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.
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........
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