ABSTRACT
The study assessed the how policy and legal framework influence software innovation in Kenya. It concentrated on Government laws, policies, industry related issues as well as copyright infringement and enforcement establishment in Kenya. The general objective was an assessment of how legal framework influence software innovation in Kenya. Whereas sub-objectives involved establishing the influence of ICT regulations; establishing the effects of ICT innovation policies; and assess how industry related economic issues affect innovation of software in Kenya. The target population were drawn from software firms in Nairobi. Sampling approach was purposive, to select sample who were competent, knowledgeable and experts in ICT innovation field. Research data were obtained by use of questionnaires, they were then sorted, coded grouped and analyzed using the Statistical software. The findings of the study were that economic factors influence innovation in the form cost of products produced, the size of the market available that dictates demand and supply. Additionally, market prices determine the available innovation due determination market prices before launching products so as not to produce products that are overpriced and out of reach of most customers. Further, rivalry among large industry players affect innovation as each player intends to competitive advantage over the rest. Government play critical role in innovation by setting rules and regulation that govern ICT sector by issuing license to industry actors with conditions that they need to comply with to operate legal businesses. The study recommends need to create ICT hubs to voluntarily equip and incubate innovative ideas. The regulatory framework should create more incentives that promote innovation as this sector has potential of creating massive employment. Future study should be carried to establish how emerging technology would influence the policy direction of a country, as this study has established that existing regulation only cover the existing innovations.
TABLE OF CONTENTS
DECLARATION ii
ABSTRACT iii
LIST OF TABLES vi
LIST OF FIGURES vii
ABBREVIATIONS AND ACRONYMS viii
CHAPTER ONE
INTRODUCTION
1.1 Background of the Study 1
1.2 Problem Statement 5
1.3 Objective of the study 6
1.3.1 General Objective 6
1.4 Research Hypothesis 6
1.5 Justification of the study 7
1.6 Scope of the Study 7
CHAPTER TWO
LITERATURE REVIEW
2.1 Introduction 8
2.2 Theoretical Review 8
2.2.1 General Equilibrium Theory 8
2.3 Software Development and Innovation 9
2.4 ICT Industry Regulations 11
2.5 Policy 13
2.5.1 Patents 13
2.5.2 Copyright 14
2.6 Government 14
2.7 Empirical Review 16
2.8 Conceptual Framework 18
CHAPTER THREE
METHODOLOGY
3.1 Introduction 19
3.2 Research Design 19
3.3 Population 19
3.4 Sampling Design 20
3.5 Data Collection instruments and procedures 20
3.5.1 Collection Instruments 20
3.5.2 Collection Procedure 21
3.6 Validity and Reliability 21
3.7 Data Analysis and Presentation 21
3.8 Ethical considerations 22
3.9 Operationalization of Variables 23
CHAPTER FOUR
DATA ANALYSIS AND INTERPRETATION
4.1 Introduction 25
4.2 Demographic information 25
4.3 Legal Factors affecting the innovation of Software Developers in Kenya 28
4.4 Regression Analysis 33
CHAPTER FIVE
SUMMARY, CONCLUSIONS AND RECOMMENDATIONS
5.1 Introduction 36
5.2 Summary 36
5.3 Conclusion 37
5.4 Policy Recommendations 38
5.5 Limitations of the Study 38
5.6 Areas for Further study 38
REFERENCES 39
APPENDICES 43
APPENDIX I: RESEARCH QUESTIONNAIRE 43
LIST OF TABLES
Table 4.1: Duration of working at the organizations… 27
Table 4.2: Economic Factors… 28
Table 4.3: ICT Regulations… 30
Table 4.4: ICT Innovation Policies… 31
Table 4.5: Techniques for Mitigating Legal Liability 32
Table 4.6 Model Summary 34
Table 4.7: ANOVA Table 34
Table 4.8: Regression Coefficients… 35
LIST OF FIGURES
Figure 2.1: Conceptual Framework 18
Figure 4.1: Distribution in terms age of the respondents 25
Figure 4.2: Gender Distribution 26
Figure 4.3: Level of education 27
ABBREVIATIONS AND ACRONYMS
EPO European Patent Office
GOK Government of Kenya
IPR Intellectual Property Right
PC Personal Computer
TRIPS Trade Related areas of Intellectual Property rights
WIPO World Intellectual Property Rights
USPTO United States Patent and Trademark Office
CHAPTER ONE
INTRODUCTION
1.1 Background of the Study
As postulated by Laplante (2007) software innovation is methodogical use technology, scientific knowledge, procedures as well as skill in designing, analyzing, documenting and rolling out a software. Recently, there has been a fundamental shift on development and deployment of software’s. Previously there were few software’s that were custom built and used on disconnected computers (Apiwattanapong &Harrold 2002). Technological advancement led to increased software development as more applications were developed in response to changing needs. Additionally, internet greatly improved connectivity of computers as well as the connectedness of computer systems around the world. Over the years, software engineering has led to social, economic and technological advancement. Organizations companies and even countries have agreed on the notion that the ability to produce software is a strategic financial capability (NESSI, 2008).Therefore the need for laws to govern their innovation and deployment.
In the United States, many individual states have access to policies for information and communication technology (ICT), often these policies have been referred to the International or National Standards. They have for decades since inception provided technical information to ensure users gain access to information (Mambi 2010).
Today almost all execution of the new EU legislations requires the support of ICT systems, exchange of information amid authorities across borders or for the supply of online public services to citizens. Consideration of ICT consequences early in the drafting procedure will ensure a timely implementation of legislation and offers the likelihood of reusing and adapting existing solutions as much as possible (Mambi 2010).
European Commission in 1999, begun reviewing EU telecommunications law which was adopted in 2002. July 2003, the new framework came into use, with exclusion of data shield that was ratified in July 2002 and became functional end of October 2003(European Union Information Society, 2009). The new law expected to spur competition in e-communications sector; create a operational market within; as well as defend user interests that may not be assured through market forces(Eurpean Union Information Society, 2010). Rules of the new regulations aims to de- regulate, are simple, technology-neutral, flexible hence are relevant in computer communications sector(European Union Information Society, 2011).
Regulations existed in the EU prior to application of the 2002 framework. These were intended to manage change over from monopoly to competition. Thus the focus was on the creation of a competitive market as well as establish the rights of new entrants. The fast changing technologies, the newly freed up markets have led to a solitary, clear regulatory framework that covers electronic communications (European Union Information Society, 2010).
The new structure is in response to the large, dynamic, erratic telecommunications market associated with speedy rise of players. Due to increase in merging amongst technologies, services, and networks, legislations have changed from emphasis on telecommunications to flexible law geared towards regulating all areas in e-communications, associated set-up as well as its services (European Union Information Society, 2013). Thus, the approach points out that ICT is greater than telecommunications alone. Additionally, telecommunications services and networks include broadcasting services (European Union Information Society, 2013).
By law, the roles of regulatory authorities is to encourage competition in electronic communications services and networks sector. Regulators ensure users obtain utility with regard value and quality; promote investment and innovation in organizations.
In Asia, in 2000 India adopted Information Technology Act, intended at promoting e-commerce. It has modified 2008 to include substantive penal and also procedural rules.Additionally many other Asian countries like Pakistan, the Maldives and many more have no substantive cyber regulation laws of their own and, therefore, tend to rely on international laws that govern information Communication techniques (Cyber Law Asia, 2010). Other Asian countries that have struggled to form their legislations concerning cyber crimes were seen to infringe on the privileges of the people given to them by the Constitution.
Bangladesh, an Asian country for example are in the process of developing a digital security law designed to cover undertaking in digital crimes. Experts opinion were that the proposed law may be used to curtail freedom of expression (Domínguez, 2016). A jail term of 14 years is provided for in the draft law for lawbreakers. The new law was meant to end disagreements in relation to Section 57 of the 2006 ICT Act that regulates Internet use.
Study by Obutte (2011) found out that in Nigeria, the importance, relavance and the idea of regulating ICT sector was not properly designed. Operators in the industry were issued with lincences around ten years ago and there have been contemporary experiences in the sector yet regulations have not been updated to reflect the current status. The national regulator has not made decision to purposively regulate the sector.
In South Africa, the law governing ICT is relatively new and as it was ammended recently, their ICT Law is comprehensive. It focuses on information as opposed to the storage method (the computer). Further, user and readers learn the impact of ICTon formulation of laws law, the growing need regulating of telecommunications sector (Nexis, 2014).
In Tanzania ICT laws are under review, so as to incorporate emerging issue such as cybercrime that is on the rise. According to the Assistant Minister of Communications, Science, and Technology, the policy in place was enacted in 2003 hence was not reflecting emegring isssues in the sector. Actors in the ICT sector had grown as well as th mobile phones subscribers aditionally, users of PC too are on the rise (Majaliwa, 2012).
In Kenya, the Cabinet Secretary in-charge of ICT on several occasions emphasized that the country is committed to coming up with legislation in relation to Cyber Crime in collobaration regionally & internationally patners so as to eliminate the vice (GOK, 2015). Through CCK and the ICT Authority the Ministry are in the process of creating Public Key Infrastructure (PKI) that will aid the government to offer digital certification facilities through CCK. The PKI will involve creation of a Root Certification Authority (RCA) to offer citizens digital certificates for use in e- commerce dealings. In line with the above, CCK has come up with a licensing context for Electronic Certification Service Providers (E-CSP) (Benjamin, 2005).
In 2009, Kenya enacted laws geared towards fighting Cyber Crime, the Act provide for sanctions and penalties for cyber crime offenders ( Government of Keny, 2010). A committee was set up in June 2012 so as to spear head war against cyber crime, the Act provides rigid penalties against unlawful cyber acts (GOK, 2015. Technically, the covers the Electronics as well as Transactions law that covers mobile money transactions (Government of Kenya, 2010). Whereas, Electronic Transactions covers; Unlawful access to PC data; unauthorized disclosure of password; Access with intent to commit offenses; interfering with computer source documents; Electronic fraud; publication of indecent as well as deceitful materials, amonst other crimes. The intention of of this research is to determine how laws influence the innovation in the market.
1.2 Problem Statement
Due to changes in technology, information is transferred from one individual to another in a matter of seconds. Technological advancement has affected the economic activities greatly as we are in information era and, no much focus is towards anyone who is injured in information transfer (Baker, 2010). Raising ethical and legal concern which relates to issues like; right to information and right to privacy that are threatened by the need for free movement of information, visa-viz the need to guard economic right of intellectual property proprietors (Benjamin, 2005). Private information is broken into categories relating to; personal privacy, communication, possessions as well as body privacy information, each person strives to ensure that the personal information is kept within themselves. Technological changes have brought difficulty in maintaining privacy (Baker, 2010).
There are so many software innovators world over, some have unique ideas whereas some share same lines of thought. This has led to competition in the sector hence consideration is based on first come first serve basis especially in software industry where piracy is common (Rivette & Kline, 2000). Previously intellectual rights lasted more than a decade in order to derive economic benefit (Kitch & Perhan, 1989).
Various Countries across the world have come up with laws so as to regulate software innovation so to ensure safety, as well ensure well-being the general public when developing software. Through this that developers of software are assessed and permitted or denied chance to roll out their ideas (Layton, 1986). In instances where public safety and well being is in question the innovator may require to be registered or licensed. Certain countries have "industrial exemption" which may allow software innovators to be placed internally an organization devoid of license so long as are not the ultimate decisions decision makers in relation to release of products for communal use (American Council of Engineering Companies, 2007). While several studies have been undertaken in Kenya’s information and communication technology industry, there is no conclusive study that has focused on the Kenya’s legal system and the innovation of software products, consequently this study intends to focuse on this gap through assessing the connection between the formulation of laws and the invention of software products.
1.3 Objective of the study
1.3.1 General Objective
The general objective of study was to analyze the legal factors affecting the innovation of ICT products in Kenya.
1.3.2 Specific Objectives
i. To determine the influence ICT regulations on the innovation of software developers in Kenya
ii. To assess how ICT innovation policies affect innovation of software developers in Kenya.
iii. To determine whether industry related economic factors influence on the innovation of software developers in Kenya.
1.4 Research Hypothesis
H1: Legal systems influence the innovation of software firms in Kenya
H0: Legal Systems does not influence the innovation of software firms in Kenya
1.5 Justification of the study
In the recent past technology advancement have been rapid. Since the invention of the Internet, information and ideas have been passed from one point to another in a matter of seconds; hence people learn and solve problems faster. This situation has led to more innovations, inventions and more software being developed and advanced. The number of persons involved in this field of technology doubles every half a decade thus a reason to control and direct the methods and purpose for these inventions.
Over the years, the use of technology has increased tremendously globally, thereby, increasing the number of people with access to software technology globally. Personal computers, tablets, and mobile phone are some of the gadgets in which users store both personal and business information. With the rise in the number of users as well as the developers of software for the gadgets, it means an increase in the number of personal and business information, competition and ideas in innovation all-around the globe. The inputs of legal analysis in software engineering techniques will ensure that there is privacy for the users of the same technology as well as ensure economic growth and stabilization in the markets, since there will be control on software development. The software will be more likely developed to help human course rather than destroying it. Legal analysis will also ensure a significant drop in cybercrime globally.
1.6 Scope of the Study
Assessment was done amongst software firms in Nairobi, targeting senior software innovators from the firms as the respondents.
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