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ORGANIZATIONAL FACTORS AS CORRELATES OF COMPEITIVE ADVANTAGE IN THE NIGERIAN TELECOMMUNICATION INDUSTRY
ABSTRACT
The Global System for Mobile communication (GSM) was introduced in the Nigerian telecommunication industry in 2001 after the industry’s deregulation in 1992. The mobile telephone network which revolutionized the business, social and economic lives of Nigerians also engendered competition in the industry. Competition among the operators enabled them to deploy their organizational factors of stakeholders, knowledge, innovation, culture and technology management to create competitive advantage for the benefit of the telecommunication consumers. However, the industry is challenged by volatility of quality of service and intermittent network failures which have affected the value of its competitive advantage. The study examined organizational factors as correlates of competitive advantage.
The study adopted a survey research design. Target population comprised 584 senior and executive management staff of the selected five mobile network operators. This population size also constituted the sample size for the study, using total enumeration. Data were collected through the use of validated questionnaire. The Cronbach’s Alpha coefficients for the constructs ranged from 0.709 to 0.897. The response rate was 64.49%. Data were analyzed using descriptive and inferential statistics.
Findings revealed that there was positive and significant effect of stakeholders management on competitive advantage in the Nigerian telecommunication industry (Adj R2 =0.626;
F(1,471)=509.732; p < 0.05). Positive and significant effect of knowledge management on competitive advantage was found in the industry (Adj R2 = 0.532; F(1, 471)= 346.11; p < 0.05).Positive and significant effect of innovation management on competitive advantage was established in the industry (Adj R2 = 0.514; F(1, 471)= 322.734; p < 0.05).The effect of organizational culture on competitive advantage was positive and significant in the industry (Adj R2 = 0.576; F(1, 471) = 413.575; p < 0.05).There was positive and significant effect of technology management on competitive advantage in the Nigerian telecommunication industry (Adj R2 = 0.516; F(1, 471) = 323.411; p < 0.05).
The study concluded that the massive revolution in the Nigerian economy by the mobile telephone network was created by the competitive advantage driven by organizational factors. It was recommended that the Nigerian telecommunication industry should emphasise improvement of stakeholders’ values, knowledge, innovation, culture and technology management as models for enhanced quality of service and prevention of network failures. The industry regulator, Nigerian Communication Commission should enact policies to regulate these organizational factors.
Keywords: Competitive advantage, Telecommunication industry, Stakeholders management, Knowledge management, Innovation management, Culture management, Technology management
Word Count: 381
CHAPTER ONE
INTRODUCTION
1.1 Background to the Study
According to Kazmi (2008), organizational capability factors or capability factors (or simply organizational factors as this thesis has chosen to call them) are the intrinsic abilities or skills of an organization with which it deploys its competencies to overcome its weaknesses so as to exploit the opportunities and confront the threats in its external environment.They are viewed as skills for organizing resources and channelling them to productive uses (Kazmi, 2008;Ekore 2014; Ismail, Rose, Uli & Abdullahi, 2014). On the other hand, organizational factors are the strategic strengths that are developed in various functional units in the organization which are essential for the formulation and implementation of strategies (Kazmi, 2008; Ekore, 2014). Resources, whether tangible or intangible, may remain worthless without the organizational factors to develop them(Ismail et al, 2014). Many strategists argue that organizational factors are the result of the organization’s knowledge base which is defined as the knowledge and skills of its staff (Ismail et al, 2014). Researchers are interested in organizational factors for two reasons. Firstly, they would like to know what competencies exist within the organization to exploit the opportunities and confront the threats in its environment. Secondly, they would like to determine what potentials would be developed in order to exploit opportunities and overcome threats in the future.Organizational factors are numerous and varied. They could be organizational skills, organizational integration, product development, technological capabilities, innovation, organizational culture, stakeholders’ management, knowledge management (Ismail et al, 2014; Prahalad & Hamel, 1990; Stalk,Evans & Shulman,1992).
Kazmi (2008) also argued that strategic advantages are the results of organizational capabilities/factors.Strategic advantages are the outcome of the activities of the organization in its bid to generate greater economic value for its customers, the reward of which are such financial benefits like profitability, return on investments and non-financial advantages like market share or reputation(Kazmi, 2008; Prahalad & Hamel, 1990).Competitive advantage is the common example of strategic advantage created by companies.A company is said to have competitive advantage if it is able to create more economic values than its competitors in the industry (Akinbola, Adegbuyi & Otokiti, 2014).According to Prahalad and Hamel, (1990), the source of competitive advantage has moved from physical to intangible intellectual and knowledge based resources.
The challenge facing most mobile network firms today is to identify the set of intangible market based capabilities or factors as sources for creating competitive advantage (Akinbola, Adegbuyi & Otokiti, 2014; Akingbade, 2014). Most of the capabilities available to the firms are heterogenous and numerous but for a resource to have and gain advantage, it must be valuable, rare, inimitable, and non-substitutable (Barney, 1991). It is only when these scarce resources or capabilities are identified and appropriate programme developed to meet the above criteria before an organization can have competitive advantage (Akinbola, Adegbuyi & Otokiti, 2014; Barney, 1991). There are different views about where the sources of competitive advantage are generated from.The two common views are the capabilities based view and the resources based view.
There are two opinions on the capabilities based view.According to Zhang(2008), the first is the core competence opinion postulated by Prahalad and Hamel (1990) and the remaining one is the overall capability opinion given by Stalk,Evans and Shulman (1992). Prahalad and Hamel (1990) cited in Zhang (2011) described core competence as the organization’s retained knowledge, especially the knowledge concerning how to manage the numerous types of producing skills and how to combine the network of technologies, Zhang (2008).They highlighted three criteria to identify corporate core competence as follows; Firstly, it must be able to co-ordinate several products and markets. Secondly, they should guarantee measurable advantages to the final consumers. Thirdly, they must be extremely difficult for competitors to copy (Prahalad & Hamel, 1990). On their part, Stalk, Evans and Shulman (1992) submitted that a successful company should focus on its behaviours especially the organizational actions and business systems as well strategize on improving its activities as a basic strategic goal, Zhang (2008). By this, they postulated the idea of total capacity as the general skills and experience among the employees of the organization (Zhang, 2011).
The mobile telecommunication network has a market share of 72% of the global telecommunication industry (GSMA, 2016). Equally, in Africa, the mobile network controls 80% share of the telecommunication market. In Nigeria, the mobile telecommunication network has 99.74% share of the telecommunication industry.In a quest for telecommunication services, the Federal Government of Nigeria promulgated Decree no. 75 of 1992 which deregulated the telecommunication industry and created the Nigerian Communication Commission as the apex regulator of the industry. Before the deregulation of the telecommunication service in 1992, Nigeria had only about 400,000 installed telephone lines and 25,000 analogue mobile lines which translated to 0.4 lines for 100 inhabitants(Ndukwe,2003). Putting it in another way, this amounted to a tele -density of about 250 inhabitants to one telephone line i.e0.45% (Ndukwe, 2003; Hassan, 2011). In January 2001, Nigeria, through the telecommunication regulatory body, Nigerian Communication Commission (NCC),conducted the world acclaimed transparent auction of its digital mobile licenses which were won by three service providers, namely MTN (Nigeria), Econet Wireless (Later Vmobile, later Celtel,later Vodafone, later Zain and now Airtel) and the national carrier, MTEL (a subsidiary of NITEL) at the cost of N285 Million each (Ndukwe, 2003). In the year 2002, the second national carrier, Globacom was granted an operating license while in January 2007, the Emerging Markets Telecommunication Service (EMTS) under the brand name of Etisalat was granted a unified access license (NCC, 2007). In 2009, another unified access license was granted to Smile Communications.In December, 2014, the national carrier license earlier granted to Mtel was acquired by Natcom which they (Natcom) launched as Ntel in April, 2016. From these accounts, there are six GSM service providers in the Nigerian telecommunication industry. They are: MTN, Globacom, Airtel, Etisalat, Smile and Ntel.
The Global system for mobile communication(GSM, originally called Groupe Special Mobile) is a technology developed by the European Telecomunication Standards Institute (ETSI) to identify the rules or the code for second-generation (2G) digital cellular networks which use the altered version of Time Division Multiple Access (TDMA) deployed in mobile phones.It was first deployed in Finland in July 1991 and is the most popular of the three digital wireless telephony technologies (TDMA, GSM and CDMA), (Abubakar & Bello, 2013).According to Abubakar and Bello (2013), the GSM .technology network is made of three subsystems such as a network switching subsystem (NSS), a base station subsystem (BSS) and the operations support subsystem (OSS).The network describes the technology of the band system of the wireless communication( like GSM,CDMA,WAN).This technology is made of MSC (Mobile Switching Centre) and other connected registers.The base station system is made of a BSC (Base Station Controller) and many BTSes (Base Transceiver Stations).The operating support system (OSS) coordinates the monitoring and maintenance of the technology of the network. Users (subscribers) deploymobile devices referred as User Equipment (UEs) such as hand sets to connect with the help of the network.The other connecting system between the subscriber and the network is the BTS which is regulated by the original base station controller through the base station control function (BCF).The BCF is executed as a separate unit or combined in a TRX (Transceiver) as a single entity base station.The BCF supplies an operations and maintenance (O& M) linkage to the network management system (NMS) and coordinates operational states of TRX as well as software and alarm linkage.
The mobile telecommunication network since its deployment in Nigeria has increased the teledensity from 0.45% in 1992 to 107.87% in 2015 (NCC,2016). The subscription level also increased from 425,000 lines 1992 to 154,529,780 GSM lines in 2016, which represents 355% increase. Table 1.1 shows the subscription level for GSM lines in Nigeria from 2002 to 2016
Table 1.1: Number of Subscribers to GSM technology in Nigeria (2002 -2017)
| Years | No of Subscribers | Teledensity |
| 2016 | 154,529, 780 | 110.00 |
| 2015 | 151,017,244 | 107.87 |
| 2014 | 139,143,610 | 99.39 |
| 2013 | 127,606,629 | 91.15 |
| 2012 | 113,195,951 | 80.85 |
| 2011 | 95,886,714 | 68.49 |
| 2010 | 88,348,026 | 63.11 |
| 2009 | 74,518,264 | 53.23 |
| 2008 | 64,296,117 | 45.93 |
| 2007 | 41,975,275 | 29.98 |
| 2006 | 33,858,022 | 24.18 |
| 2005 | 19,519,154 | 16.27 |
| 2004 | 10,201,728 | 8.50 |
| 2003 | 4,021,945 | 3.35 |
| 2002 | 2,271,050 | 1.89 |
Source: NCC 2017 Website
It is to be noted that the teledensity in Table 1 was computed on the basis of a population of 126 Million for Nigeria until 2005 and from 2006, it was computed on a population of 140 million people.The penetration level from December, 2007 is based on active subscribers while from 2002 to 2006, it was based on connected subscribers (NCC, 2016).
The contribution of the telecommunication industry to the Nigerian wealth basket is tremendous.Table1. 2 shows the contribution of the telecommunication industry to the Nigerian Gross Domestic Product (GDP).
Table1.2:The Contribution of the telecommunication industry to the GDP of
| Year | Jun.2016 | 2015 | 2014 | 2013 | 2012 | 2011 | 2010 |
| % contribution to GDP | 9.80% | 8.50 | 7.60 | 7.40 | 7.70 | 8.60 | 8.90 |
Source: 2017 NCC Website.
The GSM technology controls the Nigerian telecommunication industry. Table 1.3 below shows the market share of each of the three technologies in the Nigerian telecommunication market.
Table 1. 3: Percentage Market share by Technology as at January, 2017
| Technology | Mobile GSM | Mobile (CDMA) | Mobile Wireless | Fixed Wired | VOIP |
| % Market Share | 99.74% | 0.14% | 0.02% | 0.08% | 0.02% |
Source: NCC 2017 Website
Table 1. 4a : Shows the market share of each of the four major GSM service providers.
The Market Share by Operator as at January 2017
| Operator | MTN | Globacom | Airtel | Etisalat |
| Subscribers(no) | 61,840,461 | 37,357,843 | 34,116,409 | 20, 809,889 |
| Market Share | 40.12% | 24.27% | 22.14% | 13.50% |
Source: NCC 2017 Website
Table 1.4b: Shows the market share of each of the four major GSM service providers.
The Market share by operator as at October, 2016
| Operator | MTN | Globacom | Airtel | Etisalat |
| Subscribers (No) | 60,982,487 | 37,117,992 | 32,775,916 | 22,210,315 |
| Market Share(%) | 39.84% | 24.25% | 21.41% | 14.50% |
Source: NCC 2017 Website.
The above scenario clearly shows the huge impact the Global System for Mobile communication (GSM) technology exerts on the lives, businesses, creation of wealth and the general economy of Nigerians and Nigeria. As at July, 2016, the total investment in the telecommunication industry in Nigeria was about $68Billion. Of this amount, about $35Billion came from the foreign direct investment (NCC, 2017 Website).The mobile service providers have created a lot of economic and social values for Nigerians (Hassan,2013).The six service providers have deployed their core competencies to create competitive advantage in the market to the advantage and benefit of consumers (Akinbola, Adegbuyi & Otokiti, 2014). Despite the laudable achievements of competitive advantage created by the six network providers in the Nigerian telecommunication industry, one recurring problem since the introduction of the mobile telecommunication is the issue of poor quality of service and network failures.
The motivation for this study lies in the long standing disequilibrium or mismatch between the quality of service and the creation of competitive advantage in the Nigerian telecommunication industry which has resulted in lingering issues of volatility in quality of service and network failures.While the regulators and policy makers have made efforts which have not yielded the desired results in improving the quality of service, yet the issue of improving the competitive advantage created by industry players has remained largely overlooked.It is true that the industry regulators, Nigerian Communication Commission has continued to impose penalties on the operators for delivering poor quality of service, little seems to have done to explore the myriad of issues that affect the quality of service.Previous studies have established a correlation between the creation of competitive advantage and the quality of service (Stonehouse,Hamill, Campbell & Purdett, 2004).
In the search for the good quality of service and elimination of network failures, it became necessary to investigate those factors that affect and improve the competitive advantage of network operators in the Nigerian telecommunication.Theanalysis of summary table of literature (STOL)on the generation of competitive advantage in the telecommunication industry undertaken by this researcher shows a general gap in literature.Specifically, the STOL also shows a specific gap in the literature in the area of sources of competitive advantage which are potential resources or capabilities in the firms which result in the creation of competitive advantage.From the information available to this researcher,there is paucity of prior studies that have examined the creation of ccompetitive advantage and its sources in the Nigerian telecommunication industry.This is despite a consensus among researchers that the creation of competitive advantage is the surest means to surpass the competition and satisfy consumers (Oghojafor,2012;Porter,1985;Barney, 1991).
In the light of the foregoing, it became very important to conduct a study on the creation of competitive advantage in the Nigerian Telecommunication industry with a focus on those sources that have probablyadvanced the creation of value for the consumers in the industry. According to Wu (2010), the concept of competitive adavantage cannot be analysed without the three basic aspects of the subject namely, the source of competitive advantage, the factors that maintain a competitive advantage and the subject of allocating benefits created by competitive advantage.A detailed study of the literature on competitive advantage suggested a gap in the sources of competitive advantage in the telecommunication industry in Nigeria. Whereas there was a rich body of knowledge in the literature on competitive advantage in most advanced and emerging countries, there were only a few research works in this area in Nigeria, (Hassan, 2011,Oyedijo, 2012). The few available literature on this subject concentrated on some aspects of sources of competitive advantage without linking them with competitive advantage in the telecommunication industry (Akinbola, AdegbuyiandOtokiti, 2014; Itanyi and Ukpere, 2014; Olughor,2014;Suraji &Ajiferuke, 2013;Emerah,Oyedele and David,2013; Oyatoye, Adebiyi & Ameole, 2013; Akpotu, Ikechukuwu and Tamunosiki Amadi,2013; Eromafuru,2013; Ogbo, Itanyi and Ukpere,2012;Osemene, 2012; Babatunde, 2013).This study was undertaken to close the gap. This wasto the best knowledge of the researcher presumablythe first attempt to undertake a comprehensive study which examined five sources of competitive advantage (Stakeholders’,Knowledge, Innovation, Culture and Technology management) on this industry. This study used Lagos State as study area. It contributed to knowledge in the identification of the sources of competitive advantage in the telecommunication industry in Nigeria.
1.2 Statement of the Problem
There is a problem of lack of identification and recognition of the competitive advantages created by GSM technology andthe six mobile network service providers in the Nigerian mobile telecommunication industry. According to Prahalad and Hamel, (1990), the source of competitive advantage has moved from physical to intangible intellectual and knowledge based resources.The challenge facing most mobile network firms today is to identify the set of intangible market based capabilities as sources for creating competitive advantage.Most of the capabilities available to the firms are heterogenous and numerous but for a resource to have and gain advantage, it must be valuable, rare, inimitable, and non-substitutable (Barney, 1991). It is only when these scarce resources or capabilities are identified and appropriate programme developed to meet the above criteria before an organization can have competitive advantage (Akinbola, Adegbuyi & Otokiti, 2014; Barney, 1991).
Despite the successes achieved since the hosting of the Global System for Mobile communication in Nigeria in 2001, there have been challenges of poor quality of service delivery, network failures, network congestion, unfair competition and infrastructure failures which have worked against excellent service delivery and the realization of greater creation of value and its multiplier effects on the economy(Hassan,2011).These challenges have been used by both the researchers, analysts, consumers and policy makers in the telecommunication industry to underestimate the huge economic and social values created by the service providers.Both commentators and analysts have tended to lay more emphasis on these challenges than the enormous benefits Nigerians have derived from the mobile networks (Abubakar& Bello,2013).According to Stonehouse, Hamill, Campbell and Purdlet (2004), there is no single measure of competitive advantage but rather there are several indicators that a company has achieved greater performance.Such evidences include improved quality of service,brand loyalty, awareness and customer perception, profitability, price premium, market share and efficiency.Investigating the five potential sources of competitive advantage as this study has done ascertained the critical success factors upon which the industry would build and improve upon to achieve greater quality of service that would reduce if not completely eliminate volatility in quality of service, network failures, inconnectivity challenges and other related operational service challenges.
Studies undertaken by various authors (Ahmed, 2011; Ogbo, Itanyi, and Ukpere 2012) have tended to conclude that none of the service providers has created a competitive advantage. Specifically,Ogbo, Itanyi and Ukpere (2012) disclosed that an analysis of the services being promoted by the network providers would indicate similar types of services and equally show that they have similar category of management system and organizational strategies.On the other hand, most of the network hosts have no well articulated organizational innovation roadmaps.However, other studies conducted by (Oghojafor, 2013; Akinbola,Adegbuyi & Otokiti, 2014; Suraj &Ajiferuke,2013; Hassan, 2011;Ijewere & Gbandi, 2012) have confirmed that the industry and the six GSM service providers have created competitive advantage to the benefit of the consumers.This researcher would like to align with this second group of experts to say that the industry and the six service providers have created competitive advantage.As Barney (1991) put it that a company is confirmed to generate sustainable competitive advantage if it is executing value-generating strategies that is being executed by its contemporaries in the market and the competitors are not able to the advantages of these plans, a competitive advantage is maintained if it overcomes efforts to copy by competitors.Barney (1991) also stipulated that a firm has competitive advantage if its main assets are valuable, rare, imperfectly imitable and non-substitutable (VRIN). The followingadvantages shown in table 5 are created by the GSM technology over its rivals such as CDMA and fixed wireless.
This study will investigate to what extent this creation of competitive advantage in the Nigerian telecommunication industry has been caused by the four independent variables of stakeholder management, knowledge management, innovation managementand culture management.
There exists a problem of establishing the sources of the competitive advantage created by the six mobile service providers in the Nigerian telecommunication industry.Different companies with identical assets have distinct efficiencies in the utilisation of resources and such distinctiveness among companies are the related companies’ unique capabilities, Zhang (2008).These unique capabilities are the sources of competitive advantage,(Zhang, 2008).There are different views about where the sources of competitive advantage are generated from.The two common views are the capabilities based view and the resources based view.There are two opinions on thecapabilities based view.According to Zhang(2008), the first is the core competence opinion postulated by Prahalad and Hamel (1990) and the remaining one is the overall capability opinion given by Stalk,Evans and Shulman (1992).Prahalad and Hamel (1990) cited in Zhang (2008) described core competence as the organization’s retained knowledge,especially the knowledge concerning how to manage the numerous types of producing skills and how to combine the network of technologies, Zhang (2008).They highlighted three criteria to identify corporate core competence as follows; Firstly, it must be able to co-ordinate several products and markets. Secondly, they should guarantee measurable advantages to the final consumers. Thirdly, they must be extremely difficult for competitors to copy (Prahalad & Hamel, 1990).On their part, Stalk, Evans and Shulman (1992) submitted that a successful company should focus on its behaviours especially the organizational actions and business systems as well strategize on improving its activities as a basic strategic goal, Zhang (2008).By this, they postulated the idea of total capacity as the general skills and experience among the employees of the organization(Zhang 2008). Barney (1991) in his resource based view described enterprise resources as all resources, capability, systems of the organization, identities of the company, experience and information which the company can harness and use to enhance its efficiencies, Zhang (2008).Barney (1991) went further to say that such resources must be valuable, rare, inimitable and non-substitutable (VRIN) to create competitive advantage.
The problem is that no study or research to the best knowledge of this researcher has been able to establish the core competences or overall capability of the service providers in the Nigerian telecommunication industry. From the history of the mobile network companies especially the challenges which they faced with the various stakeholders like the various governments imposing different spurious taxes, communities demanding different compensations for mast installations, managing the various stakeholders successfully suggests core competence for them in this area. Wu (2010) defined critical stakeholders as people who have valuable assets, unquestionable interests, influence or great powerful effect that impact on the progress and roadmaps of the company, Clarkson (1995) submitted that the continued existence and viability of the enterprise rests on its capability to meet up with its social and financial goals which entails the ability to generate profits and dividends sufficient to make sure that the stakeholders units remain as part of the corporate stakeholders entity. Jone (1995) also argued that the management of stakeholders’ interests can generate competitive advantage by decreasing the costs of doing business. Harrison, Bosse and Philips (2010) stated that companies that appropriate benefits with their stakeholders and incorporate them in their planning activities will benefit by having their demand potentials enhanced, greater efficiencies entrenched in their operations, greater level of innovativeness and enhanced capability for conflict resolution. All these will generate competitive advantage. Ayuso, Roadriguiz and Ricart (2006) argued that a company can generate competitive advantage by involving their stakeholders’ relationships in managing the unexpected incidents, image management and creativity through the acquisition of a network of contacts and retention of experienced handsThe objective of this thesis is to investigate how stakeholders’ management has been a source of competitive advantage in the Nigerian telecommunication industry.
Teece (1982) submitted that there is an agreement among experts in the company’s organization that an essential origin of competitive advantage in this millennium of knowledge economy is the knowledge resources of a company. Marr, Schiuma and Neely (2004) admitted that knowledge assets are performance enhancers and for this reason, it is the knowledge resources that generate the values. Lynn (1998) stated that the capability of companies to generate competitive advantage stems from their tacit assets and knowledge assets are the primary source of the intangible assets which are hard to replicate according to Dunnings (2000).Studies of many researchers in other countries have shown the importance of the organization knowledge assets in the telecommunication industry.Findings by Seng and Lin (2004) and Singh and Sharma (2011) as cited in Suraji et al, (2013)on the Indian telecommunication industry showed that skills, systems and core competence of KM are the main elements of expertise in knowledge management. Studies on the Australian telecommunication sector by Strang (2010) cited in Suraji et al,(2013) reveal a cluster of online companies depended on knowledge management standards like learning, transfer and generation of knowledge, acquisition including cognitive learning framework such as analysis and examinationof knowledge to enhance creativity.
A similar study carried out on the Malaysian telecommunication industry by Chong and Yeow (2005) cited in Suraji et al,(2013) showed that KM practices there are at the primary stages.Despite these enormous contributions of knowledge management to the generation of competitive advantage, there is no empirical study on the Nigerian telecommunication industry that shows the contribution of knowledge management to the competitive advantage created by the six mobile network providers in the Nigerian telecommunication industry.This is a problem which this research intends to solve.There is no gainsaying the fact the ease with whichthe telecommunication companies have succeeded in Nigeria shows a good knowledge of the market.A study carried out by Suraji and Ajiferake (2013) focusing on state of knowledge management in the Nigerian telecommunication industry concluded that many Nigerian telecommunication organizations sampled know the indispensability knowledge as a critical asset for competitive advantage.The sampled companies in that study affirmed knowledge as the critical asset enhancing performance and accepted the the importance of recruiting a Chief Knowledge officer(CKO) in order to help attract and keep key talents in the industry.The above cited authors have helped to reveal the deficit of studies on the practice of knowledge management in the telecommunication industry in Nigeria. This thesis will investigate how knowledge management has contributed to the creation of competitive advantage for the GSM companies in the Telecommunication industry of Nigeria.
There is a problem of identifying the level of contribution of innovation management to the generation of competitive advantage by the six network providers in the Nigerian telecommunication industry.Dodgson, Gaun and Salter (2008)stated that innovation creates value and profit and enable companies to develop sustainable competitive and hence, if a company does not innovate, their rivals will do.Howells (2000) stated that the service sectors especially the computer and telecommunication services have become innovation-intensive.Morris (2009) submitted that contrary to the generally assumed notion, innovation is not in any way restricted to technology. Innovation by technology alone is not enough to guarantee the viability of every enterprise. By today’s business terrain, technology is the asset that any focused and well funded competition can readily duplicate or by pass. The study by Morris,(2009) advocates that establishing a customer based business model and system is the desirable innovations for sustainable competitive advantage. A potential source of competitive advantage for the Nigerian telecommunication industry is innovation.However, a study by Ogbo, Itanyi and Ukpere (2012) confirmed that there is innovation management in the Nigerian telecommunication industry which needs to be improved. The study however, advocated for creation of innovation teams across the firms to act as champions to collaborate with innovation leaders in the execution and generation of knowledge, innovation ideasfor change.This thesis will examine whether the GSM companies have leveraged on innovation management to create competitive advantage.
Another factor in enhancing competitive advantage in the telecommunication as found by Tian, Nakamori, Werzbieki (2009) cited in Suraji, et al (2013) is the organizational culture.However, there is no empirical study that has established a linkage between culture management and the creation of competitive advantage in the Nigerian telecommunication industry.This is the problem which this study intends to solve. Studies by Barney (1986); Denison& Mishra (1995) submitted that corporate culture is a source of competitive advantage. Barney (1996) indicated that organizational culture should posseses three district qualities for it is to have competitive advantage namely; the culture should create value, should possess rarity and should be inimitable. Many studies have established a positive correlation between organizational culture and organizational performance.Zhang and Liu (2006) cited in Ozigbo (2013) submitted that a unique culture impacts on the harmonious working relationships and the general performance of the company.Yu (2004) averred that organizational culture has an effect on many indices of the companies’ systems and results. Oparanwa (2010) discovered that organizational culture is a primary variable with great impact on organizational performance.Zain, Ilsak&Ghani (2009) submitted that organizational culture has a great influence the employees’ loyalty to the company.Akpotu, Ikechukwu&Tamunosiki-Amadi (2013) submitted there is a great correlation that existsin such social attributes the social assets such as trust, reciprocity and cohesiveness and the firm’s competitiveness. This study will investigate how the mobile network companies have leveraged on culture management to create competitive advantage.
Since the introduction of the GSM, the issue of constant changes in technology has posed a problem in the industry. The introduction of GSM started with second generation (2G) technology. The operators later moved to the third generation (3G) technology. At the time of the research, competition has driven the industry to move to fourth generation (4G) LTE (Long Term Evolution). Furthermore, the global telecommunication industry is preparing to migrate to fifth generation technology (5G) LTE. These constant changes in technology pose a problem of high cost of acquiring the technology, training the manpower with the necessary skills and knowledge to manage the technology. The thrust of this study has been to investigate the effect of organizational factors on competitive advantage in the Nigerian telecommunication industry.
1.3 Objective of the Study
The general objective of this study is to identify and investigate potential organizational factors that are the sources of competitive advantage created by the mobile network companies in the Nigerian Telecommunication Industry. The specific objectives are as to:
- determine the effect of stakeholders management on the competitive advantage of the mobile network companies in the telecommunication industry in Nigeria;
- examine the effect of knowledge management on the competitive advantage of the mobile network companies in the telecommunication industry in Nigeria;
- investigate the effect of innovation management on the competitive advantage of the mobile network companies in the telecommunication industry in Nigeria;
- evaluate the effect of culture management on the competitive advantage of the mobile network companies in the telecommunication industry in Nigeria and
- establish the effect of technology management on the competitive advantage of the mobile network companies in the telecommunication industry in Nigeria.
1.4 Research Questions
Based on the above stated research objectives, the following research questions will be answered by this study. They are:
1 What is the effect of stakeholder management oncompetitive advantage for the mobile
network companies in the Nigerian telecommunication industry?
2 How does knowledge management affectcompetitive advantage for the mobile network
companies in the Nigerian telecommunication industry?
- What is the effect innovation management on competitive advantage for the mobile
network companies in the Nigerian telecommunication industry.
4 How does culture management affect competitive advantage for the mobile network
companies in the Nigerian telecommunication industry.
- What is the effect of technology management on competitive advantage for the mobile network providers in the Nigerian telecommunication industry?
1.5 Hypotheses
HO1 Stakeholders management will not significantly affect the creation of competitive advantage for the mobile network companies in the Nigerian telecommunication industry. (At 5% level of significance)
HO2 Knowledge management will not significantly affect the creation of competitive advantage for the mobile network companies in the Nigerian telecommunication industry. (At 5% level of significance)
HO3 Innovation management will not significantly affect the creation of competitive advantage for the mobile network companies in the Nigerian telecommunication industry. (At 5% level of significance)
HO4 The culture management of the mobile network companies in the Nigerian telecommunication industry will not significantly affect the creationof competitive advantage for them.(At 5% level of significance)
HO5 Technology management of the mobile network companies in the Nigerian telecommunication industry will not significantly affect the creation of competitive advantage for them. (At 5% level of significance)
1.5.1 Rationale for Hypotheses
There is a number of studies on the benefits of managing stakeholders’ interests withmajority of them reaching consensus that stakeholders’ management will create competitive advantage for a firm. These studies have submitted that firms that manage and involve their stakeholders within the threshold of their critical strategiesderive advantages such as enhanced customer loyalty to their products and efficiency, greater innovativeness, better conflict resolution capability and reduction of transaction costs (Harrison,Bosse &Philips,2010; Jones, 1995; Clarkson,1995; Ayuso,Roadriguiz and Ricart, 2006; Wu, 2010; Wu 2012; Wu 2013; Jones & Wicks 1999).Conversely there are studies which which disagree with the submissions of the stakeholder management and maintain that stakeholder management does not create competitive advantage for a firm.They submitted that the stakeholder management concept is not a well thought out concept because it embodies ambiguities in giving details of the workings of the corporate systems, incoherence in explaining the relationships between the inhouse and outside variables, poor analysis of the corporate environment, ambiguities in explaining the working processes within the company and insufficiency in scenario evaluation. It is because of these inadequacies in the concept that they argued that stakeholder management will not create competitive advantage for the firm,((Key, 1999; Blattberg, 2004; Weiss, 2010; Mansell (2013).Based on these premises,therefore, the following hypothesis is proposed:
Ho1: Stakeholder management will not significantly affect competitive advantage for the mobile network companies in the Nigerian telecommunication industry.
There is an avalanche of studies on the effect of knowledge management on the results of a company.The telecommunication industry is a knowledge based industry.Many studies have submitted that knowledge management will create competitive advantage for a firm.These studies argued that knowledge assets can generate good corporate results and that there is a great linkage between the assets and the generation of values for the companies (Teece, 1982; Marr,Schiuma & Neely,2004, Grant 1995; Conner,1991; Demsertz,1988; Kogut & Zender ,1992;Madhok, 1996;Nahapiet & Ghoshal, 1998; Lynn, 1998; Dunnings, 2000;Singh & Sharma, 2011;McEvily & Chakravarthy, 2000). On the other hand, there are studies that have argued that knowledge management does not create competitive advantage for a company.They submitted that knowledge management as a fad being promoted by consulting companies and the likelihood that it will fade like other fads before it. Other studies in this group submitted that knowledge management emphasizes managing and exchange of knowledge rather than the creation, production of knowledge and capabilities (Foss, 1996; Heiman & Nickerson, 2002;Mahoney, 2001; William, 1999; Nickerson & Zenger , 2004). Based on these arguments, therefore, it is hypothesized as follows:
Ho2: Knowledge management will not significantly affect competitive advantage for a mobile network company in the Nigerian telecommunication industry.
Many studies have argued that innovation management will create competitive advantage for firms.They contend that whereas competitive advantage can be created from the quantities of strategic resources, the prevailing move favours those companies that coordinate knowledge, technology, innovation and skills to produce goods and services,(Dodgson, Gaun & Salter,2008; Howells ,2000; Morris ,2009; Ogbo, Itanyi and Ukpere,2012;Nacinovic,Galetic and Cavlek,2010;Mironspektor,Erez&Naveh,2011;Svensrud and Asvoll,2012; Baer,2012; Yaun and Woodman,2010;Al-Hakim and Hassan,2012).
Conversely, there are many studies that have criticized the submission that innovation management creates competitive advantage. Such studies include, Wolff (2007); Bowen (2009); Rosenbusch (2010).There is no consensus among researchers that innovation results in greater corporate performance and competitive advantageRosenbusch (2010) argued that if firmdeploys great volume of assets to the innovation project and is unable to commercially produce successful goods and services, such assets and efforts are wasted to the detriment of the company. Therefore, it is hypothesized as follows:
Ho3: Innovation management will not significantly affect competitive advantage for a mobile network company in the Nigerian telecommunication industry.
There are many studies that have avowed that culture management will create competitive advantage for an organization.For instance,Barney (1996) submitted that for an organization’s culture to have competitive advantage, it must have three distinct characteristics; it must have value, it must be rare, it must be perfectly imitable and cannot be substituted.Other studies that have submitted that culture management will create competitive advantage are (Denison & Mishra, 1995; Schein,2004; Madu, 2013;Zhang & Liu ,2006; Zain,Ilaska & Ghani, 2009;Akpotu, Ikechukwu & Tamunosiki-Amadi 2013;Olughor,2014; Oparanwa, 2010). On the other hand, there are some studies that criticized the submission that culture management will create competitive advantage for an organization.Such studies include Carrol (1982); Reyonds(1986);Saffold (1988);Wilderom and Berg (1998); Calori and Sarnin (1991); Koene (1996); Petty (1999);Ashkanasy (2000); Kasper (1990); Schreyogg (1991).Wilderom and Berg (1998) pointed out that the empirical studies that show the effect on organizational results by organizational culture are few. Therefore, it is hypothesized as follows:
Ho4: Culture management will not significantly affect competitive advantage for a mobile network company in the Nigerian telecommunication industry.
There are studies that have confirmed that information and communication management (ICTM) have a positive effect oon competitive adavantage ( Bhatt & Grover, 2005; Bharadway, 2000; Duh, Chow & Chen, 2006; Dehning & Stratopoulos, 2003; Fashy, 2000; Neirotti & Paolucci, 2007; Santhanam & Hartono, 2003; Zhang & Lado, 2001). There are other studies that argue that ICT management have a negative effect on competitive advantage because as they argued, ICT can be duplicated (Carr, 2003; 2005; Clemons & Row, 1991; Huang & Liu, 2005; Martinsons & Leung, 2002). There are equally other authors who claim that ICT has no effect on competitive advantage (Venkatraman & Zaheer, 1990; Warner, 1987). Based on the various divergent submissions of the different authors, it is, therefore, hypothesized as follows:
HO5: Information and communication technology management will not significantly affect the creation of competitive advantage for the mobile network providers in the Nigerian telecommunication industry.
1.6 Scope of the Study
The study dwelt on the effect of organizational factors on the competitive advantage created by the mobile network telecommunication companies in Nigeria. From the findings of this researcher,much studies have not been done in this area. This work looked at five potential sources of competitive advantage. They are :stakeholder management, knowledge management, innovation management, culture management and technology management. This study was carried in Lagos state. Lagos is the major business and economic hub of Nigeria. The headquarters of the six mobile network service providers namely; MTN, Globalcom, Airtel, Etisalat, Smile and Ntel are located in Lagos.The corporate strategic decisions on the six variables of this study are usually made in the Lagos head office. Primary data will be collected from the senior management staff of the service providers. Lagos is also home to about 30% of the mobile network subscribers in Nigeria.
1.7 Justification for the Study
Findings from the study of the effect of organizational factors on competitive advantage are of great importance to the mobile network providers in the Nigerian telecommunication industry. This is because these network providers depend on the competitive advantage they create to reduce the level of volatility of quality of service, reduce network failure, retain the loyalty of their customers and increase their market share. However, a major problem challenging the mobile network providers is to determine the organizational factors that drive their competitive advantage. The findings of this study have established the organizational factors that affect competitive advantage in the Nigerian telecommunication industry for the benefit of the network providers.
The outcome of this study is of great benefit to the industry regulators and policy makers. The industry regulator, Nigerian Communication Commission (NCC), has initiated many policy measures to solve the problem of volatility of quality of service and network failures in the industry. They have also imposed various heavy financial and operational penalties on the network operators for poor quality of service and intermittent network failures. However, these measures appear not to have solved the problem as the quality of service is still relatively poor and networks still fail. By investigating and finding the organizational factors that affect the competitive advantage of the network providers, this study has provided great tools for reframing the industry policy framework. The findings of this study have also provided an alternative policy base for reviewing the current policy framework on controlling network failures and volatility of quality of service which appear to be ineffective.
This study also has a theoretical relevance for researchers. There is paucity of research materials on issues of the effect of organizational factors on competitive advantage. A study that has done a comprehensive investigation of organizational factors that have effect on competitive advantage in the Nigerian telecommunication industry such as this would help in enriching the literature of knowledge in this area.This study would serve as a reliable reference material for future researchers.
One of the greatest beneficiaries of this study are the network service providers.By establishing the relevant organizational factors of stakeholders, knowledge, innovation, culture and technology management as sources of competitive advantage, this study has determined the critical success factors for reducing and automatically eliminating volatility of service and network failures. It now behoves on the network service providers to review their strategies towards focusing on achieving excellence in the five sources of competitive advantage in the industry.
The findings of this study are also of great relevance to the consumers of telecommunication services in Nigeria. The consumers in Nigeria have not made concerted efforts to question the quality of services delivered to them. The findings of this study have established the benchmark upon which the consumers would assess the ability of service providers to create better economic values (competitive advantage). This, they can do by assessing the network providers’ strategies and policies on stakeholders management, knowledge management, innovation management, culture management and technology management. Based on these, consumers should patronize switch to operators with appreciable measure of improvement in the creation of competitive advantage.
1.8 Operationalization of Variables
The following regression model is developed to predict competitive advantage which is the dependable variable from the five organizational factors.
Y = Competitive Advantage
Y = f (X)
Where Y = y1, y2, y3,y4 ,y5
y1 = competitive advantage
y2 = competitive advantage
y3 = competitive advantage
y4 = competitive advantage
y5 = competitive advantage
y1 = y2= y3 =y4 =y5 =competitive advantage
X = organizational factors
Where X = x1, x2, x3, x4, x5
x1 = Stakeholders Management (SM)
x2 = Knowledge Management (KM)
x3 = Innovation Management (IM)
x4 = organizational Culture Management(OCM)
x5 = Information and communication technology management (ICTM)
From the formulated hypotheses, the following functional relationships will exist between the dependable and independent variables of this study.
y1 = f (x1) ……….. Ho1
y1 = f (x2) ……….. Ho2
y1 = f (x3) ……….. Ho3
y1 = f (x4) ……….. Ho4
y1 = f (x5) ———— Ho5
This study will therefore predict the dependent variable from the independent variables
as derived from the four hypotheses above by developing the following regressional model.
Y = a0 + b1x1 + u1 (1)
Y = a0 + b2x2 + u2 (2)
Y = a0 + b3x3 + u3 (3)
Y = a0 + b4x4 + u4 (4)
Y = a0 + b5x5 + u5 (5)
Y= a0 + b1x1 + b2x2 + b3x3 + b4x4 + b5x5 + e
Where e =error term.
1.9 Operational Definition of Terms
Competitive advantage: An enterprise has a competitive advantage if it is able to create more economic value than the marginal (breakdown) competitor in its product market. The economic value created by an enterprise in the course of providing a good or service is the difference between the perceived benefits gained by the purchasers of the good and the economic cost to the enterprise.
Stakeholders: Any group or individual who can affect or affected by the achievement of the organisations objectives.
Stakeholder Management: refers to communicating, negotiating, contracting, and managing relationships with stakeholders and motivating them to behave in ways that are benefical to the organization and its stakeholders.
Knowledge: Is an awareness, understanding and familairty gained from a beaming of information, experience, skills, principles, rules, value, insight, study, investigation and observation.
Knowledge Management: Is defined as the organisatinal capability that identifies, locates (creates and acquires), transfers, converts and distributes knowledge into competitive advantage.
Innovation: refers to an attribute, a process and a result. Innovation is a process that happens somewhere in your company or in someone’s mind whose result is an insight, a new idea, product, a strategy or a new business process. One of the qualities that distinguishes the new thing is its innovativeness which refers to its distinctiveness, its originality, its usefulness and most importantly its value. To be considered an innovation in business the result must be increased value in the formof a new functionality, reduced cost, a price increase (good for the seller), a price decrease (good for the buyer)s and better margin for the seller.
Innovation Management: Is the institutional planning and control process of all transactions by persons carrying out managerial responsibilities which cover the development and implementation of company’s subjective new products and process.
Organisational Culture: Is a pattern of basic assumptions, invented, discovered or developed by a given group as it learns to cope with the problems of external adaption and internal intergration that has worked well enough to be considered valuable and therefore is to be taught to new members as the correct way to perceive, think and feel in relation to those problems.
GSM: Global System for Mobile communications originally Groupe Special Mobile is a standard technology developed by the European Telecommunications Standard Institute (ETSI) to describe the protocols for second-generation (2G) digital cellular networks used by mobile phones, first developed in Finland in July 1991.It uses a variation of time division multiple access (TDMA).It is the most used of the three digital wireless telephony technologies (TDMA, GSM and CDMA).
GSMA: Global System for Mobile Communication Association.
Tariffs: This is the price the GSM companies charge their customers for the services (telephone calls) made on their network.
Network: A GSM network is made up of three subsystem as follows: the network and switching subsystem (NSS), the base station subsystem (BSS), the operations support system (OSS).
Data: raw unanalyzed facts that are measures or attributes of phenomena which are out of context and have no relationship with other facts.
Information: is analysed and processed data which form a body of objective facts in a format suitable for decision making or which are reviewed in a context that defines relationship between two or more pieces of dat and possibly other information.
Tacit Knowledge:Is the knowledge that draws on the accumulated experience and learning of an individual and it is hard to reproduce or share with others.
Explicit Knowledge: Is knowledge that is articulated in such a way that they can be directly or completely transferred from one person to another.
CVF:refers Competing Values Framework which depicts four organizational forms; clan, adhocracy, market and hierarchy and indicates whether an organization has a predominantly internal or external focus or whether it strives for flexibility, individuality, stability or control.
Shared Values: These are a deeper level of awareness of what the organizational culture entails and includes values about what ought to be in the organization.
Core Values: are depicted as the ways in which a business is conducted
Espoused Values:Are the values which an organization states to hold, describing its future.They represent the set of values that an organization advocates to its internal or external role played either written or oral communication, regarding the kinds of behavior that its professes to behave it.
Artifacts:This is the most visible level which include everything one can see, Hear or eet when encountering a new group of people such as language, the environment, technology, the architecture or the observable rituals.
Basic Underlying Assumptions:govern the core of the organizational culture model and consist of unconscious beliefs that are taken for granted such as beliefs about the environment, human nature, organisations and peoples’s relationship to each other.
Incremental Innovations:from the internal perspective based on the knowledge and resources, it will build upon existing knowledge within a certain company, which means it will be competence, enhancing and knowledge linked.
Radical Innovation:from the internal perspective, it entails new knowledge and resource which will result into competence destroying process and from the external perspective, it will involve large technological advancements thereby rendering the existing products obsolete and non-competitive.