Effects of Disruptive Innovation on the Employment Status and Income

of Migrants and Non-migrants Engaging in Online Transportation, the

City of Palembang

Wahyu Saputra

, Sri Rum Giyarsih

and Agus Joko Pitoyo

Student of Doctoral Program in Population Study of the Postgraduate School, Gadjah Mada University, Bulaksumur

Caturtunggal Kec. Depok Kabupaten Sleman, Yogyakarta, Indonesia and Lecturer Geography Education Study Program,

University of PGRI Palembang, Jl. Jend. A. Yani Lr. Gotong Royong 9/10 Ulu, Palembang, Indonesia

Lecturer of Doctoral Program of Population Study Program at the Postgraduate School, Gadjah Mada University,

Yogyakarta, Indonesia and Geography Study Program, Gadjah Mada University, Yogyakarta, Indonesia

Lecturer of Doctoral Program of Population Study Program at the Postgraduate School, Gadjah Mada University,

Yogyakarta, Indonesia and Geography Study Program, Gadjah Mada University, Yogyakarta, Indonesia and Researchers at

the Center for Population and Policy Studies, Gadjah Mada University, Yogyakarta, Indonesia

Keywords:

Disruptive Innovation, Employment Status, Income, Migrants, Non-migrants, Online Transportation.

Abstract:

This study was intended to explain how disruptive innovation, that is, online transportation affected the em-

ployment status and income of migrants and non-migrants in the City of Palembang. It employed a quantitative

descriptive approach and acquired the data through surveys, with a sample size of 384 respondents working in

a mobility service provider, GoJek. Then, the collected data were processed in a statistical analysis tool, SPSS

23, using the feature Cross Tabulation. The results showed that online transportation provided an opportunity

for both unemployed and already employed populations. Also, it attracted migrants and non-migrants to either

quit or keep their ﬁrst jobs in formal and informal sectors and work as online motorcycle taxi drivers. Rel-

atively high income enticed many of them into earning a living solely from online transportation. However,

some chose to undertake another job to receive additional income and, expectedly, improve their welfare and

life standard.

1 INTRODUCTION

Disruptive innovation can have positive and negative

impacts depending on how people or companies deal

with it. For instance, it is likely to lead to positive

outcomes if companies turn it into a challenge in run-

ning their enterprises or if individuals perceive it as a

potential source of income. On the contrary, failing to

adapt may result in negative consequences. Compa-

nies built traditionally can be disturbed by innovations

that make use of technology, which continually gives

birth to new business models (Bower and Christensen,

1995). Disruptive innovation induces a competitive

situation for companies that have been around for a

long time to continue to exist in the world of busi-

ness. Unable to treat disruptive innovation as a chal-

lenge may have repercussions like loss of proﬁts for

previously successful companies (Christensen et al.,

2015). The market of ordinary companies is exposed

to disruption due to new technologies (Faisal, 2015),

including online transportation.

One of the newest services in m-commerce is on-

line transportation (Silalahi et al., 2017), and its users

do not need access to a personal computer (Clarke III,

2008). It is a transportation service that the public can

order with only their smartphone (Nurhidayah et al.,

2017), which connects drivers to passengers (Wall-

sten, 2015) (Watanabe et al., 2016). This way, on-

line transportation offers time efﬁciency in ﬁnding a

means to move from one place to another (Farin et al.,

2016). Many people in Indonesia, including Palem-

bang, have felt this beneﬁt.

Palembang is one of the cities in Indonesia and the

only one in South Sumatra Province that has an on-

line mobility service provider. Focusing on an online

transportation company, GoJek, this paper describes

how it creates occupational opportunities for migrants

and non-migrants who are either unemployed or al-

ready employed. It will also result in the transfer

of work for those who previously worked in the for-

Saputra, W., Giyarsih, S. and Pitoyo, A.

Effects of Disruptive Innovation on the Employment Status and Income of Migrants and Non-migrants Engaging in Online Transportation, the City of Palembang.

DOI: 10.5220/0009908802610265

In Proceedings of the International Conferences on Information System and Technology (CONRIST 2019), pages 261-265

ISBN: 978-989-758-453-4

261

mal or informal sector. A variety of reasons underlie

their decision to work in this company, for example,

presumably high income and ﬂexible working hours.

Although formal employment is typically associated

with high education and income, people already en-

gaging in it potentially exhibit particular interest in

working in online transportation, which is an informal

sector that is commonly characterized by low educa-

tion and income (Bambang and Saputra, 2015).

This research is based on the existence of research

on online transportation in Indonesia that focuses on

customer satisfaction (Santoso and Nelloh, 2017), the

inﬂuence of online transportation user behavior that

is there are a variety of services, perceived pleasure

and innovation (Septiani et al., 2017). In addition,

other research that focuses on the quality of online

transportation services is the ease of using services

(Silalahi et al., 2017). The novelty in this study

lies in the object of research not on users of online

transportation services, but on online transportation

workers. Therefore, research on Effects of Disrup-

tive Innovation on the Employment Status and In-

come of Migrants and Non-migrants Engaging in On-

line Transportation, the City of Palembang becomes

inherently fascinating to analyze.

2 RESEARCH METHODS

This quantitative research employed a descriptive ap-

proach. Data collection techniques using a survey

with a questionnaire as a research instrument. The

supporting data were collected through surveys from

a sample consisting of 384 respondents who worked

at an online transportation company (GoJek). These

data were then processed in an analysis tool, SPSS 23,

using the cross-tabulation feature. The ﬂow chart of

this research is as follows:

Figure 1: Research ﬂow chart

3 RESULTS AND DISCUSSION

3.1 The Employment Status of

Migrants and Non-migrants before

Working at an Online

Transportation company (GoJek)

Before online transportation, migrants and nonmi-

grants earned a living in various sectors. Some had

been engaged in the formal industry as, among oth-

ers, staff in companies, teachers, and bank employ-

ees, and the informal sector, including fruit vendors

and transport workers. Some others had been unem-

ployed. Figure 2 shows the economic activities that

migrants and non-migrants practiced before working

as motorcycle taxi drivers at GoJek.

Figure 2: The employment status of migrants and nonmi-

grants before working at gojek company

Based on Figure 2, migrants and non-migrants

had different employment statuses before working at

GoJek. The highest percentage (i.e., 22.1%) was

migrants previously engaged in the formal sector,

whereas the lowest one (16.4%) was migrants who

were initially unemployed. As for the non-migrant

respondents, most of them previously earned a liv-

ing from the informal sector (14.1%), and a fewer

number of them were unemployed (12.2%). In other

words, before working at GoJek, some migrants and

non-migrants did not have sources of income, while

some others were already employed either formally or

informally. Based on the sector of employment, the

majority of migrants worked in the formal industry

before holding down a job at GoJek, while the largest

share of non-migrants had informal employment.

Both migrants and non-migrants seemed to be in-

terested in working at GoJek regardless of their for-

mer occupations in formal and informal sectors. Such

interests are indeed inseparable from economic deter-

minant, that is, income. The opportunity to receive

an even higher one than in their previous employ-

ments attracts more people to work for GoJek. The

leading reason for working in an online transportation

company is ﬂexible working hours (Nurhidayah et al.,

2017), followed by the potential for earning a high in-

come (Hall and Krueger, 2018). For instance, in San

CONRIST 2019 - International Conferences on Information System and Technology

262

Francisco in 2013, onethird of the 8,500 registered

taxi drivers resigned and chose to work at an online

mobility service provider called Uber (Essif, 2014).

This type of service industry offers job opportunities

for unemployed and already employed migrants and

non-migrants (Anwar, 2017).

3.2 The Other Occupations of Migrant

and Non-migrant Motorcycle Taxi

Drivers at an Online Transportation

Company (GoJek)

Some migrants and non-migrants were solely trans-

port workers at GoJek, but some others chose to un-

dertake another occupation. Figure 3 below presents

data on the proportions of migrants and non-migrants

based on their second jobs.

Figure 3: The other occupations of migrant and nonmigrant

motorcycle taxi drivers at an online transportation company

Figure 3 shows that migrants and non-migrants

chose to work two jobs. Informal employment had the

highest percentage, i.e., 8.3% in migrants and 7.3% in

non-migrants. These results indicate that working at

GoJek does not prevent them from undertaking two

jobs. Having two occupations means earning a living

from two sources and, thereby, generating higher in-

come. Some transport workers at GoJek strive to gain

this beneﬁt.

Although some migrants and non-migrants had

other occupations, those who did not were dominant,

namely 43.5% and 27.9%, respectively. This ﬁnding

suggests that most of them want to focus on work-

ing as online motorcycle taxi drivers, which requires

them to reach a preset target point for a higher in-

come. Seeking to attain this, they do not keep another

occupation. It is believed to be the effect of disruptive

innovation, that is, a business model that can interrupt

other existing enterprises (Isaac and Davis, 2014) and,

consequently, persuade people to leave their previous

work in one particular business and move to online

transportation. Ride-hailing services offer ﬂexible

working hours, and, for this reason, drivers can man-

age their schedule by themselves (Watanabe et al.,

2016) and earn better income (Fanggidae et al., 2016).

3.3 The Income of Migrants and

Nonmigrants before Working at an

Online Transportation Company

(GoJek)

Before working for GoJek, the income of migrants

and non-migrants with formal and informal employ-

ment ranged between <IDR 1,000,000 and >IDR

3,000,000. Figure 4 summarizes the distribution of

these research subjects based on their monthly income

before working at an online transportation company.

Figure 4: The monthly income of migrants and non-

migrants before working at gojek.

Prior to working at GoJek, both migrant and non-

migrant motorcycle taxi drivers generated different

amounts of income. Based on the largest propor-

tions among the income group, 13.3% migrants and

9.1% non-migrants earned IDR 1,000,000-2,000,000.

As for those working previously in the formal sector,

the highest percentages were 12% migrants and 6.2%

non-migrants with incomes between ¿IDR. 2,000,000

and IDR 3,000,000. In other terms, although both

migrants and non-migrants earn a substantial amount

of income, they continuously work at GoJek. On-

line transportation companies give millions of people

a chance to improve their standard of life (Nurhidayah

et al., 2017). Therefore, many people decide to work

for these companies even though they have already

earned a relatively large income before. They under-

take this job indeed because of one leading factor, that

is, receiving an additional income (Izzati, 2016) (An-

war, 2017).

3.4 The Income of Migrants and

Nonmigrants Generated from

Working at an Online

Transportation Company (GoJek)

Migrants and non-migrants who entered the online

transportation networks earned varying amounts of

income, namely >IDR 1,000,000 - 2,000,000, > IDR

2,000,000 - 3,000,000, and >IDR 3,000,000. These

data are presented in Figure 5.

Figure 5 above shows that migrants and nonmi-

grants received different amounts of monthly incomes

from working at GoJek. Around one-third of them,

Effects of Disruptive Innovation on the Employment Status and Income of Migrants and Non-migrants Engaging in Online Transportation,

the City of Palembang

263

Figure 5: The income of motorcycle taxi drivers at GoJek

precisely 32.1% of the former and 27.1% of the lat-

ter, generated >IDR 3,000,000 per month. These re-

sults prove that working as motorcycle taxi drivers

can increase their earnings. Also, none of them re-

ceived below IDR 1,000,000. In other words, those

who were unemployed or already employed prior to

their jobs at GoJek earned upwards of IDR 1,000,000.

These ﬁndings express the beneﬁt of disruptive inno-

vation, that is, helping workers to make a substantial

amount of income. Online transportation applies the

concept of sharing economy (Wahyuningtyas, 2016)

that all workers have the same opportunity to earn in-

come, whose rate depends on the target points they

have achieved. Therefore, the majority of them in-

vest their time and resources in online transportation

(Isaac and Davis, 2014).

3.5 The Incomes Generated by

Migrants and Non-migrants at an

Online Transportation Company

from Other Sources (GoJek)

Some transport workers at GoJek also tried to earn

a living from other sources. This income was cate-

gorized into ﬁve classes, namely no income, <IDR.

1,000,000, between IDR 1,000,000 and 2,000,000,

between > IDR 2,000,000 and 3,000,000, and >IDR

3,000,000, as presented in Figure 6 below.

Figure 6: The incomes generated by motorcycle taxi drivers

at GoJek from other occupations.

Based on the highest percentages in Figure 6

above, migrants and non-migrants had no other in-

comes. However, small proportions of them simi-

larly showed other sources of income from formal

and informal employments. In the formal sector, less

than 10% of migrants (8.2%) and nonmigrants (5.0%)

earned IDR1,000,000-2,000,000, >IDR2,000,000-

3,000,000, and >IDR 3,000,000; also, none of them

received below IDR 1,000,000. In the informal sec-

tor, only a small share of migrants (8.2%) and non-

migrants (5.0%) received <IDR 1,000,000 and >IDR

1,000,000-2,000,000.

The results of this study indicate that disruptive in-

novation can help migrants and non-migrants to mul-

tiply their earnings, speciﬁcally from working as mo-

torcycle taxi drivers and in either formal or informal

sectors. In other terms, it can increase not only their

ﬁnancial input but also their welfare or life standard.

Flexible jobs at an online transportation company al-

low workers to generate income from it in addition to

one from other occupations (Hall and Krueger, 2018).

4 CONCLUSIONS

Disruptive innovation, that is, online transportation

has created opportunities for both unemployed and

already employed persons. It attracts migrants and

non-migrants to leave their previous employments in

the formal and informal sectors and move to an online

mobility service provider. Sufﬁciently high income

has made most of them focus on working at this com-

pany without having other sources of income. Nev-

ertheless, some keep their old occupations, and for

them, holding two jobs at the same time means earn-

ing an additional income to improve their welfare and

standard of life.

ACKNOWLEDGEMENTS

Authors would like to thank the Ministry of Research,

Technology, and Higher Education of the Republic

of Indonesia for funding this research under the 2019

Doctoral Research Grant scheme.

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