Internationalization of mobile network operators: institutional distance, regional effects and country factors

Competition in the mobile telecommunications market is enhanced by entry of foreign mobile network operators (MNOs). Competition results in lower prices of mobile services that, in turn, can lead to increased levels of adoption. Despite these benefits, to date understanding of the drivers behind increasing international involvement (i.e., internationalization) of MNOs has not been systematically evaluated. Existing studies on internationalization in other domains have shown the importance of industry-, country- and regional-level factors in internationalization. Furthermore, differences in institutional environments between countries (known as institutional distance) have recently been shown to explain internationalization strategies of firms.To that end, the goals of this study are to: 1) systematically evaluate MNO internationalization which, despite many rich case studies on internationalization of individual MNOs and MNOs in separate geographic regions, has not yet been done; 2) test the importance of industry-specific factors in institutional distance and their effects on MNO market entry from a home to a host country and 3) assess the impact of the regional dimension on MNO internationalization.By achieving these objectives, this study makes the following contributions. First, it develops a theoretically-based framework that explains and predicts internationalization of MNOs. The framework considers several factors in MNO internationalization: institutional distance between the home and host countries of the MNO, regional factors and characteristics of the host country. A survival regression model is built and tested based on the framework using data on MNO entries into 36 countries of Europe and South America during the time period 19952006. Second, following institutional theory, this study combines the national- and industry-level measures of institutions, thus advancing international business research on the effects of institutional distance on market entry.Results of this study show that internationalization can be explained by both institutional and regional factors. The differences between institutions of MNOs home and host countries have a consistent effect on MNO entry as the MNO internationalizes. By comparison, the effect of regional experience on entry eventually decreases as the MNO enters more countries. Country characteristics, including the level of technology adoption and quality of life, were found to not have a significant effect on MNO entry.