Effects of telecom service providers’ strategic investments on business performance

Abstract

Purpose – The purpose of this paper is to identify the structure of strategic investments and the effect of each investment category on business performance in two leading information and communication technology (ICT) countries, the USA and South Korea. Design/methodology/approach – This is a longitudinal comparative study of the relationship between strategic investments and organizational performance of major telecommunication service providers (TSPs) in the two leading ICT countries, the USA and South Korea. Findings – The study found that a sufficient amount of strategic investments in technological innovations is the driving force for TSPs’ business performance. However, strategic investment structures differ among TSPs, depending on their market position, whether the first mover in the market or a follower, and on their country’s market characteristics. Moreover, even though both countries’ TSP markets are oligopolistic in nature, the market is more saturated in Korea and thus competition appears to be fiercer there than in the USA. The stronger oligopolistic market in Korea has lead TSPs to compete primarily on their marketing strategies, while TSPs in the USA do so based on technological innovation. Originality/value – The findings of the study shed new insights that can help both TSPs in developing their competitive strategies and government policy makers in assuring healthy competitive telecommunication markets in their countries.