Strategic action in network industries: an empirical analysis of the European mobile, страница 15

As expected, we found mobile phone operators to focus on the layering and enhancement of new services when market penetration is high in order to increase the network’s vertical range of services. On the other hand, they prefer to base their strategic actions on promotion activities when concentration is low to increase the horizontal scope and to achieve large networks. Against this, phone operators engage in more cooperative moves earlier in time and in markets with greater penetration and concentration. This is the type of behavior that can be expected in mediation industries. Networks expand horizontally to increase their reach to new nodes and they expand the range of services vertically by layering new services on top of their network infrastructure. Both types of expansion may be achieved internally or through alliances. Regarding inter-firm cooperation, horizontal interconnects among firms are essential in the early stages in order to establish a viable market, whereas vertical alliances of layered services become particularly important in markets characterized by high penetration or high concentration.

In addition to the empirical analysis of strategic actions and cooperation, this paper also highlights the intimate connection between two concepts not previously connected by the literature: activities and actions. A competitive move usually represents a reconfiguration of the activities that a firm performs. For instance, the introduction of a new product requires a substantial change in the range and extent of the activities in which the firm is involved. The effective provision of Internet services for mobile phone operators, for example, requires the adaptation of services, the distribution of TCP/IP-compatible adapters to a critical mass of users, and interlayer access arrangements between mobile phone companies and internet service providers. Thus, strategic actions in the market have parallel equivalents inside the firms in the activities performed and the emphasis that these receive.

In view of this parallelism between action and activities, we would expect exchanges and overlaps between research on value configuration analysis and competitive dynamics to increase. Value-configuration analysis facilitates the categorization of competitive moves into categories that reflect meaningful types among the activities occurring inside firms, so that firm conduct, together with its effects and the constraints upon it, can be better understood. Analyzing the range and the extent of activities of firms with different value configurations in terms of their competitive moves in the market, helps to advance our understanding of the firm-market link, as this relates to an industry’s key success factors (Amit & Schoemaker, 1993).

On the other hand, actors take actions and perform activities. In each activityaction-actor set, activities are reconfigured by way of strategic actions taken in the market by specific actors. In the end, the actors—be it a single actor or a combination of several actors engagd in collaborative efforts—reflect who it is that contributes to, and appropriates the value generated by, the reconfigured activities. In the case of value chains, transaction-cost economics has provided clear answers about the circumstances that encourage vertical integration and alliances. The notion of ‘‘complementors’’ (Nalebuff & Brandenburger, 1997) has also facilitated the analysis of more complex non-sequential relationships between firms (Caplin & Nalebuff, 1997). However, we may have to adapt our current theories based on the manufacturing sector to suit industries with a different logic. It is not clear that assetspecificity plays its traditional critical role in explaining integration and collaboration between layered services, such as phone operators, Internet providers, and electronic banking. In the case of network industries, there are very strong crosslayer externality effects and common interests that may substantially mitigate certain types of opportunistic behavior. Future research should address the markethierarchy dichotomy and the nature of cooperation in the layered services provided by network industries.