IDEAS home Printed from https://ideas.repec.org/a/bpj/rneart/v13y2014i3p271-302n1.html
   My bibliography  Save this article

Regulatory Environment and Firm Performance in EU Telecommunications Services

Author

Listed:
  • Montolio Daniel

    (Faculty of Economics and Business, University of Barcelona (UB) Av Diagonal, 690 08034 Barcelona, Spain; and Barcelona, Institute of Economics, Carrer Tinent Coronel Valenzuela, 11, 08034 Barcelona, Spain)

  • Trillas Francesc

    (Public-Private Sector Research Center, IESE Barcelona, Barcelona, Spain; and Barcelona Institute of Economics, Carrer Tinent Coronel Valenzuela, 11, 08034 Barcelona, España)

  • Trujillo-Baute Elisa

    (University of Warwick – Warwick Business School, Room B2.01, Warwick Business School, The University of Warwick, Coventry CV4 7AL, UK)

Abstract

We empirically estimate the effects of regulated access prices and firms’ multinational status on firm performance by using firm, corporate group, and country level information for the European broadband market between 2002 and 2010. Three measures of firm performance are used, namely: market share, revenue and productivity. Special attention is paid to differences in the impact on the performance measures depending on a firm’s position as either a market incumbent or entrant. We find that while access prices have a negative effect on entrants’ market share and revenue, the effect on incumbents’ market share, revenue and productivity is positive. Further, we find that multinational entrants perform better than national entrants in terms of their market share but worse in terms of their revenue and productivity. The opposite is true of incumbent multinationals which perform better than nationals in terms of their revenue and productivity but worse in terms of their market share. This confirms that a firm’s multinational status has a significant impact on its performance, and that this impact differs for incumbents and entrants. Finally, when evaluating the impact of access prices on firm performance at the mean performance of national and multinational firms, we find that the impact of access prices is lower for multinational than for national firms.

Suggested Citation

  • Montolio Daniel & Trillas Francesc & Trujillo-Baute Elisa, 2014. "Regulatory Environment and Firm Performance in EU Telecommunications Services," Review of Network Economics, De Gruyter, vol. 13(3), pages 271-302, September.
    • Handle: RePEc:bpj:rneart:v:13:y:2014:i:3:p:271-302:n:1
    DOI: 10.1515/rne-2014-0030
    as

    Download full text from publisher

    File URL: https://doi.org/10.1515/rne-2014-0030
    Download Restriction: For access to full text, subscription to the journal or payment for the individual article is required.
    File URL: https://libkey.io/10.1515/rne-2014-0030?utm_source=ideas
    LibKey link: if access is restricted and if your library uses this service, LibKey will redirect you to where you can use your library subscription to access this item
    ---><---

    As the access to this document is restricted, you may want to look for a different version below or search for a different version of it.

    Other versions of this item:

    References listed on IDEAS

    as
    1. de Bijl, Paul W.J. & Peitz, Martin, 2005. "Local Loop Unbundling in Europe: Experience, Prospects and Policy Challenges," MPRA Paper 2511, University Library of Munich, Germany.
    2. Carlo Cambini & Laura Rondi, 2012. "Capital structure and investment in regulated network utilities: evidence from EU telecoms," Industrial and Corporate Change, Oxford University Press and the Associazione ICC, vol. 21(1), pages 31-71, February.
    3. Gerpott, Torsten J. & Jakopin, Nejc M., 2007. "Firm and target country characteristics as factors explaining wealth creation from international expansion moves of mobile network operators," Telecommunications Policy, Elsevier, vol. 31(2), pages 72-92, March.
    4. Sumantra Ghoshal, 1987. "Global strategy: An organizing framework," Strategic Management Journal, Wiley Blackwell, vol. 8(5), pages 425-440, September.
    5. Mattia Nardotto & Tommaso Valletti & Frank Verboven, 2015. "Unbundling The Incumbent: Evidence From Uk Broadband," Journal of the European Economic Association, European Economic Association, vol. 13(2), pages 330-362, April.
    6. Gerpott, Torsten J. & Jakopin, Nejc M., 2005. "The degree of internationalization and the financial performance of European mobile network operators," Telecommunications Policy, Elsevier, vol. 29(8), pages 635-661, September.
    7. Lenn Gomes & Kannan Ramaswamy, 1999. "An Empirical Examination of the Form of the Relationship Between Multinationality and Performance," Journal of International Business Studies, Palgrave Macmillan;Academy of International Business, vol. 30(1), pages 173-187, March.
    8. Choi, In, 2001. "Unit root tests for panel data," Journal of International Money and Finance, Elsevier, vol. 20(2), pages 249-272, April.
    9. Sidak,J. Gregory & Spulber,Daniel F., 1998. "Deregulatory Takings and the Regulatory Contract," Cambridge Books, Cambridge University Press, number 9780521591591.
    10. Michał Grajek & Lars-Hendrik Röller, 2012. "Regulation and Investment in Network Industries: Evidence from European Telecoms," Journal of Law and Economics, University of Chicago Press, vol. 55(1), pages 189-216.
    11. Jakopin, Nejc M., 2008. "Internationalisation in the telecommunications services industry: Literature review and research agenda," Telecommunications Policy, Elsevier, vol. 32(8), pages 531-544, September.
    12. Mark Armstrong & David E.M. Sappington, 2006. "Regulation, Competition and Liberalization," Journal of Economic Literature, American Economic Association, vol. 44(2), pages 325-366, June.
    13. Esteban García‐Canal & Mauro F. Guillén, 2008. "Risk and the strategy of foreign location choice in regulated industries," Strategic Management Journal, Wiley Blackwell, vol. 29(10), pages 1097-1115, October.
    14. Jan Johanson & Jan-Erik Vahlne, 1977. "The Internationalization Process of the Firm—A Model of Knowledge Development and Increasing Foreign Market Commitments," Journal of International Business Studies, Palgrave Macmillan;Academy of International Business, vol. 8(1), pages 23-32, March.
    15. Jan Johanson & Jan-Erik Vahlne, 2009. "The Uppsala internationalization process model revisited: From liability of foreignness to liability of outsidership," Journal of International Business Studies, Palgrave Macmillan;Academy of International Business, vol. 40(9), pages 1411-1431, December.
    16. David Sappington, 2006. "Regulation in Vertically-Related Industries: Myths, Facts, and Policy," Review of Industrial Organization, Springer;The Industrial Organization Society, vol. 28(1), pages 3-16, February.
    17. Koutroumpis, Pantelis, 2009. "The economic impact of broadband on growth: A simultaneous approach," Telecommunications Policy, Elsevier, vol. 33(9), pages 471-485, October.
    18. Wallsten Scott & Hausladen Stephanie, 2009. "Net Neutrality, Unbundling, and their Effects on International Investment in Next-Generation Networks," Review of Network Economics, De Gruyter, vol. 8(1), pages 1-23, March.
    19. Cave, Martin & Vogelsang, Ingo, 0. "How access pricing and entry interact," Telecommunications Policy, Elsevier, vol. 27(10-11), pages 717-727, November.
    20. MB Sarkar & S Tamer Cavusgil & Preet S Aulakh, 1999. "International Expansion of Telecommunication Carriers: The Influence of Market Structure, Network Characteristics, and Entry Imperfections," Journal of International Business Studies, Palgrave Macmillan;Academy of International Business, vol. 30(2), pages 361-381, June.
    21. Einhorn, Michael A., 2002. "International telephony: a review of the literature," Information Economics and Policy, Elsevier, vol. 14(1), pages 51-73, March.
    22. Geoff Edwards & Leonard Waverman, 2006. "The Effects of Public Ownership and Regulatory Independence on Regulatory Outcomes," Journal of Regulatory Economics, Springer, vol. 29(1), pages 23-67, January.
    23. David J. Denis & Diane K. Denis & Keven Yost, 2002. "Global Diversification, Industrial Diversification, and Firm Value," Journal of Finance, American Finance Association, vol. 57(5), pages 1951-1979, October.
    24. Levin, Andrew & Lin, Chien-Fu & James Chu, Chia-Shang, 2002. "Unit root tests in panel data: asymptotic and finite-sample properties," Journal of Econometrics, Elsevier, vol. 108(1), pages 1-24, May.
    25. Valletti, Tommaso M., 0. "The theory of access pricing and its linkage with investment incentives," Telecommunications Policy, Elsevier, vol. 27(10-11), pages 659-675, November.
    26. Masaaki Kotabe & Srini S Srinivasan & Preet S Aulakh, 2002. "Multinationality and Firm Performance: The Moderating Role of R&D and Marketing Capabilities," Journal of International Business Studies, Palgrave Macmillan;Academy of International Business, vol. 33(1), pages 79-97, March.
    27. Keiichi Hori & Keizo Mizuno, 2009. "Competition schemes and investment in network infrastructure under uncertainty," Journal of Regulatory Economics, Springer, vol. 35(2), pages 179-200, April.
    Full references (including those not matched with items on IDEAS)

    Most related items

    These are the items that most often cite the same works as this one and are cited by the same works as this one.
    1. Montolio Daniel & Trillas Francesc & Trujillo-Baute Elisa, 2014. "Regulatory Environment and Firm Performance in EU Telecommunications Services," Review of Network Economics, De Gruyter, vol. 13(3), pages 271-302, September.
    2. Daniel Montolio & Elisa Trujillo, 2012. "What drives investment in telecommunications? The role of regulation, firms’ internationalization and market knowledge," Working Papers 2012/1, Institut d'Economia de Barcelona (IEB).
    3. Daniel Montolio & Elisa Trujillo, 2012. "What drives investment in telecommunications? The role of regulation, firms’ internationalization and market knowledge," Working Papers 2012/1, Institut d'Economia de Barcelona (IEB).
    4. Garrone, Paola & Zaccagnino, Michele, 2015. "Seeking the links between competition and telecommunications investments," Telecommunications Policy, Elsevier, vol. 39(5), pages 388-405.
    5. Briglauer, Wolfgang & Gugler, Klaus & Haxhimusa, Adhurim, 2016. "Facility- and service-based competition and investment in fixed broadband networks: Lessons from a decade of access regulations in the European Union member states," Telecommunications Policy, Elsevier, vol. 40(8), pages 729-742.
    6. Briglauer Wolfgang & Frübing Stefan & Vogelsang Ingo, 2014. "The Impact of Alternative Public Policies on the Deployment of New Communications Infrastructure – A Survey," Review of Network Economics, De Gruyter, vol. 13(3), pages 227-270, September.
    7. Briglauer, Wolfgang, 2014. "The impact of regulation and competition on the migration from old to new communications infrastructure: Recent evidence from EU27 member states," ZEW Discussion Papers 14-085, ZEW - Leibniz Centre for European Economic Research.
    8. Lei Li, 2008. "Multinationality and technical efficiency: A neglected perspective," Management International Review, Springer, vol. 48(1), pages 39-64, February.
    9. Luo, Xueming & Zheng, Qinqin, 2018. "How firm internationalization is recognized by outsiders: The response of financial analysts," Journal of Business Research, Elsevier, vol. 90(C), pages 87-106.
    10. Nguyen, Quyen T.K. & Kim, Sylvia, 2020. "The multinationality and performance relationship: Revisiting the literature and exploring the implications," International Business Review, Elsevier, vol. 29(2).
    11. Tselekounis, Markos & Varoutas, Dimitris & Martakos, Drakoulis, 2014. "A CDS approach to induce facilities-based competition over NGA networks," Telecommunications Policy, Elsevier, vol. 38(3), pages 311-331.
    12. Buigues, Pierre-André & Lacoste, Denis & Lavigne, Stéphanie, 2015. "When over internationalized companies reduce their international footprint," International Business Review, Elsevier, vol. 24(6), pages 1039-1047.
    13. Fuentelsaz, Lucio & Garrido, Elisabet & Maicas, Juan P., 2020. "The effect of informal and formal institutions on foreign market entry selection and performance," Journal of International Management, Elsevier, vol. 26(2).
    14. Bobillo, Alfredo M. & López-Iturriaga, Felix & Tejerina-Gaite, Fernando, 2010. "Firm performance and international diversification: The internal and external competitive advantages," International Business Review, Elsevier, vol. 19(6), pages 607-618, December.
    15. Maya Bacache & Marc Bourreau & Germain Gaudin, 2014. "Dynamic Entry and Investment in New Infrastructures: Empirical Evidence from the Fixed Broadband Industry," Review of Industrial Organization, Springer;The Industrial Organization Society, vol. 44(2), pages 179-209, March.
    16. de Jong, Gjalt & van Houten, Jerry, 2014. "The impact of MNE cultural diversity on the internationalization-performance relationship," International Business Review, Elsevier, vol. 23(1), pages 313-326.
    17. Bauer, Johannes M. & Shim, Woohyun, 2012. "Regulation and digital innovation: Theory and evidence," 23rd European Regional ITS Conference, Vienna 2012 60364, International Telecommunications Society (ITS).
    18. Curwen, Peter & Whalley, Jason, 2013. "Mapping worldwide mobile networks: Some problems and indicative solutions," Telecommunications Policy, Elsevier, vol. 37(11), pages 1150-1165.
    19. Likitwongkajon, Napaporn & Vithessonthi, Chaiporn, 2020. "Do foreign investments increase firm value and firm performance? Evidence from Japan," Research in International Business and Finance, Elsevier, vol. 51(C).
    20. Yong Yang & Pedro S. Martins & Nigel Driffield, 2013. "Multinational Performance and the Geography of FDI," Management International Review, Springer, vol. 53(6), pages 763-794, December.

    More about this item

    JEL classification:

    • L51 - Industrial Organization - - Regulation and Industrial Policy - - - Economics of Regulation
    • L25 - Industrial Organization - - Firm Objectives, Organization, and Behavior - - - Firm Performance
    • L96 - Industrial Organization - - Industry Studies: Transportation and Utilities - - - Telecommunications
    • F23 - International Economics - - International Factor Movements and International Business - - - Multinational Firms; International Business

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:bpj:rneart:v:13:y:2014:i:3:p:271-302:n:1. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a bibliographic reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: Peter Golla (email available below). General contact details of provider: https://www.degruyter.com .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.