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Risks and rewards in the globalization of telecommunications in emerging economies

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  • Ramamurti, Ravi

Abstract

The telecommunications industry in emerging markets has been transformed from a collection of mostly state-owned, national companies to one with many privately owned, multinational corporations (MNCs). Using examples from Latin America, this dramatic reconfiguration is explained as resulting from the dynamic interplay between country and firm strategies. It is further argued that first-mover MNCs reaped greater profits than late-mover MNCs, whereas timing had the opposite consequence for host countries. First-mover MNCs had the advantage of buying the incumbent state enterprise, enjoying monopoly privileges, making preemptive investments, leveraging political connections, and adopting entry-deterring policies to minimize competition. But early-reforming countries had to contend with the region's lack of credibility with investors by deeply discounting sale price, offering special privileges and protections, and absorbing risks that late-reforming countries were able to pass on to MNCs. The paper concludes that telecommunications no longer offers foreign investors easy riches like those enjoyed by first-moving MNCs in first-reforming countries. Late-moving firms, especially in late-reforming countries, are exposed not only to governments with higher bargaining power but also to greater regulatory and competitive risks.

Suggested Citation

  • Ramamurti, Ravi, 2000. "Risks and rewards in the globalization of telecommunications in emerging economies," Journal of World Business, Elsevier, vol. 35(2), pages 149-170, July.
  • Handle: RePEc:eee:worbus:v:35:y:2000:i:2:p:149-170
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    References listed on IDEAS

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    1. Unctad, 1996. "World Investment Report 1996," Foreign Trade Review, , vol. 31(3), pages 85-109, October.
    2. Ravi Ramamurti, 1992. "Why are Developing Countries Privatizing?," Journal of International Business Studies, Palgrave Macmillan;Academy of International Business, vol. 23(2), pages 225-249, June.
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    Cited by:

    1. Dörrenbächer, Christoph & Gammelgaard, Jens, 2010. "Multinational corporations, inter-organizational networks and subsidiary charter removals," Journal of World Business, Elsevier, vol. 45(3), pages 206-216, July.
    2. Bevan, Alan & Estrin, Saul & Meyer, Klaus, 2004. "Foreign investment location and institutional development in transition economies," International Business Review, Elsevier, vol. 13(1), pages 43-64, February.
    3. Torsten Gerpott & Nejc Jakopin, 2008. "Markteintrittstiming von Telekommunikationsdiensteanbietern," Metrika: International Journal for Theoretical and Applied Statistics, Springer, vol. 19(1), pages 7-37, May.
    4. Meyer, Klaus E., 2002. "Management challenges in privatization acquisitions in transition economies," Journal of World Business, Elsevier, vol. 37(4), pages 266-276, January.
    5. Wang, Xin, 2012. "Foreign direct investment and innovation in China's e-commerce sector," Journal of Asian Economics, Elsevier, vol. 23(3), pages 288-301.
    6. Curwen, Peter & Whalley, Jason, 2013. "Mapping worldwide mobile networks: Some problems and indicative solutions," Telecommunications Policy, Elsevier, vol. 37(11), pages 1150-1165.
    7. repec:spr:manint:v:49:y:2009:i:1:d:10.1007_s11575-008-0128-3 is not listed on IDEAS
    8. Ramamurti, Ravi & Doh, Jonathan P., 2004. "Rethinking foreign infrastructure investment in developing countries," Journal of World Business, Elsevier, vol. 39(2), pages 151-167, May.
    9. Jakopin, Nejc M. & Klein, Andreas, 2012. "First-mover and incumbency advantages in mobile telecommunications," Journal of Business Research, Elsevier, vol. 65(3), pages 362-370.
    10. García-Villaverde, Pedro M. & Ruiz-Ortega, María J. & Parra-Requena, Gloria, 2012. "Towards a comprehensive model of entry timing in the ICT industry: Direct and indirect effects," Journal of World Business, Elsevier, vol. 47(2), pages 297-310.

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