Cross-border Expansion and Competitive Interactions of Mobile Network Operators in Sub-Saharan Africa

Abstract

The search for improved organizational performance and better competitive positions in their respective industries has often motivated firms to expand operations beyond their traditional domestic markets. Thus, despite the numerous obvious challenges and risks, which heighten investment costs and reduce the chances of success in doing business in foreign markets, more and more firms have become multinational in their operations. Mobile network operators (MNOs) are clearly among such firms that have increasingly sought cross-border consolidations and compete on multiple fronts in the global market in recent times, even delving into the more environmentally- and institutionally-challenging emerging-market regions, as they seek the much-desired expanded customer bases and market reach, as well as other growth opportunities that cannot accrue from operating just in their home markets.

Anchored in the internationalization and multimarket competition/competitive dynamics literatures and building upon empirical data derived from a combination of primary and (mainly) secondary sources, this study investigates how mobile network operators (MNOs) invest and competitively interact across country markets in the Sub-Saharan Africa (SSA) region. The main theoretical argument underpinning the study is that the strategic importance of mobile telecom to national security and economic advancement, which makes it a strictly-regulated hi-tech oligopolistic industry, and the numerous challenges of SSA, as an emerging-market region, which impede the prospects of successful business, can compel MNOs to adopt contingent context-specific investment strategies.

The findings of the three empirical investigations provide supporting evidence to the foregoing premise, as they make some important revelations that challenge the conjectures and findings of the extant studies that were mainly conducted in developed-market regions. For instance, by showing that MNOs rather prefer to invest in the SSA countries that share colonial ties with their countries of origin and having low-level corruption, the first empirical study makes a clear departure from the extant mainstream position that economic-related factors, such as market size and strong economic growth potentials and better standard of living of the populace, mainly determined the investment location choices of firms. The second empirical study provides evidence of both oligopolistic-reaction (or bandwagon-effect) and mutual avoidance among pairs of competing MNOs, against previous studies' suggestion finding of firms engaging in either rather than the two strategies. With these findings, the study offers offers theoretical extensions, while also having implications for managerial practice.