additional cost to Ghanaians and has subsequently led and cemented to the currently existent culture of cash. As agents, Ghanaians however possess the power to change to a cashless society if they are presented with the relevant and appropriate incentive(s).
The third core principle of CR assumes that structures themselves can be stratified; that is, a structure may consist of other sub structures or components. However, the structure has characteristics that are distinct from the characteristics of the individual components. For example, e-zwich can be divided into a social structure (i.e. the agents that do things to e-zwich) and technological structure (i.e. hardware and software structures). Each of the social and technological sub-structures have characteristics that are distinct from e-zwich.
Scientific inquiry was traditionally undertaken in closed systems where; for example, one variable was kept constant in order to determine the effect of that variable on other variables. However, current research efforts that are firmly rooted in the Critical Realist philosophical tradition, has made it clear that social phenomena, such as the slow uptake of electronic payment systems in Ghana only ever occur in open systems where events like payment transactions are determined by a multiplicity of mechanisms, perhaps of radically different kinds. For example, an individual’s ability to use credit for payment is determined by their credit worthiness. Without credit an individual has to pay with cash because he/she is not creditworthy. However, an individual with credit may choose to pay with cash because it is more convenient. Paying with cash may also depend on the availability or accessibility of devices required for non cash transaction. For example, it may not be possible to use an e-zwich card in the remote and rural areas of Ghana due to the non-availability of a POS system that allows a transaction to be executed (Edwards, O’Mahoney, & Vincent, 2014). In addition, one or several factors that determine when and how a payment system is used should be considered. Such factors may include issues such as the client’s creditworthiness, availability of client’s own funds, access to e-zwich card, availability of POS to allow for e-zwich transaction and a client’s preference. All these factors may feature simultaneously and thus determine whether an e-zwich transaction may be executed at a given time.
The Critical Realists are of the view that what they believe exist, and such a stance often affects the belief system of the CR in respective of how what exists can be studied and known. So for the Critical Realist researcher, ontology and epistemology are important since they affect consequences in respect of the possibilities and limits of research methods, techniques, and analyses that they employ (O’Mahoney & Vincent, 2014). CR knowledge claim is that values and facts are intertwined and hard to disentangle. As shown in Table 2.1, there are three types of design knowledge that exist: (1) abstract or realization-design knowledge exists in the real domain; (2) process-design knowledge exists in the actual domain; and (3) object-design knowledge exists in the empirical domain (Carlsson, 2006).

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Justification for Critical Realism

According to Carlsson (2006), the Critical Realist perspective is missing in the IS literature and any solution without a CR perspective is incomplete. Unfortunately very little academic research on financial inclusion from a critical perspective have been undertaken (Kim, Zoo, Lee, & Kang, 2017). Chatterjee et al. (2009) offers a critique of the design and development of traditional methodical approaches to Information Systems. It was argued that a number of assumptions that underlie these methodological approaches lead to incomplete ontological and epistemological considerations, and thereby, in many cases, contribute to IS failures (Kim et al., 2017). Mingers (2000) has described problems associated with the main positions within the philosophy of science; specifically, the IS phenomenon was explained and the CR philosophy was introduced with the aim of showing how it addresses these problems. Mingers (2000) has demonstrated using specific examples how CR is particularly appropriate for IS research and practice. Generalization from realist theorizing concern the characteristics and exercise of transfactual, hidden and often universal mechanisms, which are in contrast to positivity’s generalizations that are concerned with an empirical population (Danermark, 2002). In other words Critical Realist researchers seek to generalize, not about population, but about theoretical propositions. Theoretical generalizations are more enduring and can be applied through time and space. Positivity’s generalizations fail to answer why, to what extent, and in which circumstances (Montano & Szmigin, 2005).
The design processes articulated by current financial inclusive systems, which are based on positivism, traditional realism, or pragmatism, are centred on the empirical domain with very little attention being paid to discussions and clarification underpinning the philosophy (Carlsson, 2006); such an approach inevitably leads to frequent system failures (Carlsson, 2006; M. Kim, Zoo, Lee, & Kang, 2017; Mingers, 2000). Carlsson (2006) have argued in favour of a Critical Realist perspective when designing information systems, which are viewed as socio-technical systems and not just a technological artefact. Sarker et al.(2013) have described the loyalty of IS academics towards the socio-technical paradigm. Sarker et al. (2013) have identified eight ways in which the technical and the social systems are featured in the IS literature. Types IV (The Social Inscribed within the Technical) and VIII (The Social and the Technical Entangled-in-practice) are relevant to this study. Type IV describes how social considerations are inscribed within the technological artefact. Design science research was cited as an example of Type IV, which is focused on the creation and evaluation of IT artefacts. In this regard, social considerations provide the justificatory knowledge that informs the design of the technological artefact (Gregor & Jones, 2007; Walls, Widmeyer, & El Sawy, 1992). Type VIII holds that the social and technical are ontologically inseparable, and the human and technological entities are different even though they work together to produce outcomes when they are conjoined (Henfridsson & Bygstad, 2013; Leonardi, 2011; Orlikowski, 2010).
Henfridsson & Bygstad (2013) has explained how literature on digital infrastructure offers powerful lenses for conceptualizing the increasingly inter-connected information system artefacts and how little attention has been paid to the causal powers that explain how and why such infrastructure evolves over time. It was argued that “more knowledge about what drives digital infrastructures would be highly valuable for managers and IT professionals confronted by the complexity of managing them” (Henfridsson & Bygstad, 2013). Following the identification of three generative mechanisms of digital infrastructure, the way in which these mechanisms work to produce the outcomes that are observed as well as reasons behind the successful evolution of specific digital infrastructures were outlined.
The research has argued that the three generative mechanisms proposed to explain how a socio-technical artefact emerges and evolves offer a more comprehensive account of socio-technical entities. These generative mechanisms are:

  1. Situational mechanisms (macro-micro level), which relates to how the infrastructure as a whole enables and constrains its various components;
  1. Action-formation (micro-micro level) mechanisms (socio-technical action) relating to how a specific combination of individual desires, and beliefs generate a specific action (e.g. how an individual’s action whether to use or not to use e-zwich affect others; and
  1. Transformational mechanisms (micro-macro level), which explain emergent behaviour, that is, how different components (social and technical structures) interact in order to produce an outcome at a macro level.
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Critical Realism and Research

Critical research is any research that challenges conventional knowledge bases and methodologies that make claims of scientific objectivity, be it quantitative or qualitative. It attempts to reveal how particular knowledge bases reproduce structural relations of inequality and oppression (Muncie, 2006). Bohman (2005) describes critical research as providing the descriptive and normative bases for social inquiry aimed at decreasing domination and increasing freedom in all their forms. In this study, the research area of interest stems from the freedoms e-zwich in Ghana allows the individual, particularly the unbanked individual, and small merchant to enjoy and the constraints accompanying that particular freedom. Conventional wisdom is that financial exclusion results from a lack of bank accounts and access to financial services. The research used CR as a lens to understand the generative mechanism of the credit economy, which might have led to financial exclusion.

Critical Research and Affordance

Gibson, (1979) coined the term “affordance” to describe what an entity, for example, an environment, offers a human or animal, what it provides or furnishes, either for good or ill; and being invariant, is always there to be perceived whether human existed or not. Volkoff & Strong (2013) have proposed that the concept of affordances from ecological psychology is a helpful way to conceive the generative mechanisms associated with technical artefacts for use in organizations. Volkoff & Strong (2013) have described generative mechanisms as structures that have causal power or effect while mechanisms are capacities or tendencies which have potential to cause an event but may or may not do so. Furthermore, mechanisms may arise from a structure, the relations between structures, or the relations between structures and actors.
Volkoff & Strong (2013) defined affordance as “what is offered, provided, or furnished to someone or something by an object”; credit offered by the credit economy may be viewed as an example of affordance. The authors use the example of a fallen log as affording an opportunity to sit. However, like generative mechanism, the log exists whether someone sits on it or not. The study explains that “multiple affordances can arise from a single structure–actor relationship.” For example, the log may afford a sitting or stand-on affordance or even “barricading-a-path affordance to restrict passage”. Furthermore, the “potential for coordinated action by a group can be thought of as an organizational affordance” (Volkoff & Strong, 2013). For example, credit affordance exists, whether unbanked people choose to use it or not. The research sought to create societal affordance whereby groups of unbanked poor people are organized in saving groups to save and borrow and thus be presented with an opportunity to be linked with formal financial institutions so as to access credit. Volkoff & Strong (2013) have described simulation or synthetic representation affordance as the capability to conduct what-if scenarios.
Volkoff & Strong (2013) uses the core concepts of critical realism – real, actual and empirical, to show how affordances arise in the real domain, “how affordances are actualized over time by organizational actors, and how these actualizations lead to the various effects we observe in the empirical domain.” Two published cases are examined to show how affordance-based theories informed by critical realism enhances our ability to explain IT-associated organizational change and how researchers using this approach should proceed. Volkoff & Strong (2013) propose that the concept of affordances can help researchers specify mechanisms that enable them to build better theories on the effects of introducing new systems into organizations. Volkoff & Strong (2013) assert that researchers seeking to identify affordances need to uncover the immediate concrete outcomes the actors experienced or expected to experience. Through observation and/or interviews using questions such as “what did the technology enable you to do?,” “what did it make it more difficult to do?,” “what did you use the technology for?,” “what happened once you started to use the technology?,” or “were there things you expected to do that were not in fact possible,” the actual events that allow for retroduction back to the affordances can be uncovered

Abstract
Declaration
Acknowledgement
CHAPTER 1 INTRODUCTION 
1.1 BACKGROUND
1.2 CONTEXT OF THE STUDY
1.3 PROBLEM STATEMENT
1.4 RESEARCH OBJECTIVE
1.5 RESEARCH QUESTIONS
1.6 CONTRIBUTION OF RESEARCH
1.7 SCOPE AND ASSUMPTIONS
1.8 ORGANIZATION OF THESIS
CHAPTER 2 PHILOSOPHICAL UNDERPINNINGS 
2.1 CRITICAL REALISM
2.2 CRITICAL REALISM AND RESEARCH
2.3 CRITICAL RESEARCH AND AFFORDANCE
2.4 CRITICAL RESEARCH AND SOCIO-TECHNICAL INFRASTRUCTURE
2.5 RESEARCH LOGIC
2.6 CRITICAL REALISM AS AN EMPIRICAL PROJECT
2.7 CONCLUSION
CHAPTER 3 RESEARCH DESIGN
3.1 EPISTEMOLOGY AND ONTOLOGY UNDERPINNING RESEARCH
3.2 DESIGN SCIENCE
3.3 DESIGN SCIENCE RESEARCH
3.4 DESIGN REQUIREMENTS
3.5 RESEARCH TECHNIQUES
3.6 ROLE OF THE RESEARCHER
3.7 KEY INFORMANT INTERVIEWS
3.8 PURPOSIVE SAMPLING
3.9 QUESTIONNAIRE DESIGN
3.10 CONCLUSION
CHAPTER 4 LITERATURE REVIEW
4.1 RELATED WORKS
4.2 FINANCIAL INCLUSION
4.3 GENERATIVE MECHANISM OF CREDIT MARKET FOR THE UNBANKED
4.4 FRAMEWORK FOR IDENTIFYING AND UNDERSTANDING CAUSAL STRUCTURES IN CR RESEARCH
4.5 ICT FOR DEVELOPMENT (ICT4D)
4.6 FINANCIAL TECHNOLOGIES
4.7 SHARING TECHNOLOGIES
4.8 SOCIAL TECHNOLOGIES
4.9 LEVERAGING GEOGRAPHIC INFORMATION SYSTEM (GIS) TO ALLEVIATE POVERTY
4.10 THE GHANAIAN FINANCIAL CONTEXT
4.11 TECHNOLOGY ADOPTION
4.12 CONCLUSION
CHAPTER 5 CURRENT GHANAIAN PAYMENT SYSTEMS
5.1 PAYMENT SYSTEMS OVERVIEW
5.2 THE PAYMENT SYSTEM IN GHANA
5.3 COMPONENTS OF THE GHANAIAN PAYMENT SYSTEM
5.4 E-ZWICH
5.5 CHANNELS OF THE GHANAIAN PAYMENT AND SETTLEMENT SYSTEM
5.6 CROSS BORDER PAYMENTS IN GHANA
5.7 OVERSIGHT OF PAYMENT SYSTEM INFRASTRUCTURE IN GHANA
5.8 CONCLUSION
CHAPTER 6 SUBSTANTIVE INFORMATION SYSTEM DESIGN THEORY FOR SMART PAYMENT SYSTEMS
6.1 THE NEED FOR A DESIGN THEORY FOR FINANCIAL INCLUSIVE SYSTEMS
6.2 FINANCIAL INCLUSION HYPOTHESES AND SYSTEM REQUIREMENTS
6.3 SMART PAYMENT SYSTEM
6.4 CONCLUSION
CHAPTER 7 INSTANTIATION OF DCUBEAPP 
7.1 PROBLEM FORMULATION
7.2 SEARCH
7.3 SUGGESTION
7.4 PROPOSED SMART PAYMENT SYSTEMS ARCHITECTURE
7.5 BUILD, INTERVENE AND EVALUATE
7.6 CONCLUSION
CHAPTER 8 MODEL EVALUATION 
8.1 MODEL EVALUATION
8.2 CONCLUSION
CHAPTER 9 REFLECTION AND LEARNING 
9.1 EVALUATION OF THE SYSTEM
9.2 GUIDED EMERGENCE
9.3 FORMALIZATION OF LEARNING
9.4 UPDATE OF DCUBEAPP
9.5 GENERALISED OUTCOMES AND ASSESSMENT
9.6 CONCLUSION
CHAPTER 10 CONCLUSIONS AND RECOMMENDATIONS
10.1 OVERVIEW OF THE RESEARCH
10.2 THEORETICAL CONTRIBUTION
10.3 PRACTICAL CONTRIBUTIONS
10.4 CONTRIBUTION TO LITERATURE
10.5 LIMITATIONS AND AREAS FOR FUTURE WORK
Bibliography
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