Addressing the critical issues for successful international market

Transcription

Southern Cross University
ePublications@SCU
Theses
2013
Addressing the critical issues for successful
international market penetration by Malaysian
telecommunications firms
Amita Krishna
Southern Cross University
Publication details
Krishna, A 2013, 'Addressing the critical issues for successful international market penetration by Malaysian telecommunications
firms', DBA thesis, Southern Cross University, Lismore, NSW.
Copyright A Krishna 2013
ePublications@SCU is an electronic repository administered by Southern Cross University Library. Its goal is to capture and preserve the intellectual
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Addressing the Critical Issues for
Successful International Market
Penetration by Malaysian
Telecommunications Firms
By
Amita Krishna
A Thesis submitted to the Southern Cross University, Australia, in partial fulfillment
of the requirements of the Degree of Doctor of Business Administration
September 2013
DECLARATION
I certify that the material contained within this Thesis has not been previously submitted,
in whole or part, for the award of an academic degree or diploma at this or any other
institute of Higher Education. To the best of my knowledge and belief the work
presented in this Thesis is original except where due reference and acknowledgement has
been made in the text.
Amita Krishna
24 September 2013
i
ACKNOWLEDGEMENTS
This four year doctoral journey has been an arduous, however, invaluable one. There are
many who have travelled this long road with me and I would like to express my deepest
gratitude for their support and encouragement. Firstly, I am indebted to my Supervisor,
Prof. Selvanathan, who is undoubtedly the most inspiring man I have met in my life. My
MBA, nor this Doctorate would have been possible without him. His relentless support,
guidance and most of all patience is unsurpassed. Thank you so much Prof for believing
in me.
Secondly, to the staff of Unity and SCU for their assistance. A special mention to Dr
Ilham Sentosa, Cheryl Ng who helped with admin support and Dr. Michelle Wallace at
SCU who encouraged me to keep going. My special thanks to all the interview
participants, and survey respondents; particularly, Fraser Graham, Dato’ Khadar
Merican, Datuk Rebecca Sta Maria, Afzal Rahim, Vasu, Sam P, Gerald Miranda, Mike
C, Terry, Harold and Datuk Param, who assisted with contacts for interviews and
surveys. I am also most appreciative to Jasbir Chahl for always encouraging me to reach
greater heights.
Third, the numerous family members and friends who understood when I was ‘busy’. In
particular, to my family back home, Shivani, Jyoti and Kishore who were always there at
the end of the phone when I needed them. Their partners, Pradip, Shaffin and Sadhna and
the four amazing children; Shefali, Kushal, Sohini, and finally, Amar
for their
unconditional love and laughter that was much needed when things were tough.
Most of all, my appreciation goes to the one person who lived this journey with me on a
daily and nightly basis, my soulmate, Thomas Cherian. Thank You.
Finally, my late parents, Ratilal and Prabhavati Chandarana who sacrificed so much to
give us a better life. Their determination, tenacity, resilience and unconditional love have
made me the person I am today. I so wish they were here as I dedicate this thesis to them.
ii
ABSTRACT
Malaysian telecommunications firms face challenges in a competitive maturing domestic
market and are compelled to seek opportunities abroad. Accordingly, this research was
aimed at “Addressing the critical issues that impact successful international market
penetration by Malaysian telecommunications firms”.
A review of the pertinent literature led to four research questions and four research
propositions for testing through a three-stage mixed methodology. The network model
was the identified preferred model for this research. Primary data from personal
interviews are used to refine the model. This model was also tested through a Web
Survey during the second and descriptive stage. The third and confirmatory stage
involving Confirmatory Factor Analysis and Structural Equation Modelling examined the
interrelationships between the key variables.
The research findings revealed that Malaysian telecommunications firms attach
importance to internationalisation for growth and corporate sustainability. The key
success factors are effective leadership, a strategic global outlook, adequate financial and
knowledge resources as well as participation in strong external business networks.
However, they face several challenges including the dynamic market landscape, new
technologies, regulatory requirements and changing consumer demands. These compel
them to review their business models for growth and differentiation strategies to compete
in the new economy.
In line with the research objectives, the findings extended the body of knowledge on the
research topic and offered recommendations for consideration by the public authorities
and the Malaysian telecommunications firms. The findings also contributed to new
theory development as reflected by a modified network model for internationalisation.
Finally, the research offered recommendations for follow up research.
Keywords:
Malaysian
telecommunications
firms,
critical
issues,
challenges,
internationalisation, mixed methodology, personal interviews, web survey, structural
equation modelling, recommendations, network theory, new theory development
iii
LIST OF ACRONYMS AND ABBREVIATIONS
10MP
Tenth Malaysia Plan
1G
First Generation wireless telephone technology
2G
Second Generation wireless telephone technology
3G
Third Generation mobile communications
4G
Fourth Generation mobile communications
ADB
Asian Development Bank
AFTA
ASEAN Free Trade Area
APEC
Asia Pacific Economic Corporation
ARPU
Average Revenue Per User
ASEAN
Association of South East Asian Nations
ASLI
Asian Strategy & Leadership Institute
BMI
Business Monitor International
BRIC (S)
Brazil, Russia, India, China (South Africa)
CDMA
Code-Division Multiple Access
CFA
Confirmatory Factor Analysis
CMA
Communications and Multimedia Act
DOS
Department of Statistics
EPU
Economic Planning Unit
ESCAP
Economic and Social Commission for Asia and the Pacific
ETP
Economic Transformation Plan
FDI
Foreign Direct Investment
GATS
General Agreement on Trade in Services
GATT
General Agreement on Tariffs and Trade
GDP
Gross Domestic Product
GFI
Goodness of Fit Index
GNI
Gross National Income
GOM
Government of Malaysia
GSLI
Global Services Location Index (AT Kearney)
GSM
Global System for Mobile Communications
HSBB
High Speed Broadband
HSDPA
High Speed Download Packet Access
iv
ICT
Information and Communications Technology
IMF
International Monetary Fund
IMP3
Third Industrial Master Plan
INV
International New Ventures
ISDN
Integrated Services Digital Network
ISP
Internet Service Provider
IT
Information Technology
ITU
International Telecommunications Union
JV
Joint Venture
KLCC
Kuala Lumpur City Centre
KLIA
Kuala Lumpur International Airport
KLSE
Kuala Lumpur Stock Exchange
LLU
Local Loop Unbundling
LTE
Long Term Evolution
M & A’s
Mergers and Acquisitions
MASSCORP
Malaysia South South Corporation Berhad
MATRADE
Malaysian External Development Corporation
MCMC
Malaysian Communications and Multimedia Commission
MDeC
MultiMedia Development Corporation
MIDA
Malaysia Investment Development Authority
MIER
Malaysian Institute of Economic Research
MITI
Ministry of Trade and International Industry
MMS
Multimedia Messaging Service
MNC
Multinational Corporation
MNE
Multinational Enterprise
MNO
Mobile Network Operator
MSC
Multi-Media Super Corridor
MVNE
Mobile Virtual Network Enabler
MVNO
Mobile Virtual Network Operator
NEP
New Economic Policy – Malaysia
NITA
National IT Agenda
NITC
National IT Council – Malaysia
OECD
Organisation for Economic Co-operation and Development
OPP
Outline Perspective Plan
v
PEMANDU
The Performance Management and Delivery Unit
R&D
Research & Development
RAM
Ratings Agency Malaysia
RBV
Resource Based View
RMSEA
Root Mean Square Error of Approximation
SCA
Sustainable Competitive Advantage
SEM
Structural Equation Modelling
SME
Small and Medium Enterprise
SMS
Short Message Service
TMI
Telekom Malaysia International
TMT
Technology Media and Telecommunications
TRAI
Telecom Regulatory Authority of India
TRCSL
Telecommunications Regulatory Commission of Sri Lanka
UMTS
Universal Mobile Telecommunications System
UN
United Nations
UMNO
United Malay National Organisation
VoIP
Voice over Internet Protocol
WEF
World Economic Forum
WIMAX
Worldwide Interoperability for Microwave Access
WOS
Wholly Owned Subsidiary
WTO
World Trade Organisation
vi
TABLE OF CONTENTS
D ECLARATION ................................................................................................. I
A CKNOWLEDGEMENTS .................................................................................... II
A BSTRACT ....................................................................................................
III
A CROYNOMS AND A BBREVIATIONS ................................................................
IV
T ABLE OF C ONTENTS ...................................................................................
VII
L IST OF T ABLES ........................................................................................... XV
L IST OF F IGURES .......................................................................................... XX
CHAPTER 1 - INTRODUCTION .................................................................... 1
1.1 Introduction ............................................................................................. 1
1.2 Background to the Research ..................................................................... 2
1.3 The Research Problem .............................................................................. 4
1.3.1 The Research Questions ..................................................................... 5
1.3.2 The Research Objectives .................................................................... 6
1.3.3 The Research Propositions ................................................................. 6
1.3.4 The Research Hypotheses .................................................................. 7
1.3.5 Unit of Analysis ................................................................................ 7
1.4 Justification and Research Contributions .................................................. 8
1.5 Research Methodology ............................................................................. 9
1.5.1 The Research Design ......................................................................... 9
1.5.1.1 The Research Paradigm ............................................................................ 10
1.5.1.2 Dimensions of the Research ..................................................................... 10
1.5.1.3 Data Collection Instruments ..................................................................... 11
1.5.1.4 Data Analysis ............................................................................................ 12
1.5.2 Research Quality ............................................................................. 13
1.5.3 Ethical Issues .................................................................................. 13
1.6 Structure of the Thesis ........................................................................... 14
1.7 Definition of Key Terms ........................................................................ 17
1.8 Limitations and Delimitations ................................................................ 17
1.9 Chapter Summary................................................................................... 18
vii
CHAPTER 2 - THE THEORETICAL FRAMEWORK ................................. 19
2.1 Introduction ........................................................................................... 19
2.2 Globalisation and Internationalisation .................................................... 20
2.2.1 The Drivers for Internationalisation ................................................. 21
2.2.2 Internationalisation of the Telecommunications Sector .................... 24
2.2.3 Foreign Market Entry Mode ............................................................. 24
2.3 Selected Internationalisation Theories and Models .................................. 26
2.3.1 Economic Based Theories on Internationalisation ............................. 27
2.3.2 Process Based Theories on Internationalisation ................................ 29
2.3.3 The Stages and Innovation Related Models (I -Model) ..................... 33
2.3.4 Strategic Management Perspectives .................................................. 36
2.3.4.1 Resource Based View ............................................................................... 36
2.3.5 The Flagship Firm ........................................................................... 39
2.3.6 The Strategic States Model .............................................................. 40
2.3.7 The Network Model ......................................................................... 41
2.3.7.1 Justification for the Selection of the Network Model for this Research .. 45
2.4 Chapter Summary................................................................................... 46
CHAPTER 3 - THE GLOBAL TELECOMMUNICATIONS INDUSTRY .... 47
3.1 Introduction ........................................................................................... 47
3.2 Overview of the Global Telecommunications Industry ............................ 48
3.2.1 Market Structure .............................................................................. 48
3.2.1.1 Infrastructure and Equipment Suppliers ................................................... 50
3.2.1.2 Applications and Content ......................................................................... 51
3.2.1.3 Service Providers ...................................................................................... 52
3.2.2 Technological Advances .................................................................. 53
3.2.3 Regulatory Trends ........................................................................... 55
3.3 Market Changes and Industry Challenges ............................................... 58
3.3.1 Strategic Investments in a Competitive Landscape ........................... 59
3.3.2 Technology Developments ............................................................... 61
3.3.3 Changing Market Demands .............................................................. 62
3.3.4 Regulation ....................................................................................... 64
3.4 Chapter Summary................................................................................... 64
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CHAPTER 4 - THE MALAYSIAN TELECOMMUNICATIONS SECTOR . 65
4.1 Introduction ........................................................................................... 65
4.2 The Country Background ....................................................................... 66
4.2.1
The New Economic Policy ............................................................ 68
4.2.2
The Privatisation Policy ............................................................... 69
4.2.3
Malaysia – A Newly Emerging Economy ...................................... 70
4.3 The Evolution of the Malaysian Telecommunications Sector ................... 70
4.3.1 Liberalisation and Reforms: The Malaysian Telecommunications
Industry.................................................................................................... 72
4.3.1.1 Regulatory Reform ................................................................................... 75
4.4 The Malaysian Government’s Policies and Initiatives ............................. 77
4.4.1 The Current Economic and Telecommunications Landscape ............. 82
4.5 New Telecommunications Products and Services in the Malaysian
Telecommunications Industry ...................................................................... 84
4.6 The Major Malaysian Telecommunications Firms ................................... 89
4.6.1 Telekom Malaysia and TMI ............................................................. 89
4.6.2 Axiata and Celcom .......................................................................... 91
4.6.3 Time dotCom ................................................................................... 93
4.6.4 Maxis .............................................................................................. 94
4.6.5 DiGi ................................................................................................ 96
4.6.6 U mobile ......................................................................................... 96
4.7 The International Presence of Malaysian Telecommunications Firms ...... 97
4.7.1 Selected Target Regional Markets for Malaysian Telecommunications
firms ........................................................................................................ 99
4.7.1.1 India ........................................................................................................ 100
4.7.1.2 Indonesia ................................................................................................. 101
4.7.1.3 Sri Lanka ................................................................................................ 102
4.7.1.4 Singapore ................................................................................................ 103
4.8 The Malaysian Telecommunications Sector’s Competitive Strategies .... 104
4.9 Critical Factors Impacting Successful International Market Penetration 106
4.9.1 Leadership and a Global Mindset ................................................... 107
4.9.2 Global Competition and Network Externalities ............................... 109
4.9.3 Government’s Role ........................................................................ 110
4.9.4 Knowledge and Resources ............................................................. 111
ix
4.9.5 Branding ........................................................................................ 113
4.9.6 Innovation and R&D ..................................................................... 114
4.9.7 The Financial Challenges ............................................................... 116
4.10 Chapter Summary ............................................................................... 117
CHAPTER 5 - RESEARCH ISSUES AND RESEARCH QUESTIONS
DEVELOPMENT ........................................................................................ 118
5.1 Introduction ......................................................................................... 118
5.2 Research Issues, Research Questions .................................................... 119
5.2.1. Key Determinants for the Internationalisation of Malaysian
Telecommunications Firms ..................................................................... 121
5.2.2 Corporate Strategies for Successful International Market Penetration
.............................................................................................................. 123
5.2.3 Challenges faced by Internationalising Malaysian Telecommunications
Firms ..................................................................................................... 124
5.2.4 Government Support for Internationalising Malaysian
Telecommunications Firms ..................................................................... 125
5.3 Summary ............................................................................................. 126
CHAPTER 6 - RESEARCH METHODOLOGY .......................................... 127
6.1 Introduction ......................................................................................... 127
6.2 Justification for the Selected Paradigm and Research Methodology ...... 129
6.2.1 Theoretical Paradigms ................................................................... 129
6.2.1.1 The Qualitative Paradigm ....................................................................... 131
6.2.1.2 The Quantitative Paradigm ..................................................................... 132
6.2.1.3 Discussion on the Theoretical Paradigms ............................................... 133
6.2.2 Justification for the Mixed Methodology ........................................ 134
6.2.2.1 The Preferred Type of Mixed Methodology .......................................... 135
6.3 Research Design .................................................................................. 137
6.3.1 Dimensions of Research ................................................................. 137
6.3.1.1 Exploratory Research ............................................................................. 138
6.3.1.2 Descriptive Research .............................................................................. 138
6.3.1.3 Explanatory or Causal Research ............................................................. 138
6.3.1.4 Combining Research Approaches .......................................................... 138
6.3.1.5 The Outline Research Plan ..................................................................... 140
x
6.4 Methodology for Stage 1: Exploratory .................................................. 142
6.4.1 Qualitative Design and Data Collection methods ............................ 142
6.4.2 The Target Population: Composition and Selection of the Personal
Interviews .............................................................................................. 146
6.4.3 Conducting the Interviews ............................................................. 148
6.4.4 Interview Protocol and Questions ................................................... 149
6.5 Methodology for Stage 2: Descriptive .................................................. 151
6.5.1 Defining the Variables and Constructs ........................................... 151
6.5.2 The Web Survey ............................................................................ 153
6.5.2.1 Scripting Questions for the Web Survey ................................................ 154
6.5.2.2 Questionnaire Design ............................................................................. 156
6.5.2.3 The Delphi Technique ............................................................................ 159
6.5.2.4 Pilot testing the questionnaire ................................................................ 159
6.5.2.5 The Finalised Questionnaire ................................................................... 159
6.5.2.6 Sampling Design .................................................................................... 160
6.5.2.7 Sampling Methodology .......................................................................... 160
6.5.2.8 The Target Population and the Survey Sample ...................................... 162
6.5.2.9 Administration of the Web Survey ......................................................... 163
6.6 Methodology for Stage 3 : Confirmatory .............................................. 165
6.6.1 Development of the Hypotheses ..................................................... 165
6.6.2 Confirmatory Factor Analysis (CFA) ............................................. 167
6.6.3 Structural Equation Modelling (SEM) ............................................ 168
6.7 Research Quality .................................................................................. 168
6.7.1 Minimising Errors .......................................................................... 168
6.7.2 Reliability ..................................................................................... 169
6.7.3 Validity ......................................................................................... 169
6.7.4 Triangulation ................................................................................. 170
6.8 Data Analysis ....................................................................................... 170
6.8.1 Qualitative Data Analysis .............................................................. 170
6.8.2 Quantitative Data Analysis ............................................................ 171
6.9 Ethical Considerations ......................................................................... 172
6.10 Chapter Summary ............................................................................... 173
xi
CHAPTER 7 - QUALITATIVE DATA ANALYSIS .................................... 174
7.1 Introduction ......................................................................................... 174
7.1.1 Chapter Structure ........................................................................... 174
7.2 Analysis of the Primary Data: Personal Interviews ................................ 175
7.2.1 Data Analysis for Research Question 1........................................... 178
7.2.1.1 Analysis of responses to IQ 1: ................................................................ 178
7.2.1.4 Summary of Findings on Research Question 1 ...................................... 184
7.2.2.7 Summary of Findings on Question 2 ...................................................... 191
7.2.3.1 Analysis of responses to IQ 10: .............................................................. 193
7.2.3.7 Findings on Research Question 3 ........................................................... 198
7.2.4.1 Analysis of responses to IQ16: ............................................................... 200
7.2.4.4 Findings on Research Question 4 ........................................................... 202
7.3. Coding for Content Analysis ............................................................... 203
7.4. Refining the Theoretical Model ........................................................... 205
7.5 Crafting The Propositions .................................................................... 207
7.6 Chapter Summary................................................................................. 207
xii
CHAPTER 8 - DATA ANALYSIS QUANTITATIVE ................................. 208
8.1 Introduction ......................................................................................... 208
8.2 Descriptive Analysis of the Web Survey Responses .............................. 209
8.2.1 Profile and Composition of the Web Survey Respondents ............... 209
8.2.2 Statement 1: On “Positioning” ....................................................... 210
8.2.3 Statement 2: On “Capability” ......................................................... 213
8.2.4 Statement 3: On “Strategic Intent” ................................................. 217
8.2.5 Statement 4: On “Customer-Orientation” ....................................... 219
8.2.6 Analysis of the Combined Survey Responses for Proposition 1 ....... 222
8.2.7 Testing of Proposition 1 ................................................................. 224
8.2.8 Statement 5: On “Market Selection” ............................................... 225
8.2.9 Statement 6: On “Global Outlook” ................................................. 227
8.2.10 Statement 7: On “Risk” ................................................................ 230
8.2.11 Statement 8: On “Network Relationships” .................................... 234
8.2.12 Analysis of the Combined Survey Responses for Proposition 2 ..... 236
8.2.13 Testing of Proposition 2 ............................................................... 238
8.2.14 Statement 9: On “Leadership” ...................................................... 239
8.2.15 Statement 10: On “Insight” .......................................................... 241
8.2.16 Statement 11: On “Trust” ............................................................. 244
8.2.17 Statement 12: On “Knowledgeable Resources” ............................. 246
8.2.20 Statement 13: On “Government Policies” ..................................... 251
8.2.21 Statement 14: On “Government Incentives” .................................. 254
8.2.22 Statement 15: On “Government’s Role” ....................................... 257
8.2.23 Statement 16: On “Independent Regulation” ................................. 260
8.2.26 Summary of the Survey Responses ............................................... 267
8.3 Triangulation of the Findings ............................................................... 268
8.4 Reliability of the Sample Data and the Variables .................................. 271
8.4.1 Reliability of “Dynamic Market Landscape” .................................. 272
8.4.2 Reliability of “Strategy” ................................................................ 273
8.4.3 Reliability of “Challenges” ............................................................ 274
xiii
8.4.4 Reliability of “Government” .......................................................... 275
8.5 Confirmatory Factor Analysis of Propositions ...................................... 276
8.5.1 CFA on Proposition 1: “Dynamic Market Landscape” .................... 277
8.5.2 CFA on Proposition 2: “Strategy” .................................................. 278
8.5.3 CFA on Proposition 3: “Challenges” .............................................. 279
8.5.4 CFA on Proposition 4: “Government” ............................................ 280
8.6 Generated SEM Models ........................................................................ 281
8.6.1 Re-specified Model ........................................................................ 284
8.7 Chapter Summary and Conclusions ...................................................... 286
CHAPTER 9 - RESEARCH CONCLUSIONS AND IMPLICATIONS ....... 288
9.1 Introduction ......................................................................................... 288
9.2
Conclusions on the Research Propositions ....................................... 290
9.2.1
Conclusions on Research Proposition 1 ..................................... 290
9.2.2
9.2.3
9.2.4
9.2.5
Summary .................................................................................. 302
9.3
Conclusions About The Research Problem ....................................... 302
9.3.1
9.4
Summary .................................................................................. 307
Contribution and Theory Development............................................. 307
9.5 Implications for Policy and Practice ..................................................... 310
9.5.1 Implications for Policy .................................................................. 311
9.5.1.1 Recommended Policy Changes for the Successful Internationalisation of
Malaysian Telecommunications Firms ............................................................... 314
9.5.2 Implications for the Malaysian Telecommunications Firms ............. 314
9.6 Limitations .......................................................................................... 319
9.7 Implications for Further Research ........................................................ 319
9.8 Summary and Conclusions ................................................................... 320
xiv
LIST OF TABLES
Chapter 2
Table 2.1: Psychic Dispersion Zones based on cultural affinity ........................ 25
Table 2.2: Economic Based Models - Internationalisation ................................ 28
Table 2.3: Summary of the Stage Models ......................................................... 34
Chapter 3
Table 3.1: Top 10 Global Telecommunications firms performance 2011 ........... 54
Chapter 4
Table 4.1: Overview of the MyICM886 Masterplan ......................................... 80
Table 4.2: TM International Ventures .............................................................. 90
Table 4.3: Axiata Group Subsidiaries and Associates ....................................... 92
Table 4.4: Maxis Entities ................................................................................. 95
Table 4.5 Malaysian Telecommunications Players venturing overseas .............. 99
Table 4.6: The Indian Telecommunications Market ........................................ 100
Table 4.7: The Indonesian Telecommunications Market ................................. 102
Table 4.8: The Sri Lanka Telecommunications Market ................................... 103
Table 4.9: The Singapore Telecommunications Market .................................. 104
Chapter 5
Table 5.1: Identification of Research Gaps .................................................... 120
Chapter 6
Table 6.1: Comparative Research Approaches ................................................ 131
Table 6.2: Mixed Method Design Types ......................................................... 136
Table 6.3: Creswell - Mixed Method Design Types ........................................ 136
Table 6.4: Dimensions of Research Design .................................................... 137
Table 6.5: The Outline Research Plan ............................................................ 141
xv
Table 6.6: Stage 1: Steps in the qualitative research process .......................... 142
Table 6.7: Qualitative Data Collection Methods ............................................. 143
Table 6.8: Summary of Interview Types ....................................................... 145
Table 6.9: Interview Approaches Summary .................................................... 146
Table 6.10: Profile of Interview Participants .................................................. 147
Table 6.11: Interview Participants ................................................................. 148
Table 6.12: Key Discussion Points and Interview Questions .......................... 150
Table 6.13: Mapping Interview Questions to Research propositions ............... 151
Table 6.14: SEM Variables and Constructs ................................................... 152
Table 6.15: Scripting Questions for the Web Survey ...................................... 155
Table 6.16: Attitude Rating Scales ................................................................. 158
Table 6.17: Non-Probability Sampling ........................................................... 161
Table 6.18: Survey Sample Composition ....................................................... 163
Table 6.19: Survey Response Results ............................................................ 164
Table 6.20: References supporting Variables and Research Propositions ........ 166
Chapter 7
Table 7.1: Personal Interview Participants ..................................................... 176
Table 7.2: Research Questions and Related Interview Questions .................... 177
Table 7.3: Coding Process ............................................................................. 204
Chapter 8
Table 8.1: Profile of the Web Survey Respondents ......................................... 210
Table 8.2: Case Summary for Statement 1 on “Positioning” ........................... 211
Table 8.3: Cross Tabulation-Survey Responses to Statement 1: “Positioning” 212
Table 8.4: Weighted Average - Positioning .................................................... 213
Table 8.5: Case Summary for Statement 2 on “Capability” ............................. 214
Table 8.6: Cross Tabulation-Survey Responses to Statement 2: “Capability” .. 215
Table 8.7: Weighted Average – Capability ..................................................... 215
xvi
Table 8.8: Case Summary for Statement 3 on “Strategic Intent” ..................... 217
Table 8.9: Cross Tabulation-Survey Responses to Statement 3: “Strategic Intent”
..................................................................................................................... 218
Table 8.10: Weighted Average – Strategic Intent ........................................... 218
Table 8.11: Case Summary for Statement 4 on “Customer Orientation” .......... 220
Table 8.12: Cross Tabulation-Survey Responses to Statement 4: “Customer
Orientation” .................................................................................................. 221
Table 8.13: Weighted Average – Customer Orientation ................................. 222
Table 8.14: Combined Survey Responses to Proposition 1 ............................. 223
Table 8.15: Case Summary for Statement 5 on “Market Selection” ................. 225
Table 8.16: Cross Tabulation-Survey Responses to Statement 5: “Market
Selection” ..................................................................................................... 226
Table 8.17: Weighted Average – Market Selection ........................................ 227
Table 8.18: Case Summary for Statement 4 on “Global Outlook” ................... 228
Table 8.19: Cross Tabulation-Survey Responses to Statement 6: “Global
Outlook” ....................................................................................................... 229
Table 8.20: Weighted Average – Global Outlook .......................................... 229
Table 8.21: Case Summary for Statement 7 on “Risk” .................................... 231
Table 8.22: Cross Tabulation-Survey Responses to Statement 7: “Risk” ......... 232
Table 8.23: Weighted Average – Risk ........................................................... 233
Table 8.24: Case Summary for Statement 8 on “Network Relationships” ........ 234
Table 8.25: Cross Tabulation-Survey Responses to Statement 8: “Network
Relationships” ............................................................................................... 235
Table 8.26: Weighted Average – Network Relationships ................................ 235
Table 8.27: Combined Survey Responses to Proposition 2 by Group Type ..... 237
Table 8.28: Case Summary for Statement 9 on “Leadership” .......................... 239
Table 8.29: Cross Tabulation-Survey Responses to Statement 9: “Leadership”240
Table 8.30: Weighted Average – Leadership .................................................. 241
Table 8.31: Case Summary for Statement 10 on “Insight” .............................. 242
Table 8.32: Cross Tabulation-Survey Responses to Statement 10: “Insight” ... 243
Table 8.33: Weighted Average – Insight ........................................................ 243
Table 8.34: Case Summary for Statement 11 on “Trust” ................................. 244
Table 8.35: Cross Tabulation-Survey Responses to Statement 11: “Trust” ...... 245
Table 8.36: Weighted Average – Trust ........................................................... 246
xvii
Table 8.37: Case Summary for Statement 12 on “Knowledgeable Resources” . 247
Table 8.38: Cross Tabulation-Survey Responses to Statement 12:
“Knowledgeable Resources” .......................................................................... 248
Table 8.39: Weighted Average – Knowledgeable Resources .......................... 248
Table 8.41: Case Summary for Statement 13 on “Government Policies” ......... 252
Table 8.42: Cross Tabulation-Survey Responses to Statement 13: “Government
Policies” ....................................................................................................... 253
Table 8.43: Weighted Average – Government Policies ................................. 253
Table 8.44: Case Summary for Statement 14 on “Government Incentives” ..... 255
Table 8.45: Cross Tabulation-Survey Responses to Statement 14: “Government
Incentives” .................................................................................................... 256
Table 8.46: Weighted Average – Government Incentives .............................. 256
Table 8.47: Case Summary for Statement 15 on “Government’s Role” ........... 258
Table 8.48: Cross Tabulation-Survey Responses to Statement 15: “Governments Role”
......................................................................................................................... 259
Table 8.49: Weighted Average – Governments Role ..................................... 259
Table 8.50: Case Summary for Statement 16 on “Independent Regulation” .... 261
Table 8.51: Cross Tabulation-Survey Responses to Statement 16: “Independent
Regulation” ................................................................................................... 262
Table 8.52: Weighted Average – Independent Regulation ............................. 262
Table 8.54: Summary of Survey Responses .................................................... 267
Table 8.55: Triangulation of the Findings: ..................................................... 270
Table 8.56: Additional Comments provided by Web Survey Participants ........ 271
Table 8.57 Reliability Measure For “Dynamic Market Landsc ape” Variable ... 272
Table 8.58: Reliability Measure For “Strategy” Variable ................................ 273
Table 8.59: Reliability Measure For “Challenges” Variable ........................... 274
Table 8.60: Reliability Measure For “Government” Variable ......................... 275
Table 8.61: Goodness of Fit of Dynamic Market Landscape ........................... 277
Table 8.62: Goodness of Fit of Strategy ......................................................... 278
Table 8.63: Goodness of Fit of Challenges ..................................................... 279
Table 8.64: Goodness of Fit of Government ................................................... 280
Table 8.65: Summary of Goodness of Fit indices of Variables ........................ 281
xviii
Table 8.66: Summary of Variables and Constructs ......................................... 282
Table 8.67: Goodness of Fit of Generated Model ........................................... 284
Table 8.68: Goodness of Fit of Re-specified Model ........................................ 285
Chapter 9
Table 9.1: Research Proposition 1 Response Pattern ...................................... 293
Table 9.5: Summary of Research Propositions Conclusions ............................ 304
Table 9.6: Findings on Research Gaps ........................................................... 306
xix
LIST OF FIGURES
Chapter 1
Figure 1.1: Structure of Chapter One ................................................................. 1
Figure 1.2: The Research Master Plan .............................................................. 11
Figure 1.3: Thesis Chapter Structure ................................................................ 16
Chapter 2
Figure 2.1: Structure of Chapter Two ............................................................... 19
Figure 2.2: Drivers for Internationalisation ...................................................... 22
Figure 2.3: The Uppsala Model of Internationalisation, 1977 ........................... 31
Figure 2.4: The Business Network Internationalisation Process Model, 2009 .... 32
Figure 2.5: Modes of Resource Adjustment ...................................................... 38
Figure 2.6: Crucial Competitive Edge within the Strategic States Model .......... 40
Figure 2.7: Preliminary Theoretical Model ...................................................... 43
Chapter 3
Figure 3.1: Structure of Chapter 3 ................................................................... 47
Figure 3.2: Telecommunications Market Sectors .............................................. 49
Figure 3.3: Telecommunications Regulatory Objectives ................................... 57
Figure 3.4: Changing Patterns and Attendant Challenges ................................. 58
Chapter 4
Figure 4.1: Structure of Chapter Four .............................................................. 66
Figure 4.2: National Development Policies ...................................................... 68
Figure 4.3: Consolidation of the Malaysian Market 1989 – 2003 onwards ........ 75
Figure 4.4: Malaysian Initiatives Timelines ..................................................... 82
Figure 4.5: Factors impacting the successful international market penetration of
Malaysian telecommunications firms ............................................................. 107
Figure 4.6: NIP Framework .......................................................................... 115
xx
Chapter 5
Figure 5.1: Structure of Chapter Five ............................................................. 118
Chapter 6
Figure 6.1: Structure of Chapter 6 ................................................................. 128
Figure 6.2: Business Research Approach and Influencing Factors .................. 130
Figure 6.3: The Three Stage Research Approach ............................................ 139
Figure 6.4: The Web Survey Process ............................................................. 153
Figure 6.5: Likert Scale ................................................................................. 158
Chapter 7
Figure 7.1: Structure of Chapter Seven .......................................................... 175
Figure 7.2: Refined Theoretical Model .......................................................... 206
Chapter 8
Figure 8.1: Structure of Chapter Eight ........................................................... 208
Figure 8.2: Combined Responses to Statement 1 on “Positioning” .................. 213
Figure 8.3: Combined Responses to Statement 2 on “Capability” ................... 216
Figure 8.4: Combined Responses to Statement 3 on “Strategic Intent” ........... 219
Figure 8.5: Responses to Statement 4 on “Customer Orientation” ................... 222
Figure 8.6: Combined Responses to Proposition 1 .......................................... 223
Figure 8.7: Combined Responses to Proposition 1 – By Group Type .............. 224
Figure 8.8: Responses to Statement 5 on “Market Selection” ......................... 227
Figure 8.9: Responses to Statement 6 on “Global Outlook” ............................ 230
Figure 8.10: Responses to Statement 7 on “Risk” ........................................... 233
Figure 8.11: Responses to Statement 8 on “Network Relationships” ............... 236
Figure 8.12: Responses to Proposition 2 ........................................................ 237
Figure 8.13: Combined Responses to Proposition 2 – By Group Type ............ 238
Figure 8.14: Responses to Statement 9 on “Leadership” ................................. 241
Figure 8.15: Responses to Statement 10 on “Insight” ..................................... 244
Figure 8.16: Responses to Statement 11 on “Trust” ........................................ 246
xxi
Figure 8.17: Responses to Statement 12 on “Knowledgeable Resources” ........ 249
Figure 8.18: Combined Responses to Proposition 3 ........................................ 250
Figure 8.20: Responses to Statement 13 on “Government Policies” ................ 254
Figure 8.21: Responses to Statement 14 on “Government Incentives” ............ 257
Figure 8.22: Responses to Statement 15 on “Governments Role” ................... 260
Figure 8.23: Responses to Statement 16 on “Independent Regulation” ............ 263
Figure 8.24: Combined Responses to Proposition 4 ........................................ 264
Figure 8.26: CFA on Dynamic Market Landscape: Proposition 1 .................... 277
Figure 8.27: CFA on Strategy: Proposition 2 ................................................. 278
Figure 8.28: CFA on Challenges: Proposition 3 ............................................. 279
Figure 8.29: CFA on Government: Proposition 4 ........................................... 280
Figure 8.30: Generated SEM Model ............................................................... 283
Figure 8.31: Re-specified Model .................................................................... 285
Chapter 9
Figure 9.1: Structure of Chapter Nine ............................................................ 289
Figure 9.2: Relationship between the additional variables to the Network Model
generated by the SEM Model ......................................................................... 309
xxii
Chapter 1 - Introduction
1.1 Introduction
This Chapter lays the foundation for this research and provides an overview of the thesis
on “Addressing the critical issues for successful international market penetration by
Malaysian telecommunications firms”. It has nine (9) Sections as shown in Figure 1.1.
This Section provides an introduction and overview of the chapter.
Figure 1.1: Structure of Chapter One
1.1: Introduction
1.2: Background to the Research
1.3: Research Problem
1.4: Justification & Contributions
1.5: Research Methodology
1.6: Structure of the Thesis
1.7: Definition of Key Terms
1.8: Limitations & Delimitations
1.9: Chapter Summary
Source: Developed for this Research
Section 1.2 presents the background to this research. It reflects the significant roles
played by Malaysian telecommunications firms in national economic development and
the emphasis accorded to venturing abroad for sustainable long term growth.
1
Research starts with a problem which is a ‘specific restatement of a managerial problem
for the purpose of empirical investigation’ (Davis 2005, p. 48). Section 1.3 presents the
research problem, research questions, objectives, research propositions and the research
hypotheses.
Section 1.4 justifies the need for this research and outlines the contributions to
scholarship, policy and practice. Section 1.5 introduces the mixed methodology approach
that was adopted for this research. This Section also presents the research design, the
primary data collection tools, and the data analysis procedures.
Section 1.6 outlines the structure of the thesis which has nine chapters. Several key terms
are used in this research. The definitions and descriptions of the terms are outlined in
Section 1.7.
Section 1.8 addresses the limitations of this study on its scope due to time and resource
constraints and concludes with Section 1.9.
1.2 Background to the Research
The
Malaysian
Government
recognises
the
strategic
importance
of
the
telecommunications sector for the country’s social and economic development (Ure
2000). From being treated as a public good in its early stages of development, the
industry has witnessed rapid growth and transformed into an economic commodity. The
sector’s contribution to the GDP was 2.9% in 2009 and the target is to reach 10.2% by
2015 (GoM 2010). The market capitalisation of
Malaysian telecommunications
companies listed on Kuala Lumpur Stock Exchange (KLSE) more than doubled from
RM48.5 billion in 2008 to an estimated RM115 billion in 2010 (bursamalaysia.com
2011; Economic Planning Unit (EPU) 2011).
The rapid growth of the industry is in line with the National Telecommunications Policy
(NTP 1994 - 2020) which is aimed at encouraging competition to enhance efficiency in
the regulated, open and competitive telecommunications market (Ure 2000; Lee 2002;
EPU 2010). This regulatory response has led to the Malaysian telecommunications
2
market becoming one of the most advanced in the developing world (budde.com 2011;
Business Monitor International (BMI) 2011).
The Malaysian market, dominated by mobile subscriptions, achieved a 137.7% mobile
penetration rate with over 39,826 million mobile subscribers as at September 2012 as
compared to a 98.9% penetration rate with 27.7 million subscribers in 2008 (Economic
Intelligence Unit (eiu.com) 2011; Pyramid Research 2011; BMI 2012; MCMC 2012).
Malaysia had the third highest mobile penetration rate in South East Asia, after
Singapore and Thailand in 2009 (MSC 2010). However, in alignment with global trends,
the domestic fixed line segment, dominated by Telekom Malaysia (TM), declined to
3,908 million fixed lines in Q2 2012, compared to 4.37 million in 2009 (MCMC 2012).
Internationalisation is an important factor for firms to grow economically and
technologically (Ahmad & Hashim 2007). Malaysian telecommunications firms are
embarking on internationalisation strategies to reap the benefits through acquisitions and
the purchase of equity (Ahmad & Hashim 2007; Ure 2009; Curwen & Whalley 2010).
The pull factors are market liberalisation, advances in technology, increased connectivity
and interdependence among world markets which provide opportunities for expansion
(Fletcher 2001; Friedman 2005; Salazar 2007; IMF 2008). Malaysia’s participation in the
WTO agreement, which included the telecommunications sector in 1997 as well as with
the regional and bilateral free trade agreements, accelerated the pace of market
liberalisation (Jussawalla 1999; Ure 2000; Zita 2005; Sivalingam 2007).
The push factor is the limited domestic market which is characterised by increased
competition. This requires Malaysian telecommunications firms to venture abroad for
growth and corporate sustainability. Two major Malaysian mobile telecommunications
firms, namely Axiata and Maxis, now have a presence in regional markets which include
India, Indonesia, Sri Lanka, Singapore and Bangladesh. Axiata has a presence in 10
Asian countries with an estimated 212 million subscribers (Axiata 2012). Maxis has a
presence in India, where it holds a 74% stake in Aircel which is ranked number five in
India and in Indonesia where it holds 44% of PT Natrindo Telepon Seluler (NTS),
rebranded as Axis
(Oxford Business Group 2007; BMI 2011; Maxis 2012).
Significantly, the number of subscribers in their overseas market is double that of the
domestic market of Maxis. In the fixed line segment, Time dotCom completed its
3
acquisitions of three firms across South East Asia in the second quarter of 2012 and aims
to become a regional player by tapping into regional wholesale bandwidth and data
centre markets (The Business Times, 23 November, 2011; Time dotcom 2012).
However, Malaysian telecommunications firms that venture into foreign markets have to
address several attendant challenges. The strategic considerations of a firms
internationalisation process is influenced by both internal and external factors. The push
and pull factors were discussed in the earlier section. External factors include the impact
of globalisation, particularly in service industries (Oswal 2010; Wong 2012).
Furthermore, country factors, industry specific factors, target market potential and risk,
are usually beyond the control of the firms (Ekeledo & Sivakumar 2004; Laanti 2009).
Along with market selection, entry mode and timing, these include the need to have a
global strategic outlook and manage diverse cultural and competitive environments
(Ricks, Toyne & Martinez 1990; Bellin & Pham 2008); effective leadership (Curwen &
Whalley 2008; Carayol 2011); intellectual capital (Subramaniam & Youndt 2005);
keeping pace with technological advances (Krishna 2011; GoM 2012); developing
network relationships (Foster & Karin 2002; Li & Whalley 2002; Peppard & Rylander
2006; Kenny 2009; Laanti 2009); professional management structures and knowledge
(Tan 2008; Montolio & Trujillo 2012) and access to capital for branding and marketing
(MARC 2007). The situation requires Malaysian telecommunications firms to critically
review their strategies and business models for successful internationalisation and
minimise risks.
1.3 The Research Problem
‘The research process begins with problem discovery, and identifying the problem is the
first step towards its solution’ (Zikmund 2000, p. 56). The telecommunications industry
is characterised by traditional telecommunications players being challenged by
convergence and internet-focused players like Amazon, Facebook and Google (Mogg et
al. 2012). As telecommunications services become a commodity, firms face challenges
with strategic differentiation for competitive advantage (McKinsey 2012). As discussed
in Section 1.2, the resulting competitive landscape is compelling firms to seek
sustainable growth in international markets.
4
While there have been several studies on the internationalisation of telecommunications
firms (Stienstra et al. 2004; Curwen & Whalley, 2005; Gerpott & Jakopin 2007; Zita
2005; Curwen & Whalley, 2006, 2008, 2010; Salazar 2007; Kitchen & Ahmad 2008;
Jakopin 2008; Ure 2008, 2009;
Chanmongkolpanich 2009; Laanti 2009; Laanti,
McDougall & Baume 2009; Kim et al. 2009; Clifton, Daniel & Comin 2011), much of
the scholarship is focused on the developed countries and the more developed emerging
markets.
The findings of a preliminary literature review revealed research gaps in the scholarship
on Malaysian telecommunications firms that are venturing abroad. Accordingly, the
research problem for this study can be stated as:
Addressing the critical issues for successful international market penetration by
Malaysian telecommunications firms.
1.3.1 The Research Ques tions
Since research can be complicated, good research questions enable a researcher to stay
on track (Punch 1998). The research questions, developed from the literature review and
stated in Section 5.2 are:
i.
How are the dynamic changes in the global telecommunications industry
influencing the strategic choices of Malaysian telecommunication firms?
ii.
What are the appropriate corporate strategies for successful international market
penetration by Malaysian telecommunications firms?
iii.
What are the challenges that Malaysian telecommunications firms face in
international markets?
iv.
How adequate are the Malaysian Government’s policies and initiatives for
supporting the internationalisation efforts of the Malaysian telecommunications
sector?
5
1.3.2 The Research Obje ctives
As reflected by the research questions, this research had the following six objectives.
i.
To identify the dynamic changes in the global telecommunications industry that
influence the strategic choices of Malaysian telecommunications firms.
ii.
To determine the appropriate corporate strategies that are necessary for successful
international market penetration by Malaysian telecommunications firms.
iii.
To identify the challenges that Malaysian telecommunications firms face in
international markets.
iv.
To examine the adequacy of the Government’s policies and initiatives for
supporting the internationalisation efforts of Malaysian telecommunications
firms.
v.
To offer recommendations on policy and practice for addressing the critical
factors for successful international market penetration in the Malaysian context.
vi.
To extend the scholarship and provide new insights into internationalisation
theory.
1.3.3 The Research Propositions
Research propositions are concerned with relationships between concepts (Maxfield &
Babbie 2001; Zikmund 2003). They are testable and are evaluated against empirical
evidence or data (Neuman 2006). As discussed in Section 6.5.2, a web survey was used
to test the theoretical model for this research. Four propositions, based on the research
questions that emerged from the literature review, were developed for this purpose and
these are listed below.
I.
The dynamic changes in the global telecommunications industry have a strong
influence on the competitive strategies of Malaysian telecommunications firms.
6
II.
Malaysian telecommunications firms have appropriate strategies for successfully
internationalising their operations.
III.
Malaysian telecommunications firms that are internationalising their operations
face significant challenges.
IV.
The Malaysian Government is fully supportive of the efforts of Malaysian
telecommunications firms that are internationalising their operations.
1.3.4 The Research Hypotheses
Four research hypotheses were crafted to confirm the validity of the tested theoretical
model through Structural Equation Modelling (SEM) and Confirmatory Factor Analysis
(CFA) as detailed in Section 6.6.1. These are:
H1: The “Dynamic Market Landscape” influences internationalisation strategy.
H2: “Internationalisation Strategy” is influenced by the dynamic market landscape
together with the ability to overcome challenges.
H3: “Challenges” impact the successful international market penetration of Malaysian
telecommunications firms.
H4: The “Government” plays a moderating role in the international market penetration of
1.3.5 Unit of Analysis
A unit of analysis can be defined as “the primary empirical object, individual, or group
under investigation” (Davis 2005, p.175). The Malaysian telecommunications sector has
four mobile players, 12 Mobile Virtual Network Operators (MVNO’s), seven Internet
Service Providers (ISP’s) and four Worldwide Interoperability for Microwave Access
(WiMAX) players with 8 players being awarded LTE licences in 2012 (MCMC 2012). In
view of cost and resource limitations, this research focuses on a single country, Malaysia.
The unit of analysis for this study comprises the major firms that had or currently have
7
overseas operations through outward internationalisation. They are namely i) Telekom
Malaysia; (ii) Axiata iii) Maxis; and iv) Time dotCom.
1.4 Justification and Research Contributions
Malaysian telecommunications firms have to internationalise their operations in order to
grow and develop into global players. As the domestic market becomes saturated and
highly competitive, Malaysian telecommunications firms are expanding their business
opportunities in neighbouring countries to seek new external revenue sources (Ahmad &
Hashim 2007).
The business performance of Malaysian telecommunications firms operating abroad have
been varied. Axiata was reported to have missed all its headline KPI’s for 2011 and
faces challenges in an increasingly complex marketplace (Axiata 2012; The Business
Times, Malaysia, 14 May 2012). This is reflected by the comments from Axiata’s CEO,
Jamaludin Ibrahim “2012 will be a game changing year for Axiata. To meet this demand
we have begun a comprehensive and holistic approach to data looking at it from revenue
opportunities, cost structure, customer experience, organisational reforms and new
business models. Moving forward we are confident of delivering profitable growth and
driving differentiation through innovative digital services and products. The results this
quarter are certainly a step in the right direction”.
Axiata had an estimated 200 million subscribers in its overseas markets and revenues
grew to RM4.55 billion, compared with RM4.19 billion in the previous corresponding
quarter. Cumulatively, for the nine-month period, the group's profit grew seven per cent
to RM2.2 billion with total group revenues of RM13.2 billion as at Q3 2012 (Axiata
2012; The Business Times, Malaysia, 30 November 2012).
TM, the predecessor incurred major losses in the early years when it ventured into Africa
(Kitchen & Ahmad 2008). Another key industry player, Maxis which has a presence in
Indonesia and India has also been plagued with challenges in its international ventures
(BMI 2012).
8
The study on the internationalisation processes of Malaysian telecommunications firms is
significant from a number of perspectives. First, is the limited scholarship on the
challenges that Malaysian telecommunications face when venturing abroad. Second, is a
need to assess the adequacy of the Malaysian Governments’ policies and measures to
support the internationalisation efforts of Malaysian telecommunications firms. Third, to
examine the strategies adopted by Malaysian telecommunications firms to maximise their
returns from their investments in foreign market operations. Based on these
considerations, this research can be justified on the grounds that the findings could:
i) extend the existing body of knowledge on the challenges that impact on Malaysian
telecommunications firms that are venturing abroad.
ii) lead to recommendations on appropriate corporate strategies for successful
iii) offer recommendations for improving the policies and programmes of the Malaysian
Government
for
supporting
the
internationalisation
efforts
of
Malaysian
1.5 Research Methodology
Empirical research in social science proceeds in a variety of settings and contexts.
‘Within the constraints of time and other resources, there will usually be only one major
methodology which suits the research problem and associated research gaps’ (Perry
2001, p. 28). The methodology adopted for this research and its design is detailed in
Chapter 6 and outlined below.
1.5.1 The Research Design
The research design is the framework and structure for the collection and analysis of the
required data to address the research problem (Zikmund 2003; Bryman & Bell 2007). In
essence, it outlines the “plan on how the study will be conducted” (Berg, 2004, p.31).
The research was guided by a masterplan setting out the selected paradigm, the
9
dimensions of the research, the data collection instruments, the analysis procedures and
the targeted outputs. This is detailed in Section 6.3 and is outlined below.
1.5.1.1 The Research Paradigm
While there are a number of paradigms to guide research (Guba & Lincoln 1994), they
are generally grouped into two methodological approaches; inductive and deductive
(Patton 1990; Easterby-Smith, Thorpe & Lowe 1991; Parkhe 1993; McMurray 2009).
Guided by the objectives of this research, the inductive and deductive approaches were
used in a complementary manner at different phases of the research as discussed in
Section 6.2.2.1.
1.5.1.2 Dimensions of the Research
Research can be categorised into three main dimensions, namely, exploratory,
descriptive, and explanatory or causal (Neuman 2006). As detailed in Section 6.3.1, a
three-stage approach, utilising all the three types of research, was used for this study. As
shown in Figure 1.2, the first stage, exploratory and qualitative was also aimed at
identifying an appropriate theoretical model for this study (Sekaran & Bougie 2010). The
second stage and descriptive permitted the testing the identified theoretical model. The
final stage, quantitative and confirmatory in nature involved the validation of the tested
model using Confirmatory Factor Analysis (CFA) and Structural Equation Modelling
(Tabachnick & Fidell 2007; Hair et al. 2010).
10
Figure 1.2: The Research Master Plan
Stage 1
Research
Paradigm
Research
Dimension
Data Collection
Instruments
Data Analysis
Stage 2
Qualitative
Secondary
Data
Primary
Data
Interviews
E-Survey
Content
Analysis
Content
Analysis
SPSS
Delphi
Pilot
Theoretical
Model
Refined
Model
Confirmatory
Primary Data
Literature
Review
Quality
Assessment
Research
Outputs
Quantitative
Descriptive
Exploratory
Stage 3
Refined
Model
CFA
SEM
Triangulation
Final Verified
Model
1.5.1.3 Data Collection Instruments
As detailed in Sections 6.4.1 and 6.5, three data collection instruments were used. These
were (i) the literature review for the collection of secondary data (ii) personal interviews
for the collection of primary, qualitative data and (iii) a web survey for the collection of
quantitative data for the descriptive and confirmatory stages of this research.
i) The Literature Review
Secondary data was collected through a detailed review of the existing scholarship on the
background and focus theories (Philips & Pugh 1987) of this study. The former related to
international market penetration models and theories, the global telecommunications
industry and the emerging trends. The focus theories were the Malaysian
11
telecommunications sector, the pertinent Malaysian regulatory policies, the Malaysian
telecommunications sectors’ strategies and the factors which impact the successful
international market penetration of the sector.
The review identified the key research issues and an appropriate theoretical model for the
study. It also developed the research questions which served as the basis for the crafting
of research propositions. These were used to test the identified theoretical model during
the second and descriptive stage of this research.
ii) Personal Interviews
Primary data were collected through face-to-face interviews with 20 participants from
the regulatory bodies, academia, Government agencies and the telecommunications
firms. The researcher adopted a semi-structured approach to ensure a free flow of
information through dialogue (Yin 1994; Mason 2002). The analysed data from the
personal interviews permitted the refinement of the theoretical model.
iii)The Web Survey
The quantitative data for the descriptive and confirmatory stages of the research were
collected through a web survey with 205 participants as detailed in Section 6.4 A
structured questionnaire was used for ‘comparability of the data, increased speed,
accuracy of recording, and to facilitate data processing’ (Malhotra 2010, p. 335). The
Delphi technique was used to provide feedback on the draft questionnaire from eight
knowledgeable individuals who were familiar with the research issues. It was based on a
five-point Likert attitude rating scale. The questionnaire was then pilot tested by a sample
of 20 participants before it was released to the target population.
1.5.1.4 Data Analysis
Qualitative and quantitative data were collected for this mixed methodology research.
The qualitative data emerged from the literature review and the personal interviews. The
web survey generated the required quantitative data for the descriptive and confirmatory
stage of this research.
12
As detailed in Section 6.8.1, the qualitative data analysis process involved data reduction,
coding, content analysis and data display. The display enabled the researcher to draw
justifiable conclusions (Miles & Huberman 1994).
The quantitative data analysis procedures, detailed in Section 6.8.2, included checking,
editing, coding, categorising, transcribing and data cleaning. The data was keyed into
SPSS version 17.0. Descriptive statistical analysis techniques were used to calculate the
mean, standard deviations and cross tabulation of the results.
The SPSS data were subjected to Confirmatory Factor Analysis (CFA) using AMOS 20.0
SEM software.
1.5.2 Research Quality
An important element of any research is to ensure its quality, credibility and
trustworthiness (Bryman & Bell 2007). The researcher took measures to ensure the
quality of research (Flick, Kardorff & Steinke 2004) and these are detailed in Section 6.7.
1.5.3 Ethical Issues
Social and business research raises concerns about moral and ethical issues (Hussey &
Hussey 1997). Research ethics ensure that research activities do not cause harm to
participants or have any adverse consequences (Ticehurst & Veal 2000; Cooper &
Schindler 2006). As detailed in Section 6.9, the researcher took several measures to
ensure that no harm was caused to the University and the several parties involved in the
research.
This research was conducted in compliance with the National Statement on Ethical
Conduct in Human Research (2007) and was approved by the Human Research Ethics
Committee of Southern Cross University (Approval Number ECN-10-122).
13
1.6 Structure of the Thesis
The thesis adopted a unified structure with nine chapters, as shown in Figure 1.3 in line
with Easterby-Smith, Thorpe & Lowe (2002).
Chapter One introduces the research topic and lays the foundation for this research. It
presents the background to this research, the research problem, the research questions,
the research objectives, the research propositions and the research hypotheses. It then
justifies the need for the research and its contributions for scholarship, policy and
practice. It then outlines the research methodology including the data collection
instruments and the data analysis procedures. The limitations of the research are
discussed and the key terms are defined. The Chapter concludes with a presentation on
the structure of the thesis.
Chapter Two presents the background theories on international market penetration that
are pertinent to the telecommunications sector. These include the economic and process
theories; the U models of 1977 and 2009; the flagship model; the strategic states model
and the strategic management based theories.
Chapter Three examines the literature on the global telecommunications industry in
terms of market characteristics. It then discusses changing patterns and challenges
emerging from the liberalisation of the telecommunications sector.
Chapter Four commences with an overview of the Malaysian economy, the national
developmental goals and the evolution of the Malaysian telecommunications sector. It
moves on to examine the literature on the country’s telecommunications policies and the
strategies adopted by the industry players to address the challenges emerging from the
forces of globalisation. It also identifies the factors which impact the successful
international market penetration of the sector.
Chapter Five analyses the data that emerged from the literature review and identifies a
preliminary theoretical model for this research. The analysis revealed several gaps in the
existing body of knowledge and these permitted the basis for the development of four
research questions.
14
Chapter Six presents the methodology for this study which is a mixed methodology
using qualitative and quantitative approaches. It also justifies the need for a three-stage
study which amalgamates an exploratory stage, a descriptive stage and a confirmatory
stage. The data collection instruments are discussed and the data analysis procedures are
presented. The discussion concludes with the measures being taken to enhance the
quality of the research and to address ethical issues.
Chapter Seven analyses the qualitative data that emerged from the personal interviews.
The findings were then compared with the analyses of the secondary data in respect of
each of the four research questions for the purpose of refining the preliminary theoretical
model. The Chapter concludes with the crafting of the research propositions for the
testing of the refined theoretical model during the descriptive stage of the research.
Chapter Eight analyses the quantitative data generated from the web survey for the
descriptive and confirmatory stages of the research. On the basis of the findings of the
descriptive stage, the refined model is tested. The Chapter then develops the hypotheses
for the validation and confirmation of the model during the third and confirmatory stage
of the research.
Chapter Nine presents the conclusions in respect of each research proposition by linking
the data from the qualitative and quantitative stages. It then discusses the relevance of the
research problem and the implications for theory development, policy and practice.
Finally the Chapter offers suggestions for future research.
15
Figure 1.3: Thesis Chapter Structure
Chapter 1: Introduction
Chapter 2: Literature Review: The Theoretical Framework Internationationalisation
Chapter 3: Literature Review: The Global Telecommunications Industry
Chapter 4: Literature Review: Malaysian Telecommunications Sector
Chapter 5: Research Issues and Research Questions Development
Chapter 6: Research Methodology
Chapter 7: Qualitative Analaysis
Chapter 8: Quantitative Analysis
Chapter 9: Conclusions and Implications
16
1.7 Definition of Key Terms
This Section provides the definitions of some of the key terms used in this research.
Detailed descriptions of other important terms appear in various Chapters of the thesis.

Internationalisation is ‘the process by which firms increase their awareness of the
direct and indirect influence of international transactions on their future and
establish and conduct transactions with other countries’ (Beamish 1990, p. 77)

Globalisation Globalisation can be defined as ‘the flow of technology, economy,
knowledge, people, values and ideas across borders’ (Fok 2007, p.185)

Core Competence refers to “a competitively important activity that a company
performs better than other internal activities” (Thompson, Strickland & Gamble,
2005, p.101).

Generation Y refers to those people who were born in the internet era and who were
born in the period from the early 1980s to the early 2000’s (Noble, Haytko &
Phillips 2009).

Sustainable Competitive Advantage refers to situation when “a company achieves
sustainable competitive advantage when an attractive number of buyers prefer its
products or services over the offerings of competitors and when the basis for this
preference is durable.” (Thompson, Strickland & Gamble, 2005, p.7).
1.8 Limitations and Delimitations
The scope of this research had to be limited due to time and resource constraints.
Accordingly, the research focused on the four mobile players in the Malaysian
telecommunications sector. It did not emphasise on the internet service providers, the
WiMAX players and the Mobile Virtual Network Operators. The findings may not
therefore be reflective of the entire Malaysian telecommunications sector. Additionally,
the literature review was reviewed and finalised in March 2012 and updated in November
2012. Due to the dynamic nature of the sector, where possible pertinent details were
added to the review.
17
Furthermore, the researcher relied on judgemental and quota sampling for the selection of
the participants in the personal interviews and the web survey. This was necessary given
the relatively small size of the target population. Notwithstanding, the researcher
acknowledges that the recruitment process could have created an element of research
bias.
1.9 Chapter Summary
This Chapter introduced the research topic and laid the foundation for this research. It
presented the background to this research, the research problem, the research questions,
the research objectives, the research propositions and the research hypotheses. It then
justified the need for the research and its contributions for scholarship, policy and
practice. The research methodology including the data collection instruments and the
data analysis procedures were then outlined followed by a presentation on the structure
of the thesis. The key terms were defined and the Chapter concludes with a discussion on
the limitations and delimitations of the research.
The next Chapter commences the literature review with a discussion on the theoretical
framework for this research.
18
Chapter 2 - The Theoretical Framework
2.1 Introduction
The earlier Chapter introduced this research on Addressing the critical issues for
successful international market penetration by Malaysian telecommunications firms.
This Chapter reviews the pertinent literature on the research topic.
The literature review is an essential first step for driving the research (Berg 2004;
Neuman 2006). Accordingly, four chapters are devoted to the review based on the
background and the focus theories (Phillips & Pugh 1987). Chapters 2 and 3 discuss the
background
theories,
namely
the
theoretical
framework
and
the
global
telecommunications industry. Chapter 4 examines the focus theories; namely the
Malaysian telecommunications sector and the principal industry players. Chapter 5
analyses the secondary data that emerged from the literature review.
This Chapter, which sets the theoretical framework for this research has four Sections as
shown in Figure 2.1.
Figure 2.1: Structure of Chapter Two
2.1: Introduction
2.2: Globalisation & Internationalisation
2.3: Internationalisation Theories & Models
Section 2.1 introduces this Chapter. Section 2.2 examines the literature on globalisation
and internationalisation. Section 2.3 reviews the pertinent internationalisation theories
19
and models categorised as the economic and process based theories. The final Section 2.4
provides a summary of the Chapter.
2.2 Globalisation and Internationalisation
This Section begins with a discussion on international market penetration, globalisation
and internationalisation. Successful international market penetration can be considered as
being synonymous with the term “internationalisation”.
There are several definitions of internationalisation many with emphasis on the term
international operations (Beamish 1990; Johanson & Vahlne 1990; Andersen 1997;
Welsch & Luostarinen 1998; Gabrielsson & Gabrielsson 2004; Ruzzier, Hisrich &
Antoncic 2006; Hollensen 2007). However, a single definition of the term
‘internationalisation’ has yet to be agreed upon. After considering all the definitions and
taking into account the objectives of this study, the researcher adopted the description
provided by Beamish (1990, p.77) who defines Internationalisation as ‘the process by
which firms increase their awareness of the direct and indirect influence of international
transactions on their future and establish and conduct transactions with other countries’
(Beamish 1990, p. 77). This definition considers behaviourial elements of
internationalisation including learning and awareness implying relationships in
international transactions may influence a firms plans to venture into overseas markets.
This adequately reflects the scenario in the Malaysian telecommunications industry
where emphasis is placed on relationships in conducting business.
There is much new research on internationalisation. The findings suggest that an
international presence with its benefits is required for growth and sustainability (Fletcher
2001; Dunning & Lundan 2008; Booz & Company 2012). The benefits include reduced
transaction costs, economies of scale, increased revenue from foreign markets,
technological advances and the lowering or removal of the barriers of entry. The
adoption of internationalisation is most likely to be motivated by two factors; proactive
firms that internationalise because they want to and reactive firms that internationalise
because they have to as a result of market saturation, excess capacity and overproduction
(Knight & Cavusgil 2004; Filipescu 2007; Czinkota & Ronkainen 2007; Johansson,
Schorling & Strandberg 2008).
20
The terms globalisation and internationalisation are often interchangeably used.
However, authorities maintain that there are noteworthy differences between the two
concepts (Daly 1999). Walker and Fox (1996) view globalisation as different things in
different contexts. With increasing interdependence of national institutions and national
economies, economic theorists suggest that globalisation frees up capital flows (Floyd
2001). The gradual lifting of trade barriers through GATT and WTO has enabled global
geographical reach for firms. Similarly, globalisation theory is the growing
interdependence of national economics – involving consumers, producers, suppliers and
governments in different countries (Dunning 1997; Alam et al. 2010).
The globalisation phenomenon became prevalent in the 1970’s (Gjellerup 2000) and was
commonly used in the 1980’s as efficient trade and financial flows were enabled by
advances in technology (IMF 2008). As boundaries opened up, companies had to build
partnerships and relationships to compete effectively (Kanter 1995). Steger (2009)
describes globalisation as the buzzword of the ‘roaring nineties’ as interest in
globalisation intensified with many divergent views (Aharoni & Nachomi 2000; Clark &
Knowles 2003).
The role of the state and the importance of nations are significant for the
internationalisation process. The former aims to fulfill the national interest and the latter
conducts economic activities that extend beyond national boundaries. However, whilst
globalisation in its complete form eliminates the nation state, denationalisation and
economic activity are functionally integrated (Walker & Fox 1996). The impact is
discussed further in the next Section.
2.2.1 The Drivers for Internationalisat ion
The rapid convergence of the world’s economies and movement of capital flows has
resulted in the blurring of industry boundaries and an increasingly complex landscape
(Ernst & Young 2010; The World Bank 2011). These trends, which also present
opportunities, require the industry and Governments to rethink and reshape their
strategies to remain competitive in domestic and cross-border activities (Ali 2000; Asian
Productivity Organisation 2010; McKinsey 2012; PWC 2012).
39
21
Internationalisation involves firms expanding their operations into foreign markets
(Filipescu 2011). A firm’s internal capabilities, both nationally and internationally, guide
the internationalisation strategy along with the external environment (Johansson,
Schorling & Strandberg 2008). The influence and motivation for Malaysian companies
to invest abroad varies (Tham 2006; Zain & Ng 2006). According to Ragayah, (1999),
the key motivation was to expand and to find new markets for growth. There are several
factors impacting the push and pull factors including market-seeking, asset-seeking,
resource-seeking motives (Nachum & Zaheer 2005). Other market forces, include
competition, network externalities, Governments role and policies, and financial costs as
shown in Figure 2.2.
Figure 2.2: Drivers for Internationalisation
Competition


Competitors
global strategies
Interdependence
between
competitors
Cost
Markets



Customer demand
Transferable
Marketing
Global Customers
Internationalisation
Strategy


Economies of Scales
Country Specific
Difference
Government



Trade Policies
Technical
Standards
Host
Government
Policies
Source: Adapted from Yip 2003
As a consequence of globalisation and internationalisation there has been rapid growth in
global foreign direct investment (FDI) inflows has risen from US$700 billion in 2002 to
an estimated US$1.6 trillion in 2012 with forecasts of 1.8 trillion and 1.9 trillion in 2013
and 2014. However, the uncertainty in economic recovery and slowing global demand is
impacting the investment of transnational companies in overseas markets.
22
FDI in-flows in the services sector which includes telecommunications amounted to
US$668 million in the first half of 2012, a decline of 8% in the same period in 2011, as
compared to US$ 1.1 trillion in 2009 (UNCTAD 2012).
While FDI from developed countries rose by 25% in 2011 to reach 1.24 trillion, outward
FDI from developing countries declined by 4% to US4384 billion in 2011. The rapid
growth is also reflective of the policies of several countries, particularly in the
developing world to liberalise their economies and promote foreign investment in various
industries. However, the first half of 2012 witnessed an 11% decline in FDI inflows in
developing Asia reflected by weak external demand and uncertainty about high-growth
emerging markets.
ASEAN countries witnessed a sharp rise in FDI inflows from an estimated US$3 billion
in the latter part of the 1980’s to US$30b in 1996 by which time Malaysia accounted for
25% of inflows into ASEAN. Since independence, FDI has been fundamental to
Malaysia’s structural transformation. However, the Asian Financial Crisis of 1997-98,
resulted in Malaysia’s inflows contracting from US$7.2b in 1996 to US$2.7b in 1997.
The ASEAN regions decline in FDI flows was reflected by the overall global trend.
However, the pattern of FDI for Malaysia diverged from its ASEAN counterparts in 2002
and in 2007 Malaysia’s FDI outflows doubled that of its inflow. Furthermore,
Indonesia’s FDI flows and Vietnams FDI flows surpassed Malaysia in 2008 (Athukorala
& Wagle 2011; The World Bank 2011).
In 2011, Malaysia’s outflow FDI increased to US$1.5t as compared to by 13.1% to
US$1.32t in 2010 and US1.17t in 2009 (MITI 2011; UNCTAD 2012). Malaysian firms
are seeking growth in regional markets and FDI outflows are expected to increase with
US$8bn reported as at the end of the first quarter in 2012. However, it is viewed that
Malaysia is losing its competitiveness with rising costs and is caught in a middle income
trap as a result of limited innovation, capability and skills (World Bank 2011; UNCTAD
2012).
23
2.2.2 Internationalisation of the Telecommunications Sector
The significant developments in the service sector were triggered by GATS in 1992
(Javalgi et al, 2003; Laanti 2009; Wong 2012) Following the liberalisation of trade and
the increasing role of services, the service sector had to contend with global competition
(Wong 2012). This competition extended to network industries, including the
telecommunications sector. The telecommunications industry is a unique industry as it
has a ubiquitous influence on individual lifestyles and second, the sector has had to
contend with rapid transformation underpinned by technological developments,
liberalisation, intense competition and consumer behaviour (Lee, Ure & Lee 2009).
While the sector plays a significant role in the global economy, there is limited research
on the internationalisation of services and network industries like telecommunications,
particularly from the emerging economies. “Many of the theories and models developed
on internationalisation are based on empirical data on manufacturing companies” (Laanti,
McDougall & Baume 2009; Asgari, Ahmad & Gurrib 2010).
2.2.3 Foreign Market Entry Mode
Internationalisation choices involve strategic decisions including, foreign market
selection, the choice of the entry mode and the pace of internationalisation (Jones &
Coviello 2005). Additionally, internationalisation strategies involve product, operations,
market and organisation structural choices and decisions. The three key dimensions,
discussed below, are significant for the internationalisation of the firm.
41
Foreign market selection is determined by various factors including the size of the
market the industry, the home country and the affluence of the target market (Dow 2000;
Clark & Pugh 2001; Sakarya, Eckman & Hyllegard 2006). Firms initially select markets
which are “psychically close” in nature (Johanson & Vahlne 1977). Known as the
concept of psychic distance, it explains variations in firms international performance
(Evans & Mavondo 2002). The concept of psychic distance, coined by Beckerman
(1952) suggests that uncertainty is created as a result of the perceived differences
between a firms’ domestic markets and foreign markets (Childs, Rodrigues & Frynas,
2009). It describes the notion of the movement of a firm entering countries that are
24
physically close based on culture, economics, political inclinations and geographic
closeness and progressively expands into foreign markets with a greater distance
(O’Grady & Lane 1996; Lee 1998).
Psychic distance can be calculated through a psychic dispersion index based on the four
dimensions of (i) number of countries, (ii) psychic dispersion (iii) the number of
proportionate subscribers and (iv) their distribution by region. A composite index can
be drawn up by bringing together these four dimensions. The concept of “psychic
dispersion groups countries into Zones based on their cultural affinity” (Curwen &
Whalley 2008). On this basis, Ronen and Shenkar (1985) identified nine zones as shown
in Table 2.1.
Table 2.1: Psychic Dispersion Zones based on cultural affinity
Zone
Countries
Anglo
Germanic
Australia, Canada, Ireland, New Zealand, South Africa, United
States and United Kingdom
Abu-Dhabi, Bahrain, Kuwait, Oman, Saudi Arabia and United
Arab Emirates
Hong Kong, Indonesia, Malaysia, Philippines, Singapore, South
Vietnam, Taiwan and Thailand
Austria, Germany and Switzerland
Independent
Brazil, Japan, India and Israel
Latin European
France, Belgium, Italy, Portugal and Spain
Latin American
Argentina, Chile, Colombia, Mexico, Peru and Venezuela
Near Eastern
Greece, Iran and Turkey
Nordic
Denmark, Finland, Norway and Sweden
Arab
Far Eastern
Source: Ronen & Shenkar 1985
The number of Zones in which telecommunications firms have a presence in any point in
time is an indicator of the degree of internationalisation that they have achieved which is
based on the four dimensions of (i) number of countries, (ii) psychic dispersion (iii) the
number of proportionate subscribers and (iv) their distribution by region.
25
While the psychic dispersion index can be used to determine which operator is the most
internationalised, the findings of a study by Curwen and Whalley (2007) which covered
30 leading global mobile operators showed that the size of the telecommunications firm
and their global presence is poorly correlated. This is borne out by Deutsche Telekom
which is heavily dependent on its home market with no investments beyond its
neighbouring countries.
The choice of entry mode is an important decision that a firm has to make as part of its
internationalisation process. It requires the commitment of resources for market
expansion and impacts performance in international markets (Root 1994; Johansson,
Schorling & Strandberg 2008; Filipescu 2011). Entry mode choices are divided into two
categories: equity and non-equity. Equity entry modes which require a higher level of
control and direct investment include joint venture (JV), wholly owned subsidiary
(WOS) or sole ownership including greenfield, brownfield sites or acquisitions (Wild et
al. 2008). Non-equity entry modes include licensing, research and development (R&D)
contracts and strategic alliances (Andersen & Gatignon 1986).
The entry mode strategy attaches importance to the timing of entering a market as it
impacts the resources that a firm requires for internationalisation. If the firm has the
required knowledge and resources, and network externalities exist, it has the potential to
leverage from a first-mover advantage whilst minimising risks (Griffin & Pustay 2007;
Asgari, Ahmad & Gurrib 2010).
2.3 Selected Internationalisation Theories and Models
An important objective of the literature review, was to identify an appropriate theoretical
framework for this research. The internationalisation process is a complex phenomena
(Wong 2012), and the reviewed literature revealed several international frameworks and
theories that relate to this research. The pertinent theories are analysed and their
limitations are discussed in this Section with the aim of identifying the appropriate
theoretical framework for this research.
Internationalisation choices are connected to the growth strategy of a firm and the
technology it develops (Filipescu 2007). This Section explores three main
26
complementary categories of internationalisation. Benito and Welsch (1994) describe
these as economic based theories and process theories while Fletcher (2001)
differentiates
them
into
factors
causing
internationalisation,
which
include
management/organisation characteristics or external impediments of incentives, and the
process of firms’ internationalisation. Laanti (2009) stresses the importance of the link
between strategic management perspectives and internationalisation. The discussion
begins with a review of economic based theories on internationalisation.
2.3.1 Economic Based Theories on International isation
Early research on internationalisation began with international trade theories and
economics (Bhowmick 2004). Often referred to as FDI theories, economics-based
theories of internationalisation, as shown in Table 2.2, include the works of: Vernon
(1966) product life cycle theory; Hymer (1976); Buckley and Casson, inspired by Coase,
(1976) internalisation theory; Williamson’s (1973;1974) transaction-cost theory and
Dunning’s (1985) eclectic paradigm. Each of these are described below.
Building on Ricardo’s (1817) framework of comparative advantage, Vernon’s Product
Life Cycle theory accentuates, that in its early stages, product innovation initially takes
place in developed western nations due to increased consumer’s spendable income.
Production starts locally and as growth occurs and products mature, production is
relocated to low cost developing countries, resulting in the innovating country becoming
the net importer. Vernon’s theory focuses purely on US-based MNE internationalisation
and assumes that factors of production are immobile across countries and as such has
received criticism (Morgan & Katsikeas 1997; Oswal 2010).
Evolving from international trade theories, Stephen Hymer’s (1976), market imperfection
theory postulates that firms internationalise to leverage on advantages specific to their
ownership that are not shared by competitors. These advantages include economies of
scale, access to raw materials, factors of production, market imperfections and access to
capital. Although Hymer’s work was seminal in explaining foreign direct investment, it
received much criticism as it failed to distinguish between structural and transaction costs
that market imperfections made and focused on industrial organisations. It also did not
take into account the geographical and spatial dimensions of the MNE and the impact of
27
political or social issues. Kindleberger (1969) built on Hymers work and added superior
access could be a source of advantage; Caves (1971) suggested that brand is another
source of monopolistic advantage.
Buckley (1988) and Buckley and Casson (1976, 1985) explored the concept of
internalisation where firms replace the market and use internal capabilities to exploit a
firm-specific advantages (FSA’s) for forward integration, backward integration or for
knowledge. The theory acknowledges imperfections in the market preventing efficient
operation of the international market investment flows (Kalfadellis & Gray 2002).
Market imperfections include external market factors, government induced regulations or
the lack of knowledge. The superior ability of a firm to innovate and overcome market
imperfections by creating its own market and developing and exploiting firm-specific
advantages (FSA’s) can lead to enhanced performance (Nelson & Winter 1982).
The Transaction cost theory (Williamson 1973;1974) analyses the comparative costs of
planning, adapting and monitoring task completion under alternative governance
structures. Williamson (1981) argues that market relationships are more opportunistic
than hierarchical relationships within the organisation and firms tend to grow via mergers
and acquisitions. Asset specificity, uncertainty and frequency affect the type of
governance structure selected for the transaction. The risk of bounded rationality and
opportunism increases as asset-specificity and uncertainty increases (Aubert & Weber
2001).
Table 2.2: Economic Based Models - Internationalisation
Author
Year
Theory/Model
Main Features
Vernon
1966
Product Life Cycle
Theory
Hymer
Dunning
1960, Published
in 1976
1982, 1988
1976, 1985
1973; 1974;
1985;1991;1996
1985; 1988
Kindleberger
Caves
1969
1971
Market Imperfection
Theory
Internalisation
Theory
Transaction Cost
Theory
Eclectic Paradigm;
OLI model
Builds on Hymers
Theory
Comparative advantage of advanced
countries to developed countries.
Innovation as a key driver.
Advantages specific to ownership
Buckley
Buckley and Casson
Williamson
Common ownership and control of
activities - Firms FSA’S
Asset specificity, uncertainty and
frequency affect governance structure
Owner, Location and Internalisation
advantages
Superior access to capital
Brand as an advantage
Source: Williamson 1973;1974;1985;1991;1996; Buckley & Casson 1985; Dunning
1988; Roolaht 2002; Bhowmick 2004
28
Of these, Dunning's (1988) eclectic paradigm, represented in his OLI Model, highlights
that the internationalisation of a firm includes both internal and external environment
variables and three specific advantages (Bell & Young 1995; Pauwels, Lommelen &
Matthyssens 2004; Oswal 2010). Firstly, Owner specific advantages, including
knowledge capital and patents which can be transferred to other countries at a lower cost.
Secondly, Location specific advantages (host country factors, profitability of utilising
assets abroad in comparison to home country), which in certain target markets can attract
FDI and thirdly, Internalisation advantages (relational factors, utilisation of specific
assets internally). The model suggests that where location advantages favour the home
market, then exporting is the preferred entry mode, (Roolaht 2002; Asgari, Ahmad &
Gurrib 2010). Furthermore, as a result of the developments of globalisation, the model
was extended to include networks (Dunning & Lundan 2008).
These theories attempt to explain the motivations and reasons for the existence of
MNE’s. They do not take full account of the dynamic process of internationalisation, the
risk factors and the behaviour of managers (Benito & Welsch 1994). Furthermore, they
partially explain the behaviour of individual business units. They also focused on cost
measures and FDI and do not consider other operation modes (Dunning 2000 cited in
Laanti 2009). Another limitation is the exclusion of the choice of entry mode which is
critical to the internationalisation process (Kenny 2009). Due to these limitations, the
economic theories were not considered appropriate for this research.
2.3.2 Process Based Theories on International isation
Process based theories are generally based on a broad range of business perspectives and
widespread empirical research (Kenny 2009; Matthews 2010; Oswal 2010). In the last
three decades, two streams of research have emerged; European based models, mainly
from the Nordic region and US based models (Osarenkhoe 2008). The European models
include the Uppsala model (Johanson & Wiedershiem-Paul 1975; Johanson & Vahlne,
1977, 1990; Luostarinen, 1979, 1994) and the US based models are innovation-related
(Czinkota, 1982; Reid 1983; Cavusgil 1984; Bilkey & Tesar 1997). These conceptual
models describe the internationalisation process as a gradual and incremental sequential
process of a firm towards international development and foreign involvement of the
company (Bell & Young 1998). The process models postulate that firms increase their
29
international commitment incrementally as they increase their knowledge and experience
to increase ownership advantages. They have their backgrounds in Penrose’s (1959)
theory of the firm and behavioural theory. Of significance to this research are the
Uppsala Model, the Innovation Related models, the Resource Based View (RBV), and
the Network Model and these are discussed next.
Uppsala Internationalisation Model (U-Model), 1977
Much research has been undertaken on internationalisation in the Nordic countries and
these are collectively referred to as the Uppsala School. The School advocates two
primary models namely the Uppsala Internationalisation Model (U-Model) and the
Innovation Related Models (I-Model).
The Uppsala Model has been one of the most seminal models in internationalisation
business research and influential on the internationalisation of the firm (Bell & Young,
1998). Initiated by Johanson and Wiedersheim-Paul (1975) and further expanded and
refined by Johanson and Vahlne (1977, 1990), emphasised on market commitment and
market knowledge acquisition (Bell & Young 1998). It focused on how organisations
learn and how the learning experience impacts subsequent behaviour (Forsgren 2002).
The model implied that a firm’s penetration of individual foreign markets takes place in
stages. Each stage represents a higher level of international involvement. The first or start
up stage relates to a firm with an interest in a new foreign market. In the second or
growth stage, the firm starts exporting through agents. Based on the knowledge gained, it
then expands and establishes a foreign sales subsidiary. In the final or mature stage, it
builds a production facility (Johanson & Wiedersheim-Paul 1975).
In this model, internationalisation is an incremental and gradual process (Welsch &
Luostarinen 1988b). It reduces risk by entering neighbouring countries located at a
shorter psychic distance, and as market and experiential knowledge is acquired, it makes
a commitment to gradually expand into new foreign markets as discussed in Section
2.2.3 (Andersson 1993; Calof & Beamish 1995; Forsgren & Haagstrom 2007).
Johanson and Vahlne (1977) amended the model to emphasise that the outcome of one
cycle of events constitutes input into the next. As shown in Figure 2.3, the model
30
differentiates between the “state” and “change” aspects of the internationalisation
variables (Gabrielsson 2004). The “state” aspects consist of market commitment which
includes the resources committed to the market as well as the degree of commitment and
the ease of transferability of resources from one market to another (Eriksson et al. 1997).
According to Oviatt and McDougall (2005), it also includes knowledge about foreign
markets which is at the core of the traditional internationalisation process, the “change”
aspects relate to (i). Changes stemming from firms learning from the experiences gained
from their operations in foreign markets, and (ii). The commitment decisions that they
make to strengthen their position in the foreign market.
Figure 2.3: The Uppsala Model of Internationalisation, 1977
State
Change
Market knowledge
Commitment decisions
Market commitment
Current activities
Source: Johanson & Vahlne (1977)
The Modified U-Model , 2009
The Uppsala Internationalisation Model offered by Johanson and Valhne (1977) had
several weaknesses and in their subsequent authoritative work, Johanson and Vahlne
(2009, p.1) acknowledged that “much has changed since our model of the
“internationalisation process” of the firm. They highlighted that the economic and
regulatory environment have changed company behaviour. Accordingly, they agreed that
networks were important for successful internationalisation in line with Coviello and
Munro, (1997). They also agreed that relationship trust, commitment and new knowledge
created through exchanges in a firm’s network of interconnected relationships are also
important variables for successful internationalisation.
Johanson and Valhne accordingly amended the model in 2008, published in 2009, as
shown in Figure 2.4. The modified version differentiates between ‘state’ and ‘change’
aspects of the internationalisation variables. The ‘state’ aspects consist of market
31
commitment which includes the resources committed to the market as well as the degree
of commitment referring to the ease of transferability of resources from one market to
another. The ‘change’ aspects relate to i). Changes stemming from firms learning from
the experiences gained from their operations in foreign markets, and ii). The commitment
decisions that they make to strengthen their position in the foreign market.
Figure 2.4: The Business Network Internationalisation Process Model, 2009
State
Knowledge
Opportunities
Network Position
Change
Relationship
Commitment
Decisions
Learning
Creating
Trust-building
Source: Johanson & Valhne 2009
The four principal amendments to the original model are:
1. Adding recognition of “opportunities” to the original “knowledge concept”.
2. Changing the term “market commitment” to “network position” on the grounds that
the internationalisation process is pursued within a network.
3. Changing the original change label “current activities” to “learning, creating and
trust building in order to make the outcome more explicit.
4. “Relationship commitment decisions” to reinforce that the “commitment‟ relates
to a relationship and a firm may decide to increase or decrease its level of
commitment to one or more relationships in its network.
The models offered by Johanson and Valhne in 1977 and modified in 2009, were
considered as a good starting point for explaining the internationalisation processes of
Malaysian telecommunications firms; in particular the importance of business networks
for successful internationalisation in line with Coviello and Munro (1997). The modified
32
model 2009, has its strengths since it emphasises the key variables of relationship, trust,
commitment and the new knowledge that is created through exchanges in a firm’s
network of interconnected relationships. In view of these strengths, the researcher gave
serious consideration, to selecting the U model, (2009), as the appropriate theoretical
framework for this research.
However, the researcher also had to take into account, one important factor, i.e. that the
internationalisation paths of two leading Malaysian telecommunications firms, namely,
Axiata and TM, as discussed in Section 4.6.1 were the outcome of Government to
Government (G2G) relationships. It is therefore likely that the issues of trust, knowledge
and commitment to business partners, while important, were not given as much
emphasis. Based on these considerations, the U models were not considered appropriate
for the research.
2.3.3 The Stages and Inno vation Related Models (I -Model)
Originating from the work of Rogers (1962), (cited in Gankema, Snuif & Zwart 2000),
the diffusion of innovation theory (Ruzzier, Hisrich & Antoncic 2006), authorities have
subsequently offered variations of the I-Model. These models, focusing on the export
development process, view each stage of internationalisation as an innovation for the
firm. (Tan 2008). These stages are the outcomes of managers’ perceptions and beliefs
which influence foreign market involvement (Coviello & McAuley 1999).
The number of stages, as shown in Table 2.3, varies amongst the models, from three to
six (Johanson & Wiedersheim-Paul 1975; Bilkey & Tesar 1977; Wortzel & Wortzel
1981; Cavusgil 1982; Czinkota 1982; Moon & Lee, 1991; Rao & Naidu 1992; Crick
1995). Crick, (1995), suggests three generic stages: the “pre-export stage”; the “initial
export stage” and the “advanced stage”. These could also be classified as the “low stage”,
“middle stage” and the “higher stage” of export behaviour.
Johanson and Weidersheim-Paul, (1975) highlight that there are four stages for firms
entering international markets. The first stage focuses on the domestic market, followed
by direct exports through agents. Based on the progress achieved, firms establish an
overseas sales subsidiary and finally establish an overseas production centre.
33
Bilkey and Tesar (1977) viewed the evolution of firms’ internationalisation process as a
series of successive learning stages, increasing international experience of managers and
subsequent
internationalisation.
Wortzel
and
Wortzel
(1981)
examined
internationalisation in emerging economies linking technological capabilities with
marketing strategies. They identified five (5) stages of export development, distinguished
by the internalisation of various functions previously conducted by the firm’s foreign
customers (Roolaht 2002; Humphrey 2004; Kenny 2010).
Rao and Naidu (1992) organised firms into four distinct stages based on their level of
involvement in export activities. This includes non-exporters, firms who intend to export,
sporadic exporters and regular exporters. Czinkota’s (1982) model involves six stages
characterised by the interest in exporting to learning to the scale aspect of foreign sales.
Whilst Crick (1995) draws upon Czinkota’s (1982) model, he does not define specific
stages and emphasises on the difference in the stages from non-exporters, passive
exporters to active exporters.
Lim et al (1991) extended the works of Rogers (1962) and Reid’s (1981) work. Their
model takes into account the decision makers view on exporting in the stages of
awareness, interest, intention/trial, motivation and adoption.
Table 2.3: Summary of the Stage Models
Author
Year
Main Features
1975
Number
of Stages
Four
Johanson &
WiedersheimPaul
Bilkey and Tesar
1977
Six
Wortzel and
Wortzel
1981
Five
Cavusgil
1982
Five
Czinkota
1982
Six
Moon and Lee
Rao and Naidu
Crick
1991
1992
1995
Three
Four
Six
Evolution through the stages is dependent learning and
attitudes of management.
Based on emerging economies, stages distinguished by the
internalisation of various functions previously conducted by the
firm’s foreign customers.
Establishment of relationships is core to internationalisation
where commitment and experience increases.
Stages characterised by the interest in exporting based on
experience and learning.
Export behaviour involvement; low, middle, high.
Stages range from no interest to regular involvement.
Differentiates between non exporters, passive exporters and
active exporters; draws on Czinkota, 1982.
Commitment to overseas markets increases with each stage.
Source: Johanson & Wiedersheim-Paul 1975; Bilkey & Tesar 1977; Wortzel & Wortzel
1981; Cavusgil 1982; Czinkota 1982; Moon & Lee 1991; Rao & Naidu 1992; Crick 1995
34
While the stages models have received much support in that mutual commitment and
experiential knowledge supports the incremental approach (Chetty 1999; Peng 2001)
they have been challenged and criticised (Reid 1983; Bell 1995; Turnbull 1987;
McDougall & Oviatt 2000b). The main contention is that a linear and orderly move into
international markets may not always occur due to differences in market opportunities,
managerial capabilities and resource abilities. Furthermore, Clarke et al (1997) argues
that stages models, focus on the accumulation of market specific knowledge and not
general knowledge. Turnbull (1987) argues that a firms internationalisation is influenced
by its operating environment, industry specific characteristics, and its marketing strategy.
Government support also impacts the internationalisation process (Sullivan &
Bauerschmidt 1990). Some authorities contend that there is inadequate research to
support the notion that firms increase their commitment to markets through a sequence of
incremental steps as advocated by the stages theories (Buckley et al. 1970; Reid 1983;
Turnbull & Valla 1986; Bell 1995).
McDougall, Shane & Oviatt (1994) place emphasis on the growth of International New
Ventures (INVs) or ‘Born Globals’ (Oviatt & McDougall 1994) which may enter foreign
markets at inception and as such omit stages of the internationalisation process. Rennie
argues that “it is possible to succeed in world markets without an established domestic
base” (Knight & Cavusgil 2009). The variations include the timespan between the
foundation and internationalisation, the contribution of international activities to the
overall revenue, and the respective locations of international operations (Dib, Rocha &
Da Silva 2010). Globalisation, characteristics of the home and external markets, the
interdependence of national economies, technological advancements, network links,
entrepreneurial mindsets and consumer demand provide opportunities for born globals
(Baronchelli & Casia 2010).
Andersen (1993) points out that the stages models fail to delineate the movement
between the stages adequately and internationalisation patterns and approaches are not
universal (Buckley, Newbould & Thurwell 1979). This is supported by Welsch and
Luostarinen (1988, 1990) as they found that firms jumped stages and the process of
internationalisation had accelerated over time. The models fail to address the reversal of
the process where firms may reduce their commitment to a market and withdraw, the
process known as de-internationalisation. Some authorities are of the view that the
35
explanatory power of the stage models are more appropriate and applicable to the
manufacturing
industry
rather
than
the
service
industry
which
includes
telecommunications (Buckley, Pass & Prescott 1992; Chadee & Mattsson 1998).
The literature suggests (Ahmad & Hashim 2007; Asgari, Ahmad & Gurrib 2010) that the
internationalisation efforts of Malaysian telecommunications firms did not occur in
gradual and incremental stages. These firms established a presence in foreign markets, in
several cases, by taking up majority equity stakes in local telecommunications firms in
respective international markets as a result of Government relationships. Furthermore,
the technical capabilities of Malaysian telecommunications firms were in the domestic
market and their knowledge and experience in international markets was limited.
Accordingly, the stages and innovation-related models, despite their merits, were not
considered appropriate for this research.
In summary, many of the earlier
internationalisation theories are context specific and fail to take into account the
significant changes in the global and technological advances in today’s environment.
However, many of the theories remain relevant for an understanding of the
internationalisation process.
2.3.4 Strategic Management Perspectives
Viewed in the context of globalisation, internationalisation strategies are influenced by
the growth strategies of a firm. A competitive strategy is based on strategic management
principles and its sustainability is dependent on both industry and firm specific factors
(Chew 2007). The understanding of the internationalisation process can benefit from
integrating strategic management and international business theories (Laanti 2009) and
the pertinent ones are discussed next.
2.3.4.1 Resource Based View
Regulatory reforms and globalisation present a competitive landscape whereby it is
imperative for industry players to be agile and adapt to create value for sustainable
competitive advantage. The ability to optimise resources and capabilities are integral to
the formation of a value-creating strategy (Hamel & Prahalad 1994; Jamison 1998;
Zimmerman, Zimmerman & Lange 2008). Pioneered by Wernerfelt (1984) and evolved
36
further by the works of Teece (1982), Barney, (1996, 1991), Prahalad and Hamel (1990),
Rumelt (1991), and Peteraf (1993), the RBV of a firm has its origins in Penrose’s (1959)
seminal work on the growth of the firm.
The resource-based view (RBV) focuses on a firms internal environment and contends
that competitive advantage originates at the firm level rather than at the industry in which
the firms operate (Conner & Prahalad 1996). This concept views the firm as a collection
of inimitable resources and capabilities. Resources include physical resources, human
capital, organisational capital, financial resources and technological capabilities (Hofer &
Schendel 1978; Barney 1991, 1995). Capabilities are invisible knowledge based
phenomena and include skills, invisible assets and intermediate goods (Amit &
Schoemaker 1993). The ability to optimise resources and capabilities are integral to the
formation of a value-creating strategy (Hamel & Prahalad 1994; Jamison 1998; Fahy &
Smithee 1999; Zimmerman 2008).
However, Fiol (2001) argues that a firms SCA based on a single inimitable core
competency is debatable due to the dynamic business environment. Barney’s (1991)
response lies in the firm’s ability to be adaptive to the changing business environment in
itself could be a form of competitive advantage. According to Fahy (2002) resources
have a broad distinction between assets and capabilities. Assets can be tangible
(Wernerfelt 1989) or intangible (Hall 1992); capabilities can be skills, invisible assets
and intermediate goods (Amit & Schoemaker 1993).
Grant (1991) on the other hand, argues that while resources are the source of a firm’s
capabilities, capabilities are the main source of its competitive advantage. This implies
that the RBV of a firm takes into total consideration all the resources and capabilities of
the firm (Grant 1991). These resources should capture durability, transparency,
transferability and replicability and the capabilities of its management to formulate and
implement value enhancing strategies.
Intangible resources and internal innovation are key for business success (Itami 1987).
Firms are likely to use a combination of resources and capabilities in the pursuit of
sustainable competitive advantage. The RBV was extended to the Dynamic Capabilities
perspective (Teece, Pisano & Shuen 1997; Eisenhardt & Martin 2000) which are the
37
drivers behind managers’ abilities to recombine resources into new sources of
competitive advantage, particularly in situations of rapid and unpredictable change
(Henderson & Cockburn 1994; Teece et al, 1997).
Accordingly, the RBV places emphasis on the importance of the integration or
individuals’ specialised knowledge to build competencies to achieve SCA (Nelson &
Winter 1982; Tan 2008). Resources can also be externally leveraged through network
relationships as shown in Figure 2.5. Resource adjustments over time provide for
flexibility to determine the course of the firms “internationalisation” (Ahokangas 1998).
Figure 2.5: Modes of Resource Adjustment
Source: Ahokangas 1998
The model of resource adjustment has practical applications. It provides firms with the
flexibility to adopt different internationalisation strategies with different activities. These
could be firm or network orientated resource development strategies or alternatively, a
combination of internal and external resources. In this regard, the RBV is similar to the
network theory, which is discussed in Section 2.3.7, as both the available internal and
external resources as the total resources of the firm. External resources could be obtained
through network relationships (Tan 2008).
While the RBV theory has strengths, it has also received much criticism (Porter 1990,
1996; Preim & Butler 2001a, 2001b; Bromiley 2005; Kraijenbrink, Spender & Groen
2010). These authorities argue that (i) it excludes several factors that are important for
38
the successful entry of firms into new markets. These include relationships (Vahlne &
Johanson 2002), business networks (Johanson & Mattsson 1988), developing
commitments, market specific knowledge (Luo & Peng 1999) and trust (Morgan & Hunt
1994).
While extant RBV research has identified the linkage between resources and outcomes,
questions relating to how resources are used, developed and implemented within
managerial processes have yet to be answered (Barney et al 2001).
(ii) Porter (1991) has criticised the RBV for its negligence of the environment.
(ii) While the RBV postulates that firms are successful because they have unique
resources, it remains unclear on how firms can acquire and nurture the required resources
to remain successful (Truijens 2003).
Significantly, Malaysian telecommunications firms, as discussed in Section 4.6, invested
heavily in overseas markets and as such their internationalisation efforts were not driven
by the need to secure additional resources (Ahmad & Hashim 2008). Taking these
factors into account, the RBV was also not considered appropriate for this research.
2.3.5 The Flagship Firm
Emerging from the authoritative work of Rugman and D’Cruz, (2000), this refers to an
MNE that coordinates the investment and operational activity within its business network
(Curwen & Whalley 2010, p.36). It comprises suppliers, customers, non-business
infrastructure and selected customers. The suppliers provide the business network with
resources, and the customers are the intermediaries between the flagship firm and the end
user, a customer. However, from the perspective of the flagship firm, its customers are
the intermediaries.
The principal activity of the flagship firm in the business network centres on
coordination. Its ability to do so stems from its asymmetric relationships with other parts
of the business network. Such strategic asymmetry makes it possible for the flagship firm
to control the capital expenditure programme of its partners as well as to determine the
markets in which they can operate. Other forms of co-ordination relate to common
39
branding, pricing strategies, strategic investments, and targeting the same set of end
customers (Curwen & Whalley 2004).
This theory is well suited for understanding the operations, performance and strategies of
the leading global players in the telecommunications sector like Vodafone and Telenor as
it applies to MNEs. The unit of analysis for this research relates to Malaysian
telecommunications firms which are relatively small and do not have the necessary
strategic asymmetry to effectively exercise control and coordinate the activities of its
business partners. Therefore, this theory was not considered to be appropriate for this
research.
2.3.6 The Strategic States Model
Advocated by Pehrsson (2001), this model is centered on an understanding of the nature
of the firm and the factors that characterise the environment in which the firm functions.
The model has two dimensions namely market penetration and segment adaptation. The
former relates to the number of markets in which the firm has a presence. The latter is the
extent to which the firm’s products meet the specific needs of the market. According to
Pehrsson, cited in Curwen and Whalley, (2004) there are four optimum strategies that the
firm may follow. These, as shown in Figure 2.6, relate to price, distribution, relations and
responsiveness and each could be a source of the firm’s competitive advantage.
Figure 2.6: Crucial Competitive Edge within the Strategic States Model
Segmentation
Penetration
C
B
Price/Distribution
Responsiveness/
Distribution
Price/Relations
Responsiveness/
Relations
Many Segments
Few Segments
D
A
Less
Segment
Adaptation
More
Source: Pehrsson (2001) cited in Curwen & Whalley 2004
40
This model is useful for firms that are endeavoring to identify their optimum strategies
for competing in the market. As also pointed out by Curwen and Whalley (2004, p. 42) it
is well suited for determining the strategies of companies over time by “undertaking the
analysis for a company at two points in time”.
However, Malaysian telecommunications firms are relatively small in size and only a
small number of them have ventured abroad. Furthermore, they have done so only over
the past few years and their presence is confined to very few countries. For these reasons,
this model, despite its merits, was considered to be less appropriate for this study.
2.3.7 The Network Model
The network approach proposes a more recent behaviourial approach to the
internationalisation of a firm (Blomqvist et al 2008). Extended from the Uppsala Model
by Johanson and Vahlne (1990), the network approach incorporates investments (Tan
2008). It offers a complimentary view to FDI and other theories, Granovetter, (1985)
cited in Kenny (2009) which are decreasing in prominence as a result of the changing
global business environment. Much of the research on network theory is developed from
industrial networks.
It postulates that firms are engaged in a complex web of interdependent relationships.
Network structure is determined by interrelated and interdependent actors, activities and
resources (Hakansson 1987). Actors are bound through various resources and activity
links and are in control of resources, perform activities, develop relationships through
exchange process and aim to increase their control over the network (Hakansson &
Johanson 1992). The focus of the network model is that an individual firm is dependent
on skills and resources from another firm, and firms are motivated to engage and
establish partners in their networks to gain access to required resources through exchange
relationships. Resources could be technical, financial and distributional and have to be
invested as an incentive for companies to enter into exchange relationships (Whalley
2001, p. 9). Coordination is essential because of various dependency relationships
between the activities (Hakansson & Johanson 1992).
41
The success of a firm in entering new markets is dependent on its position in the network
as it characterises its relationships with other firms (Laine & Kock 2000; Smith-Doerr &
Powell 2003). It stresses that the internationalisation process is not based on the focal
firm alone, it relies on the external environment and networks and relationships which
evolve over time to build trust resulting in market opportunities to internationalise
(Turnbull & Valla 1986; Johanson & Mattsson 1988; Johanson & Vahlne 1990; Bell &
Young 1998). The appropriateness of this model for this research is discussed further in
Section 2.3.7.1.
It has two main dimensions, first, the degree of internationalisation of the firm and
second, the degree of internationalisation of the market. There are four different types of
firms within these dimensions; the “early starter”, the “lone international”, the “late
starter” and the “international among others”. The first two types of firms follow the
traditional internationalisation model. The other two relate to firms who are already
doing business in the international environment and are therefore able to internationalise
more rapidly by being able to utilise international networks (Johnson & Mattson 1988).
However, Asgari, Ahmad and Gurrib (2010), postulate that firms are also influenced by
varying operational environmental settings and do not have a fixed pattern of
internationalisation. These factors include both internal and external factors (Choo &
Mazzarol 2001; Ekeledo & Sivakumar 1998, 2004; Koch 2001a; Quer, Claver & Andreu
2007); Internal factors include firm specific resources, strategic considerations,
ownership advantage factors, foreign business experience and networking capability
(Ahmad & Kitchen 2008; Ekeledo & Sivakumar 1998, 2004; Koch 2001a). External
factors, such as country factors, industry factors, target market potential and risk, are
usually beyond the control of the firms (Ekeledo & Sivakumar 1998, 2004; Koch 2001a).
Accordingly, as shown in Figure 2.7, establishment in a foreign market, considers several
environmental factors as outlined by Asgari, Ahmad and Gurrib (2010). Furthermore,
involving a new network to the firm, could entail international extension which involves
establishments of positions in relation to counterparts new to the firm, penetration by
leveraging on current positions and increasing resources, or international integration,
coordination of networks (Johanson & Mattsson 1988).
42
Figure 2.7: Preliminary Theoretical Model
Strategic
Considerations
Industry
Characteristics
Domestic
Operators
Internal Factors
INTERNATIONAL
EXTENSION
Extension of exchange
relationships to include
foreign markets
INTERNATIONAL
PENETRATION
Developing positions and
increasing resource
commitments to existing
networks for market
penetration
International
Operators
INTERNATIONAL
INTEGRATION
Host/Home Country
Integration of networks that
the company is a member of
in different locations
Source: Adapted from Johanson & Mattsson 1988; Ahmad, Asgari, Ahmad and Gurrib
(2010)
Whalley, (2001), viewed integration as the most useful of the three methods, on the
grounds that it was a more “appropriate descriptor of collaborative behaviour’ (Whalley
2001, p.18). Furthermore, the likely outcomes emerging from network integration are
consolidation involving small highly internationalised players. Firms could also use the
financial strengths, to integrate their existing positions in different networks, as
manifested by Telenor, increasing its shares in its Malaysian operations.
There are various factors which influence network selection as part of the
internationalisation process. These include a firm’s market entry mode as well as the
choice of foreign markets including customers. In addition to this, network members
influence decisions and activities in the network approach (Coviello & Munro 1997;
Coviello & McAuley 1999; Andersen & Buvik 2002).
Social interaction and personal contacts can play an important role in establishing
networks in international markets and firms enter into
ventures in situations
strategic alliances or joint
where there is an initial lack of knowledge and where
complementary skills are sought (Johanson & Mattsson 1988; Welsch & Luostarinen
43
1988b). There are several factors which are critical to ensure the effective use of the
network model and these are:
First, liberalisation and regulatory reforms in the sector, accelerated by the WTO
Telecommunications Agreement, have spurred internationalisation. The regulatory
framework presents an increasingly competitive landscape in which foreign market entry
is reliant on access to networks and subsequent approval by Governments. The
internationalisation process must take into consideration Government relationships and
trade agreements (Zita 2005; Salazar 2007; Alam et al. 2010).
Second, motivated by growth and economic gains, foreign market selection is critical for
successful internationalisation. In addition to market knowledge and familiarity,
marketing strategies need to take onto account a firm’s specific advantages in the choice
of entry mode (Driscoll 1995). In the case of telecommunications firms, market entry and
successful penetration is dependent on the selected network partner.
Third,
telecommunications
firms
require
significant
investments
in
physical
infrastructure which are challenging to transfer, and often controlled by the host
country. This results in them entering new markets through equity and non-equity modes
with
network
partners.
Network
participation
involves
interconnection
and
interoperability. Although utilising networks, decreases some of the risks involved when
entering new markets,
telecommunications firms still require adequate financial
resources to invest in R&D, resources and marketing to innovate and internationalise
(Bain & Company 2010; Deloitte 2010).
Fourth, services which appeal to global customers provide opportunities for
telecommunications firms to internationalise more rapidly. Consequently, network
externalities can be leveraged through an expanded customer base built through effective
and trusting network relationships.
The fifth relates to rapid technological advances and developments including
convergence challenges and new product developments. Access to markets as well as
products can be optimised through networks (Ahokangas 1998; Andersson & Wictor
2003).
44
Finally as discussed earlier, leadership and entrepreneurial mindsets are critical for
internationalisation through networks which are dependent on relationships and trust.
Networks also provide opportunities for learning and access to local resources (Nummela
et al. 2004).
2.3.7.1 Justification for the Selection of the Network Model for this
Research
The discussion in earlier sections set out the strengths and weaknesses of the reviewed
theories and models that attempt to explain the dynamic processes of internationalisation,
Guided by the objectives of this research, the network model was considered to be
appropriate for this study for the following reasons.
First, networks are an important factor for internationalising telecommunications firms as
foreign market penetration requires regulatory compliance. This involves obtaining
licences, spectrum or buying bandwidth from network operators in the location country.
Access to financial, technical, knowledge and cultural local support can be exploited
through networks to accelerate foreign market entry and minimise risk (Freeman &
McVea 2001).
Second, Asian businesses emphasise on inter-relationships and cooperative business
networks for their expansion processes to Asian and African countries (Ahmad &
Hashim 2008). Viewed from this perspective, the network theory has relevance for the
internationalisation of Malaysian telecommunications firms.
Third, the internationalisation expansion of Malaysian telecommunications firms which
commenced with TM, a Malaysian Government linked company, in the mid 1990’s was
into countries in which Malaysia had strong bi-lateral ties through South-South economic
links
(Ahmad
&
Hashim
2007).
Through
the
use
of
business
networks,
telecommunications firms entered into joint ventures with host Governments and local
partners in the host country. As discussed in Section 4.6.1, TM’s international expansion
was facilitated by its business networks with foreign partners. The firms
internationalisation process could not be considered to have been incremental in process
and stages.
45
Taking these factors into account, the network theory was considered to be appropriate
for this study. Furthermore, the above critique of theories thus justifies the selection of
network theory as a 'best fit' model for analysis in this case.
2.4 Chapter Summary
The discussion in this Chapter was aimed at setting the theoretical foundation for this
research.
It
reviewed
the
drivers
for
internationalisation;
examined
the
internationalisation indicators and outlined pertinent theories and models. These were the
economic based theories, the process based theories, the resource based view, the
flagship firm, strategic states model and the network model. The review of the pertinent
theories revealed that Internationalisation is a complex process and that no universal
theory explains the process. Based on key considerations, the preferred theoretical
framework for this study was based on the network model. The next Chapter examines
the global trends in telecommunications.
46
Chapter 3 - The Global Telecommunications
Industry
3.1 Introduction
The earlier Chapter discussed the theoretical framework for this research. This Chapter
reviews the pertinent literature on the background theory relating to the global
telecommunications industry. It has five sections.
Section 3.1 introduces the Chapter and is followed by Section 3.2 which provides an
overview of the global telecommunications industry. Section 3.3 discusses the changing
patterns and the challenges emerging from the increasingly competitive environment
generated by the forces of globalisation. Section 3.4 examines regulatory trends in the
global telecommunications industry with the final Section 3.5 presenting the summary of
the Chapter.
Figure 3.1: Structure of Chapter 3
3.1: Introduction
3.2: The Global Telecommunications Industry
3.3: Market Changes and Industry Challenges
3.4: Regulatory Trends
47
3.2 Overview of the Global Telecommunications Industry
The global telecommunications industry was once country-centred, regulated and
monopolised by Governments, the industry has witnessed dramatic changes due to rapid
revenue growth, changes in market structure, technological advances and regulatory
practices (Curwen & Whalley 2008; IBM 2010; Kagan 2010; Ernst & Young 2012;
McKinsey 2012) and these are discussed next.
3.2.1 Market Structure
During its early stages of development, most countries treated the telecommunications
industry as a public good (Leff 1984; Pennings, Vankranenburg & Hagedoorn 2005). The
situation has since changed; triggered by the forces of globalisation, regulatory
developments, technology advancements and consumer demand. Consequently, the
industry is now characterised by intense competition and industry players are reviewing
their positions and participation in the value network (Bain & Company 2010; ITU 2011;
McKinsey 2012).
Another factor is market liberalisation; fuelled by the WTO. The consequential easing of
the barriers of entry (Porter 1995) led to telecommunications firms in developed
countries penetrating international markets. This has changed the telecommunications
landscape (Contractor & Lorange 2002; Accenture 2010; Deloitte; 2012; McKinsey
2012).
The transition of analogue to digital technologies, along with convergence and
integration of information and media, including the internet, broadband, mobile and
wireless communications, have challenged the traditional telecommunications business
model. The shift from traditional services to next generation networks, wireless, Voice
over Internet Protocol (VOIP), media and social networking has led to the rapid adoption
of mobile communications in developing countries. This medium is creating new
business imperatives for telecommunications providers (Jamison 2001; Bain & Company
2010; BMI 2012).
48
The acceleration of digitisation is an economic driver for growth and is leading to
commoditisation of telecommunications services. Firms face challenges with operational
efficiency and achieving sustainable growth (Booz 2012). With ongoing economic
market uncertainty, firms are shifting from integrated to open business models to
leverage on opportunities in the marketplace and digitisation can play an important role
in assisting policymakers to spur economic growth and employment. The trends and
forces are blurring the ecosystem and industry players are reviewing their positions and
participation in the value network ((IBM 2011). This challenge implies that
telecommunications firms have to shift their focus from technology to the customers
(Roland Berger, 2012, p.14). They have to give more emphasis to the usage and the users
of new technologies - segmented by education, income, age and gender – that now
emphasise the shift from voice to data traffic.
Currently there is an array of sectors and players in the telecommunications industry as
shown in Figure 3.2 and the pertinent ones are described below.
Figure 3.2: Telecommunications Market Sectors
Infrastructure
Equipment
Suppliers
Telecommunications
Business and
Consumers
Applications
& Content
Service
Providers:
Voice and
Data
Wireless
Wireline
49
The ITU (2012) reports that the mobile sector is leading the way with an estimated 6
billion subscriptions worldwide. Consumer demand for data has spurred 3G growth
which reached an estimated 1.5 million subscribers in 2012 (mobithinking.com 2012).
Much of this demand is from Asia which accounts for over 50% of global mobile
subscriptions with China and India accounting for majority of growth.
Customer needs and expectations for data services is driving technology developments.
The growth of mobile devices and connectivity has fuelled the evolution of the wireless
sector which is predicted to be the fastest growth sector expected to reach $796.2 billion
by 2013 (Kagan 2011). However, the fixed, wireline segment on a downward trend,
declined from 1.27 billion at the end of 2008 to below 1.2 billion in 2010 (Datamonitor
2010; ITU 2010; Plunkett Research 2010). Access to these services is underpinned by the
infrastructure which is discussed next.
3.2.1.1 Infrastructure and Equipment Suppliers
Network infrastructure provides the backbone, transmission capacity and supports
network services and access for operators. Traditionally viewed as core to the telco
industry, the dynamic market landscape and driving forces are transforming the sector as
operators review their business models and positions in the broader networked economy.
While the transition to next generation networks, including, IP, web-based infrastructure
and fibre to the home to meet communication needs across multiple channels presents
opportunities, operators remain vulnerable to sustain competitive advantage in the
dynamic landscape. These challenges are forcing operators to review how they can
combine their strategic assets and customer relationships and leverage their positions in
the network value chain (Accenture 2010; IBM 2011; Deloitte 2012).
To enhance competitive advantage, several models are emerging in the new economy.
These include firms outsourcing their network assets and operations to free cashflow.
Additionally many are entering into network sharing arrangements to reduce cost and
manage capacity as well as forming partnerships with leading media and internet firms.
Operators are also splitting their wholesale and retail businesses (Alcatel-Lucent 2012;
Roland Berger 2012). The major challenge remains achieving growth to meet consumer
50
demand as convergence increases, whilst maintaining low cost structures (CIMI 2011;
Alcatel-Lucent 2012).
Equipment suppliers meet telecommunications infrastructure needs as well as devices
(Arthur D. Little 2011). The devices sector is experiencing steady growth. There are
three times as many phones in the world today as there are personal computers (CCS
Insight 2010). Growth is fuelled by smartphones which witnessed an increase of 63.1%
increase in sales from 304 million in 2010 to 491 million in 2011 and reached over a
billion as at Q3 2012 (IDC 2011; mobithinking.com 2012). Deloitte (2011), estimate that
the $100 smartphone reached its first half billion in 2011. As consumers engage in a
mobile lifestyle, the sector has also witnessed an increase in tablet computers which grew
from 10 million sales in 2010 to an estimated 50 million in 2011 (Ortega 2011).
Due to competitive pressures and changing regulatory requirements suppliers are
increasingly adopting innovative business models to achieve network efficiencies and
fixed line infrastructure remains challenged by regulatory policy (Arthur D. Little 2011).
Due to recessionary conditions in 2003 the market valuations of leading industry players
plunged as borne out by Ericsson from US$115 billion to US$11 billion and Nortel from
US$136 billion to US$8 billion in March 2003 (Curwen & Whalley 2010). This led to
restructuring and consolidation through mergers and acquisitions.
Currently, Vodafone is a global market leader in respect of mobile networks. In respect
of GSM the leaders are Ericsson and NSN. As regards to CDMA Motorola, Nortel and
Chinese vendors Huawei and ZTE are the market leaders (Curwen & Whalley 2010).
3.2.1.2 Applications and Content
The web has presented opportunities for both the business and personal market segments.
This has made possible the usage of applications which capture valuable customer
information, enabling firms to gain insights to create customer advocacy. These services
include banking and microfinance firms like m-pesa in Africa reaching the unbanked in
rural communities. This is reflected by over 364 million low income people using mobile
financial services in 2012 (ITU 2012). There were an estimated one million applications
available in the market as at December 2011 compared to over 300,000 in December
51
2010 (IDC 2011; Deloitte 2010).
IDC (2011) forecasts an estimated 77 million
downloads in 2014 worth US$35 billion However, only 20% are downloaded and often
abandoned after being used a few times. It is anticipated that the prices of mobile
applications are likely to fall as mobile devices are enhanced with preloaded applications
(The Distimo report (2011) cited in mobithinking 2011). With content initially being
offered free, content players struggle to monetise content and manage piracy issues.
While social networks continue to attract consumers, they struggle to deliver revenues as
reflected by the Facebook IPO and its subsequent share price plunging to half its original
levels in 2012 (Bloomberg 2012). Both Facebook and Twitter are considering charging
users for specific services.
However, mobile applications services are being extended to several industry sectors
including agriculture, health, and Government. To deliver customer value, industry
players need to innovate and review business models to go beyond digitising content and
leverage on media platforms available as they face pressures to deliver high speed
connectivity (ITU 2011; Capgemini 2011).
3.2.1.3 Service Providers
Telecommunications services include both voice and data over mobile and fixed lines.
While the internet remains a major force in today’s business and social environment, it is
the mobile and wireless sector which is leading the way. Worldwide mobile subscriptions
reached an estimated 6 billion in 2012, equivalent to nearly 85% of the world’s
population, compared to 1.41 billion in 2003. China and India alone accounted for 30%
of subscriptions in 2011 (ITU 2012). The forecast is for 7.3 billion mobile connections
by 2015 Revenue from mobile data contributed as much as 25% to overall global mobile
revenue in 2010 (Ovum 2010; ITU 2011).
With mobile broadband demand increasing, there were an estimated 1.2 billion active
mobile broadband subscribers in 2011 compared to an estimated 870 million in 2010
(ITU 2011, 2012). Cloud computing continues to grow and services will be promoted
through network appliances (CIMI Corp 2012). The ITU (2010-2011) Trends in
Telecommunications, contends that “Broadband is no longer a luxury, it is a necessity
52
that will be crucial to every country’s economic, political and social growth”. Rise in
smart devices is also set to spur mobile broadband growth.
Initially used for social purposes, the landscape for social media is evolving as more
businesses are embracing these channels to reach out to consumers (Ventana Research,
2010). With the shift in social communication patterns, social networking sites like
Facebook are estimated to have a billion subscribers as at the end of 2012
(socialmediatoday.com 2012). Twitter, with an estimated 250 million active users has
900 million registered profiles. Additionally, advertising, mobile payments and eGovernment services are on the increase (Deloitte 2012).
3.2.2 Technological Advances
Ure, (2009, p.6) contextualised five technological trends that are milestones in the
telecommunications sector.

From analogue to digital

From telecom protocol (standard and proprietary) to internet protocol (IP)

From Narrowband to Broadband

From wireline to wireless (including cellular, mobile, microwave including
WiMAX).

From Broadband (BIT Rates from domestic users 144kbs upwards) to high speed
Broadband (bit rates for domestic users up to 100mbs and 1GBs) for wired
networks and 3G for wireless networks
Due to the convergence of telecommunications and media, the telecommunications
industry is often classified as part of the information, communications and technology
(ICT) or technology, media and telecommunications sectors (TMT), (AT Kearney 2010;
Deloitte 2010). The evolution of technology including the transition of analogue to
digital technologies, and consumer behaviour has led to the innovation of new mobile
services. Technological advances have resulted in demand for narrowband to broadband
and a surge in the use of IP (ITU 2011).
53
The worldwide telecommunications industry accounted for and estimated 3% of global
GDP, with revenues of $2.1 trillion in 2012 (Ovum 2012) as compared to $3.10 in 2010
(TIA 2010). Worldwide telecommunications revenues are predicted to grow to over $5.1
trillion in 2016 of which carrier revenue alone is predicted to grow from $1.9 trillion in
2010 to nearly $5 trillion in 2015. Much of this growth is fuelled by the emerging
markets, particularly mobile, of Asia Pacific, Middle East, Africa and the BRIC
economies (Budde.com 2010; Insight Research 2011).
However, fixed telephony has been on the decline since 2005 due to the rapid growth of
mobile telephony which has reached saturation levels and recorded penetration rates of
over 100% in the developed countries. In the developing countries, mobile subscriptions
are growing at 20% annually with no signs of a slowdown (ITU 2011). Technology
advances are spurring Broadband and wireless growth. The top ten global
telecommunications firms in 2011 are shown in Table 3.1
Table 3.1: Top 10 Global Telecommunications firms performance 2011
Rank
Company
No of
by
Subscribers
Subscribers 2011
Millions
Company
by
Revenue –
October
2011
Total
Revenues
in Euros
(m)
Company
by Brand
Value
1
China Mobile
AT & T
92,733
China Mobile
2
SingTel
87,719
Vodafone
3
79,515
Telefonica
Deutsche
Telekom
Telefonica
62,421
ufone
5
Vodafone
Group
America
Movil
Telefonica
NTT Do Co
Mo
Verizon
60,737
AT &T
6
Bharti Airtel
54,928
Telenor
7
51,926
TeliaSonera
8
Orange
France
Telenor
China
Mobile
Vodafone
45,503
9
Vimpelcom
10
China
Unicom
France
Telecom
America
Movil
KDDI
Deutsche
Telekom
China
Unicom
France
Telecom
4
649,568
December
433,569
December
381.72
December
236
December
231
September
227.04
September
217.3
June
203
September
193
June
192.38
October
36,746
29,236
Source: risedream.com 2011; Totaltelecom 2011; reuters.com 2011
54
With increased global connectivity, the industry is increasingly been viewed as a critical
factor for socio-economic advancement (Markova 2008; World Economic Forum 2009).
The top ten operators generated a net income of Euro 77 billion in 2011. However,
telecommunications operators now face the challenges of growth, convergence, business
transformation, change in communication patterns, along with technology and regulatory
modifications (Ernst & Young 2010).
3.2.3 Regulatory Trends
The principles of privatisation, competition and liberalisation have characterised the ICT
sector over the past two decades. There has been a shift away from the public funding
ICT infrastructure towards private sector funding and participation through PublicPrivate Partnerships (PPP).
Triggered by the Uruguay Round (1986-94), commitments were made in value-added
services. Deregulation, triggered by the WTO, a key actor for the telecommunications
industry, commenced in the USA with the Telecommunications Act of 1996. The Basic
Telecommunications Agreement was negotiated by WTO members in 1997.
The
agreements promotes liberalisation, market access, competition and price reductions for
consumers. Deregulation was followed by reforms in Western Europe in 1998, and by
Japan, Australia, New Zealand, (Li & Whalley 2002; Sanchez & Hwa 2003; Laanti 2009;
Alam et. Al. 2010; McKinsey 2010). Ownership has now shifted from the public to the
private sector and over the period 1984 and 1996, privatised assets rose to an estimated
$160 billion largely in Asia Pacific region and Western Europe (Economides 1999).
Market-based approaches characterised by intense competition as emerging new entrants
has
resulted
in
decreasing
prices
for
customers
and
lower
revenues
for
telecommunications firms. In parallel, the successful transformation of monopolistic
markets into competitive ones required the need for increased regulation and industry
oversight. As such, the number of ICT regulatory agencies worldwide has increased from
14 regulatory agencies in 1990 to 153 in 2009 (ITU 2010).
The regulatory framework at the global level is the International Telecommunications
Union (ITU) which develops policy guidelines, best practices and globally agreed
55
technical standards to support Governments and the industry. Committed to bridging the
digital divide via ICT development, it has developed a Universal framework for global
communications. The ITU also supports the industry through reports on industry trends,
events, conferences and publications (ITU 2010).
Regulatory reforms have created a dynamic landscape which presents both opportunities
and
challenges
for
consumers,
industry
players
and
Governments.
Several
telecommunications operators now have opportunities to venture into foreign markets.
The increased competition has led to consumers benefitting from competitive pricing,
innovative solutions and enhanced quality of service (Markova 2008; Ernst & Young
2010; MCMC 2010; McKinsey 2010).
These trends are generating a new set of issues. Intense competition compels industry
players to unbundle the local loop (LLU) as well as constrain and confine roaming prices
to the regulatory limits. Additionally, Governments, by way of flexible and transparent
regulations have to administer bottlenecks, oversee access and international gateways
(ITU 2011).
Regulatory objectives and their impact differs across countries. However, the overall
generally acknowledged objectives of telecommunications regulation are comparable. As
outlined in Figure 3.3. these fall into four main categories, namely, economic, technical,
social and political regulation and are discussed next.
Economic Regulation is based on the premise of supporting a growing economy through
a competitive landscape. In the telecommunications industry where the nature of the
industry may create natural monopolies, independent economic regulation is required to
protect consumers and promote the provision of quality and reliable services through
effective regulatory policies including licensing, pricing and interconnect agreements.
Competitive practices deliver these services to consumers and provide incentives to
invest and improve efficiency and service quality. Additionally, universal access and
universal service provision assist in achieving social empowerment by encouraging
operators to provide affordable telecom services to communities and households. In
Singapore, from the beginning of 2007, Singaporeans enjoyed free wireless connectivity
56
at up to 512 kbps speeds almost everywhere for at least two years under the regulator’s
‘Wireless@SG’ programme (ITU 2012).
Technical Regulation involves the regulator ensuring access to services. Operators are
encouraged to invest in cost efficient information infrastructure and technologies.
Spectrum is a finite resource and technical regulation is required to ensure effective and
efficient allocation and utilisation of such scare resources. This is extended to numbering.
Regulators are also responsible for standardisation within ITU guidelines, convergence
VoIP and monitoring NGN (ITU 2010; MCMC 2011).
Social Regulation is based on the principle that operators make available the right
infrastructure to satisfy customer needs resulting in delivering quality of service costeffectively. In Malaysia, social regulation which is aimed at ensuring that applications
and services promote Malaysian culture, identity and values. Regulators are obliged to
protect consumer rights through price regulation, privacy, managing dispute resolution
and appeals. Social regulation also aims to encourage operators to provide suitable and
affordable
telecom
services
to
rural,
non-profitable
communities
(Universal
Services/Universal Access) (ITU 2011).
Political Regulation, based on the premise of transparency, aims to increase
competitiveness through using ICT and promotion of mechanisms to facilitate market
entry. It aims to support the provision of telecommunications to improve quality of life.
Figure 3.3: Telecommunications Regulatory Objectives






Economic Regulation
Universal access provision
Licensing
Interconnect
Access to services
Competition practices
Infrastructure sharing





Technological Regulation
Technical standards
Spectrum management & assignment
Numbering
Universal access to broadband
VoIP Regulation






Social and Consumer Regulation
Quality of Service
Pricing regulation
Protect Consumer rights, Privacy
Dispute resolution and appeals
Universal service provision
Application & content requirements





Political
Transparency
Industry structure - Foster competition
Social welfare maximisation
Promotion of Investment
Ownership & Performance Levels
Source: ITU 2010; MCMC 2010
57
The rapidly evolving market, technology advances in mobility, NGN, and the
convergence of IP telephony, VoIP, data, and video warrant corresponding changes in
the regulatory framework. This is necessary as several policies in relation to the use of
internet protocol and convergence are now obsolete and serve as restrictions and barriers
for the changing market environment (Melody, Sutherland & Tadayoni 2005; ITU 2010).
3.3 Market Changes and Industry Challenges
The earlier sub-section, 3.2, discussed the significant developments in the
telecommunications market structure and its rapid growth in terms of revenues,
investments, technological advances and regulatory trends. While the prospects for the
industry remain bright, the increasingly competitive environment also has attendant
challenges.
Ure and Lovelock, (2009, p.3)
“believe that many telecoms companies are confronting the dual challenges of a maturing
industry and an increasingly ‘tech savvy’ consumer base. The challenge that now
confronts telecoms companies is to find a new role and formulate a new set of objectives
to cope with these demands”
Figure 3.4 shows some of these challenges emerging from the literature (Markova 2008;
Bain & Company 2010; EY 2010; IBM 2010; ITU 2010) and these are discussed below.
Figure 3.4: Changing Patterns and Attendant Challenges
Changing
Market Demands
Strategic
Investments
Changing
Patterns
Regulatory
Developments
Technology
Developments
Source: Markova 2008; Ure & Lovelock 2009; Bain & Company 2010; Deloitte 2010;
IBM 2010; ITU 2010; MCMC 2010
58
3.3.1 Strategic Investments in a Competitive L andscape
The global telecommunications industry witnessed dramatic structural adjustments as a
consequence of economic globalisation and liberalisation which led to regulatory
reforms. The outcome was a change in the nature and pattern of strategic investments
which was also driven by push and pull factors. An important push factor, for European
operators, was the increased competition in domestic markets which required them to
move into foreign markets for growth and revenue gains. In the United States, firms
embarked on overseas ventures to overcome the domestic regulatory challenges that they
had to contend with.
There were two significant pull factors. The first was the privatisation of the
telecommunications sector in several developing countries, including Malaysia, India,
Indonesia, Sri Lanka and Thailand. In these countries, the issuance of licences, initially
to local operators was characterised by them focusing on home markets. As the markets
became more liberalised, local operators entered into partnerships with major global
players largely from Europe and the United States to benefit from technical expertise and
to secure the capital required for infrastructure development in a capital-intensive
industry (Curwen & Whalley 2008).
The second pull factor was the advances in technology as reflected by the entry of mobile
communications in the early 1980’s. This major development, which commenced with
the First generation spectrum (1G) and subsequently 3G and broadband created new and
lucrative investment opportunities. The global investment flows gained momentum with
WTO’s BTA agreement in 1997. Accordingly, several European operators were
motivated to expand into regional and global markets to capitalise on the growth
opportunities presented by the upcoming mobile segment. This was reflected by TMobile’s investment in Poland and Vodafone, currently the worlds’ most international
operator which commenced its internationalisation in the early 1990’s and now has a
presence in more than 20 countries with more than 80% of its revenues generated from
foreign markets (Kim et al 2009; Curwen & Whalley 2010).
A pertinent regional example was SingTel which ventured into international markets due
to its limited market size. It had a presence in 20 countries with 468 million mobile
59
customers globally as at September 2012, including Australia where it acquired a
majority stake in Optus (SingTel 2012).
However, it’s strategy for international
expansion was halted by the coup in Thailand in 2006. The firm subsequently entered the
Thai market and has since raised its stake in its Thai venture to 23.2% to maximise its
value from its existing operations. AIS was listed on the Thai stock exchange in 2011
(cellular news 2011).
In the case of Japan, NTT’s internationalisation efforts were motivated by its desire to
leverage on its dominant position in the domestic market. It sought to implement its, imode as a post 2G standard to the global market. However, its technology-led strategy
was not viable as it lost $9b, and commenced retracting from international markets in the
US and Europe in 2004 and 2005 respectively. However, it commenced its
internationalisation efforts again in 2005 with the purchase of equity stakes in South
Korea, and Philippines via DoCoMo. The firm had also invested in U mobile, however,
subsequently withdrew in 2009 (U Mobile 2009).
Malaysia was more focused on global opportunities with TM venturing into African
markets in the mid 1990’s. By 2006 it had a presence in 9 countries.
The Industry’s oligopolistic nature along with network characteristics, suggests that the
telecommunications industry is a capital intensive industry requiring capital investment
in physical infrastructure. While motivations for venturing overseas vary for MNO’s, and
technological advances, along with market liberalisation present operators and industry
players alike with challenges as they share two common concerns. First, the changing
nature of consumer demand. This requires telecommunications operators to invest in
solutions that provide mobility and ubiquitous access with an emphasis on speed,
bandwidth, convergence and quality of service. Second, increasing competition and
pressures on operating margins, with declining market shares. This requires them to seek
revenues for sustainable growth, differentiation to create advocacy while managing
commitment and risks.
With limited opportunities in foreign markets, spending trends are shifting towards
mobile devices and mobile applications (Gartner 2010). Although, the nature of
investments has changed, the sector is predicted to grow rapidly in emerging markets
60
(Dunning & Lundan 2008). While both create opportunities for growth, they have to be
matched by long term growth and innovation strategies that meet investors’ expectations
(Perlmutter & Heenan 1994; OECD 2007; Markova 2008; PWC 2012).
While declining ARPU’s were a push factor for early internationalisation, as discussed in
this section, the situation has now changed. Technology advances, market reforms and
consumer demand resulting in a competitive landscape present opportunities as well as
challenges for today’s operators. The current driver for these companies is towards
sustainable technology and Long Term Evolution (LTE) technology to meet consumer
demand for data.
3.3.2 Technology Developments
The internet, now a major competitive force is altering the telecommunications landscape
and is a catalyst for the technological developments required to meet consumer demands
The convergence of technology, media, and telecommunications (TMT) combined with
open IP networks, has led to an erosion of the barriers to entry (Deloitte 2010; Mathews
2010).
Consequently, the rise in smartphones and network appliances presents further
opportunities for players to form alliances and bundle solutions with complementors to
increase revenue and market share in adjacent and related industries (Funk 2009; Deloitte
2012). Technological advances, however, require increased investments in R&D to bring
new innovative products and services to the market. Related challenges are the reducing
project life cycle times, positioning in the value network and the need for product
differentiation to reap its attendant benefits in a highly competitive market (Laanti 2009;
Ernst & Young 2010; IBM 2012). Technology advances also present opportunities for
market entry as well as increased capacity thereby increasing competition. This in turn
impacts pricing, often resulting in price reductions (Roland Berger 2012).
61
3.3.3 Changing Market Demands
The earlier sub-section, 3.3.2, discussed technology developments, in particular, the
internet and the convergence of technology, media and telecommunications (TMT).
Consequently, telecommunications firms have to address the challenges relating to
customer expectations of convergence, multi-media rich services and new product
offerings to unlock consumer value and maintain customer loyalty (Sandeberg 2008;
Bain & Company 2010; EY 2010; MCMC 2010; O2 2010; Qtel 2012).
This challenge implies that telecommunications firms have to shift their focus from
technology to the customers (Roland Berger, 2012, p.14). They have to give more
emphasis to the usage and the users of new technologies - segmented by education,
income, age and gender – that now emphasise on the move from voice to data traffic.
Firms are striving to leverage on customer experience as a differentiator to disrupt the
market and achieve advocacy (Indosat 2012; McKinsey 2012; XL 2012).
Voice revenues worldwide are generally on a decline due to increases in internet usage
through both mobile and fixed communications, the rise of social media, availability of
mobile applications and content. In high income countries, computer and internet user
penetration rates are broadly similar. However, in lower income countries, the
discrepancy between computer and internet user penetration is larger and this may be due
to the lack of fixed internet infrastructure, resulting in higher prices for internet access
and relevant content. While the demand for data services remains a major challenge in
developing countries, it also presents itself as an opportunity for increased revenue
earnings for telecommunications services, particularly in the mobile sector.
Available data on internet use show that people with higher education levels use the
internet more than those with a lower level of education. Furthermore, differences in
internet usage rates between consumers with different education levels are more
pronounced in countries where incomes are equally less distributed. In Africa, one of the
key determinants of internet access is income with those, the higher income brackets
having greater access to the internet. Data from developed countries also suggests that
affordability also plays a key role in internet use (ITU 2011).
62
However, three key trends in the internet market in developing countries point to
narrowing of the internet user divide in the short and medium terms. First, is a rapid
spread of mobile internet access which include mobile broadband access as these can
overcome infrastructure barriers as well as to allow consumers to access the internet via
the mobile devices. Second, the growing interest in providing pre-paid mobile broadband
internet services which can lower the income barriers and permit lower income
customers to purchase affordable, time or data volumes to access the internet. Third, the
increasing number of students at schools and universities who use the internet for their
study material. This implies that those currently enrolled in schools and universities that
provide internet access are likely to contribute to rapidly increasing internet penetration
rates.
A higher percentage of men than women use the internet in both developing and
developed countries. The gap is wider in developing countries and gender related
differences could be due to lower education and income levels. There are also significant
differences in internet use between urban and rural areas. People in the latter have less
access to the internet due to infrastructure and service limitations. This is also due to
differences in education and income (ITU 2011).
Another important trend that is impacting on consumer demand is the growth of social
media and networking sites which allow users to expand social and business contacts as
well as to communicate and share contact including photos, media and music. Social
networking sites have become a key driver of internet use, particularly by young people.
The findings of a survey conducted by Livingstone et al, (2011) of 25,000 young internet
users between the ages of 9 and 16 and their parents in 25 European countries found that
38% of children between 9 and 12 years old, have a social network profile and 77% of
children between 13 and 16 years old.
The trends discussed above are reflective of the significant changes that characterise the
telecommunications consumer market. They are also indicative of the new challenges
that telecommunications firm must address through revised business models that focus
on the consumer in order to meet consumer expectations and retain customer loyalty for
sustainable growth.
63
The growing demand for convergence and consumer demands for more choices of
products and services have triggered unprecedented rises in social media channels, smart
phones, SMS and Multimedia Messaging Service (MMS). This requires actions by
telecommunications operators and related industry players to maintain customer loyalty.
They also have to unlock customer value through the delivery of innovative, multi-media
rich services (Sandeberg 2008; Bain & Company 2010; EY 2010; MCMC 2010; Roland
Berger 2012).
3.3.4 Regulation
Regulatory Trends were discussed in 3.2.1.3. Regulatory reforms are targeted at
encouraging competitive markets to support growth and quality of service. The
increasing competitive landscape has resulted in growing complexity in the regulatory
environment. Convergence requires regulatory bodies to adopt a flexible and innovative
approach to meet consumers, industry players and home Government needs. The global
telecommunications’ market had 158 regulators as at the beginning of 2011. Privatisation
and ongoing reforms will require regulatory bodies to be agile and recruit knowledgeable
resources to “adapt to the needs of their mandates” (ITU 2011).
3.4 Chapter Summary
This Chapter discussed the global emerging trends in the telecommunications industry. It
outlined the market structure and size, and reviewed the regulatory framework. It then
examined the driving forces and resultant challenges emerging from the changing
patterns and trends in the industry. The next Chapter examines the Malaysian
telecommunications sector and industry.
64
Chapter 4 - The Malaysian
Telecommunications Sector
4.1 Introduction
The earlier Chapter introduced and discussed the global telecommunications sector. This
Chapter discusses the background theory of the Malaysian telecommunications sector
that relate to this research. It has ten Sections as shown in Figure 4.1.
Section 4.2 presents the country background with an overview of the key demographic
and economic indicators. Section 4.3 discusses the evolution of the Malaysian
telecommunications sector and the current situation. Section 4.4 examines the new
telecommunications products and services that are transforming the Malaysian
telecommunications market. Section 4.5 outlines the Malaysian Government’s policies
and institutional framework. Section 4.6 examines the major players in the Malaysian
telecommunications industry. Section 4.7 reviews the international presence of
Malaysian telecommunications firms and outlines selected target regional markets.
Section 4.8 assesses the Malaysian telecommunications sector competitive strategies.
Section 4.9 identifies and discusses the critical factors that impact on successful
international market penetration by Malaysian telecommunications firms. The final
section 4.10 presents the chapter summary.
65
Figure 4.1: Structure of Chapter Four
4.1: Introduction
4.2: Country Background
4.3: The Evolution of the Malaysian Telecommunications Sector
4.4: New Products & Services
4.5: Malaysian Government’s Policies & Institutional Framework
4.6: Major players in the Malaysian telecommunications industry
4.7: International presence: Malaysian telecommunications firms
4.8: Malaysian telecommunications sector competitive strategies
4.9: Critical Factors Impacting Successful International
Market Penetration
4.2 The Country Background
This Section introduces Malaysia to provide the country context in line with Perry
(2002). This is considered important as the ethnic composition and the development
strategies adopted by the country provide the contextual setting for the research.
Malaya gained independence in 1957 and in 1963 became Malaysia when it merged with
Singapore and the eastern states of Sabah and Sarawak. Political and social unrest led to
Singapore exiting the Federation in 1965 (Andaya & Andaya 1982; Jessy 1985).
66
Covering an area of about 330,252 square kilometers and the country consists of
Peninsular Malaysia (Perlis, Kedah, Pulau Pinang, Perak, Selangor, Negeri Sembilan,
Melaka, Johor, Pahang, Terengganu, Kelantan); Sabah and Sarawak in Borneo Malaysia
is a multi-ethnic country with a population of 28.92 million as at September 2012 (GoM,
201; MCMC 2012). The principal ethnic groups are the Malays, followed by the Chinese
and Indians. Other significant groups are the indigenous people of Sarawak and Sabah,
including the Dayaks, Kadazans, Bajaus, Melanaus and Muruts (GoM 2011).
At the time of independence Malaysia was, an agricultural based economy with rubber
exports accounting for 70% of export earnings with an equivalent contribution to GDP. It
was also a plural society divided by race, income and occupational classifications (Goh
2009). Almost two thirds of the population of 7.2 million people lived below the poverty
line in 1957 and the majority of them were the Malays or Bumiputeras. Committed to
poverty alleviation, Government policies were directed at rural development and the
Government plays a role of initiator, facilitator and the implementer of developmental
projects. Public policies are also aimed at providing a stable and conclusive
macroeconomic environment to support private sector involvement in the economy
(Yogeswaran 2004).
The country’s developmental goals are, namely, national unity, social equity and
improving the quality of life. As articulated in Vision 2020, these are directed at
restructuring the economy and the societal setting through four national policy
frameworks as shown in Figure 4.2. These are: the New Economic Policy (NEP), 19711990, the National Development Policy (NDP), 1991-2000, the National Vision Policy
(NVP), 2001-2010, and the National Mission, 2006-2020 (EPU 2009).
67
Figure 4.2: National Development Policies
OPP2
(1991 2000)
OPP1
(1971 – 1990)
The National
Mission
2006 - 2020
Enhancing Nation’s Capability:
To achieve competitiveness, unity
and quality of life.
Total
Development
Vision 2020
National Vision
Policy
(NVP)
Building a Resilient & Competitive
Nation:
To raise the quality of life
and generate high
sustainable growth
National Vision
Policy
(NVP)
National
Development
Policy
(NDP)
Balanced Development:
To establish a more united
and just society
National
Development
Policy
(NDP)
New Economic
Policy
(NEP)
Growth with Equity:
To eradicate poverty and
restructure society
New Economic
Policy
(NEP)
Post
Independence
1957 - 1970
Policies Objectives
National Development Policies
OPP3
(2001 2010)
• Laissez-faire /
Export-Oriented
• Economic and Rural
Development
Source: Adapted from EPU 2009
4.2.1
The New Economic Policy
The New Economic Policy (NEP), an affirmative policy based on the principle of
distributive justice. The Bumiputeras were targeted as the main beneficiaries in order to
achieve the nations overriding goal of peace and harmony (OPP1 1970-1990) of the
policies two thrusts. The first was to eradicate poverty, and the second, to increase
Bumiputera ownership of economic assets from 2.4 percent in 1970 to 30 per cent by
1990 (Dixon 1991; Jomo 2004). It was the outcome of the racial riots in 1969 that was
triggered by the wide gaps in terms of income, employment and wealth between the
economically disadvantaged Bumiputeras and the other ethnic groups (Salleh &
Meyanathan 1993). Several programmes were introduced to accelerate Bumiputera
participation in the economy and these included preferential share allocations in all
companies listed in the stock exchange; price preferences for Bumiputeras tendering for
68
Government projects and preferential treatment in the issue of new licences or permits
including transport and communications (East Analytical Unit 1995).
The NEP was generally resisted by the Malaysian non- Bumiputera community. Critics
argued that it had to be abolished for the country to stay competitive in a competitive
world. Furthermore, it led to high costs through the use of Bumiputera firms with
licences being “rented” out to Non-Bumiputeras (East Asia Analytical Unit 1995; Jomo
2004). The NEP received much criticism for creating a ‘subsidy mentality’ which
hindered competition and growth in the new world economy (Jomo 2004; Musa 2007).
Although the NEP was subsequently replaced by the New Development Policy, the
Bumiputeras continued to receive preferential treatment in all aspects of business and
industry (Perkins 2004). As part of the NEP, the telecommunications, fixed and mobile
services were monopolised by the Government (Faaland 1971; Jomo 2004).
4.2.2
The Privatisation Policy
A review of the progress made under the NEP revealed that the Bumiputeras accounted
for less than 15% of the Nation’s economic assets in 1981 (4MP 1981). To address the
imbalance, the Government introduced the Privatisation Policy in 1983 (Milne 1986) and
in support of this policy issued a Privatisation Master Plan which resulted in 230
Government enterprises, largely in the key sectors of utilities, power, transportation, and
telecommunications (Bruton, Fried & Hisrich 1997). Of these, less only 14% of the
equity ownership of the privatised entities were owned by Malaysian non-Bumiputeras in
December 2000 (GoM 2000 – 8MP).
Critics of the Privatisation Policy contended that it suited the needs of a vital few to the
detriment of the wider public. (The Star, 30 July, 2009). The absence of competitive
bidding with privatisation contracts being only awarded to those with political patronage
gave rise to problems of transparency, accountability and disclosure (Kirkpatrick 1993).
69
4.2.3
Malaysia – A Newly Emerging Economy
Classified by the Asian Development Bank (ADB) as a “newly emerging economy”, it
had a per capita income of RM30,326 (USD10,108) as at July 2012 (MIDA 2012).
Malaysia’s GDP growth rates averaged 5.8% over the period 2007-2009 (ADB 2010,
2011). Although the country reported an impressive growth rate of 5.1% in 2011 and in
2012, this was significantly lower than the 7.1% reported in 2010. The economy is
expected to be resilient and the forecast for 2013 between 4.5-5.5% on the basis that
world trade and growth improve (IMF 2011, 2012; ADB2012; MIER 2012).
The country has consistently registered a positive merchandise trade balance. However, it
remains a net importer of services and a key developmental objective is to increase its
share in world export services (ESCAP 2011). Under the Tenth (10th) Malaysia Plan,
2011-2015, the services sector aims to attract RM44.6 billion in investments generated
by trade liberalisation as reflected by the ASEAN Framework Agreement on Services
(AFAS), the World Trade Organisation (WTO) and the bi-lateral Free Trade Agreements
(EPU 2010).
The Government remains central to economic and social development by playing the role
of the catalyst and facilitator for the private sector. It is responsible for institutional and
infrastructure development including telecommunications (Yogesvaran 2004).
4.3 The Evolution of the Malaysian Telecommunications
Sector
When Malaysia gained independence, it inherited an efficient communications
infrastructure (Naidu & Lee 1997) with “one of the highest teledensities in South East
Asia” (Salazar 2007, p.10). In line with global trends, national political forces influenced
the evolution of the Malaysian telecommunications sector (Mesher & Zajac 1997).
The country’s telecommunications services were initially provided by the Post and
Telegraphic Services Department. A separate Telecommunications Department was
formed in Peninsular Malaysia in 1946 and in 1968, this Department merged with the
Telecommunications Department in Sabah and Sarawak to form the Department of
70
Telecommunications Malaysia (Jabatan Telekomunikasi Malaysia “JTM”). The JTM,
became the regulator and the sole provider of telecommunications services in Malaysia
as provided by the Telecommunications Act of 1950 (Ure 2000; Venugopal 2003; Zita
2005; Sivalingam 2007).
As part of the NEP, the telecommunications, fixed and mobile services were
monopolised by the Government (Faaland 1971; Jomo 2004; Salazar 2007) and
Government policies were directed at ensuring that the Malay community dominated the
telecommunications sector (Kitchen & Ahmad 2008). The NEP led to several specific
policies for Bumiputera business development which had an impact on the
telecommunications sector. These included:
(i). A Federal Procurement Policy which required at least 20% local content with
preferential treatment being given to Bumiputera companies. This policy led to
politically connected Bumiputeras securing contracts to manufacture telecommunications
equipment
including
mainframes
in
partnership
with
leading
international
telecommunications firms (Salazar 2007).
(ii). Government Linked Agencies like Pernas and the Armed forces fund board (LTAT)
taking advantage of the NEP and securing controlling equity interests in multinational
telecommunications firms like Ericsson and NEC which supplied the JTM with
electronics and cable equipment (Salazar 2007).
(iii). A schedule of standards and rates or Jadual Kerja Harga (JKH) which set out the
rates for all public works projects including the operations of JTM, however, all
contractors had to be registered with the Malaysian Treasury and preference was given
to Bumiputera companies for the sub-contracting of all of JTM’s operations (Salazar
2007).
The NEP also focused on creating employment for Malays within the public sector and
the Government-linked organisations. This resulted in the JTM tripling its staff strength
from 7,000 to 21,000 by the end of the 1970’s (Kennedy, 1995 cited in Mesher & Zajac
1997).
71
The inefficiencies in the JTM led to calls for privatisation through the issuance of
licences or contracts and the first private telecommunications company, Sapura Holdings
was set up in 1975. The privatisation process gained momentum with the Malaysian
Privatisation Policy, 1983 (Mesher & Zajac 1997; Salazar 2007; Sivalingam 2007).
However, there was no clear liberalisation policy with corresponding regulatory rule in
place and the Government’s majority ownership of STMB led to much contradiction for
regulation and policy planning.
4.3.1 Liberalisation and Reforms: The Malaysian Telecommunications
Industry
In the mid 80’s, the Malaysian Government recognised the strategic importance of the
telecommunications sector for Malaysia’s social and economic development. This period
also signalled the start of telecommunication’s liberalisation and reform (Ure 2000).
However, some authorities (Kennedy 1995; Jomo & Gomez 1999) suggested political
patronage was a driver for the liberalisation of the industry.
Another contributory factor was JTM’s incapacity to meet increasing demand and
improve its services resulted in the JTM being corporatised in 1987 (Zita 2005;
Sivalingam 2007). It was renamed Syarikat Telekom Malaysia Berhad (STMB); now
known as Telekom Malaysia Berhad (TMB). The JTM’s assets were transferred to the
STMB, and the new legal entity, with majority ownership by the Ministry of Finance
(MoF) was empowered to run fixed and mobile telecommunications operations.
However, the JTM remained a Government-owned body with regulatory functions (Lee
2001; Salazar 2007; Sivalingam 2007; Telekom Malaysia 2010).
Being a state owned enterprise, the STMB had to overcome the challenge of being a
commercially orientated enterprise rather than to limit itself to producing public goods to
satisfy societal needs. However, its bureaucratic culture, conflicting objectives and
leadership lacking business acumen tended to result in politically, rather than
commercially motivated decisions (Abang 2009).
Liberalisation was largely in the form of issuance of licences for entry the two major
markets, fixed line and mobile service. Although five additional licences were issued for
72
the fixed line market, TMB’s share remained at a high 96.7% due to the high investment
costs that would have to be incurred by new entrants for building a fixed line network.
Several telecommunications licences were issued in the mid-80’s. However, the licences
were given to companies owned by businessmen linked to the leaders of the political
party that was in power (Zita 2005). Furthermore, licences were awarded in a nontransparent manner and largely to individuals who were “rent seekers” with no
background in the telecommunications sector (Salazar 2007). The low start-up costs for
mobile services made it more attractive for new entrants. Five licences were issued for
mobile services between 1985-1993 and this resulted in a decline in TMB’s market share
(Lee 2001).
As pointed out by Ure (2000) there were no clear policies on the issuance of licences.
There was also a blurring of the lines of authority and a lack of transparency. Licences
for cellular mobile, paging and satellite communications were issued by the Prime
Minister’s department rather than the JTM which was only informed of licensing
decisions after they had been taken (Zita 2005). Consequently, far too many licences
were issued for a relatively small population then of about 20 million.
In the mid 90’s, the telecommunications sector underwent neo-liberal reforms and
embraced advances in technology (Ure 2000; Zita 2005). This was reflected by the
issuance of a broad framework for the industry in the form of the National
Telecommunications Policy (NTP) in 1994 (Salazar 2007). Drafted by the JTM, the NTP
recognised the central role of competition policy. However, as pointed out by Lee (2001,
p.9) “the Government did not subscribe to a totally laissez-faire approach as with the
NTP (p.10) states that”:
“Even though competition is encouraged, the Government is empowered to determine the
number of competitors that are economically viable for certain telecommunications
systems/services…”
The NTP also proposed a revision of the sector’s structure into network infrastructure
and IT Super Highway Network Infrastructure. There was also a dramatic rationalisation
of the sector. The outcome, as shown in Figure 4.3, was a reduction in the number of
73
players from nine main players to three mobile and two fixed line providers. Although
JTM was not involved in the liberalisation of the telecommunications sector, it had to
regulate the industry which was dominated by players that benefitted from political
patronage (Salazar 2007; Zita 2005).
The telecommunications sector underwent further reform in 1996 as reflected by the
announcement of the General Framework for Interconnection and Access (GFIA) in
1996 (Ure 2000). The framework established the policy objectives and regulatory
principles for the interconnection of licenced telecommunications operators on the basis
of fair, equitable and non-discriminatory principles (GFIA 1996; Ure 2000). The long
term objective of the GFIA was to arrive at an excess charge and in the event of network
operators not agreeing to a method of calculation for the excess charges, this would be
determined by the JTM. However, JTM had difficulties in discharging its regulatory role
as the major players in the industry had strong political connections (Ure 2000).
The country was hard hit by the Asian Financial Crisis that impacted the region in
1997/98. It revealed that the conventional model of the Government’s major involvement
in industry and the management of public sector enterprises had effectively collapsed
(Ching, Jomo & Fay 2005). It also led to a withdrawal of foreign telecom investments
from the region. Malaysia’s mobile industry was not spared as evidenced by sharply
increased bad debts. Consequently, about $65 million of the Employees Pension Fund
was used to buy the shares of Time dotcom. Celcom defaulted on its Eurobond debt. The
Government used another pension fund to redeem the Eurobond for $494 million (Zita
2005). Due to these financial difficulties, the industry underwent consolidation with a
reduction in the number of players from nine to five as shown in Figure 4.3.
These difficulties and the reduced average revenues per user (ARPU) necessitated a
suspension in network improvements and rollout (Ure 2000). The Government
temporarily relaxed foreign ownership limits in April 1998 to allow for up to 61%
ownership, with a proviso that the funds had to come from abroad (Sivalingam 2007) and
Telenor increased its minority position in Digi to effective control (Zita 2005).
74
Figure 4.3: Consolidation of the Malaysian Market 1989 – 2003 onwards
1989 – 1996
1996 - 2002
2003
Telekom Malaysia
Telekom
Malaysia
Telekom
Malaysia
Celcom
Mobikom
TM Celcom
TM Celcom
Maxis
Maxis
Timecel
Time
Telecom
Maxis
Maxis
TimedotCom
Time dotCom
Digi.com
DiGi.com
DiGi.com
Telekom
Malaysia
MRCB
Telecommunications
Time
Telecom:
Timecel,
TimedotCom
Sapura Digital
Digi.Com
Syarikat
Wireless
Telefon
TMI
Axiata Celcom
Prismanet
(receivership)
Source: Zita 2005; Salazar 2007; Spire 2010
A notable policy initiative was the “Equal Access” policy. Introduced in 1999, the aims
were to improve the quality of telecommunications services and encourage price
reductions. Consumers benefited from the option of selecting their long distance and
international carriers and the interconnectivity between operators. Although there were
nearly four million subscribers in 1999, the industry was saddled by several issues
including the unbundling of the local loop and interconnectivity (Ure 2000; Highbeam,
2006; Totel 2010).
4.3.1.1 Regulatory Reform
As discussed in Section 4.3.1, there have been significant Malaysian regulatory reforms
since 1987. These, together with emerging technologies and rapid increases in consumer
demands have resulted in a major transformation of the sector (Lee 2001). In 1998 the
Ministry of Telecommunications Energy and Post (MEPT) was restructured into the
Ministry of Energy Communications and MultiMedia (MIECM) in order to take account
of technological developments and for the regulatory structure to address convergence in
communications and multimedia industries.
75
The National Telecommunications Policy (NTP, 1994-2020), was crafted by the JTM
and provided a broad framework to support growth in line with Malaysia’s vision to
achieve developed nation status by 2020. It was also tasked with supporting the emerging
competitive landscape. A notable objective for the NTP was to encourage active
participation
of
Bumiputera
entrepreneurship
across
the
development
of
telecommunications and support services. Furthermore, JTM was not involved in the
liberalisation of the telecommunications sector, it had to regulate the industry which was
dominated by players that benefitted from political patronage (Zita 2005; Salazar 2007).
The NTP advocated the need for more comprehensive and effective regulatory measures
and this led to the enactment of the Communication and Multimedia Act (CMA) 1998
and the Malaysian Communications and Multimedia and Commission Act 1998. This
overhauled the licensing regime (Ure 2000) and provided for the establishment of the
Malaysian Communications and Multimedia Commission (CMC) in 1999 with the
mandate of regulating the telecommunications sector (Lee 2001; Salazar 2007; EPU
2010). This significant development indicated that the Government was moving on to a
new path to create a well regulated open and competitive telecommunication market (Ure
2000).
Regulatory activities under the CMA fall into four main areas and these are:
(i) economic regulation to enhance the efficiency of the telecommunications industry
through licensing, competition policy and service access
(ii) consumer protection which includes the main issues of service quality, required
applications services consumer disputes and affordable services
(iii) technical regulation for efficient allocation of resources security and integrity
(iv) social regulation which is aimed at ensuring that applications and services promote
Malaysian culture, identity and values.
The literature suggests that despite the reforms, several policy issues remain unsolved.
To enhance competition and increase access, transparency issues also have to be
addressed in respect of the decisions made by the Minister of Culture and Information.
76
Although the NTP was aimed at promoting competition, “competition policy and laws
are virtually non-existent in Malaysia” (Lee 2001). These issues require addressal to
maximise the benefits of the reforms which were underpinned by the objectives of
efficiency and equity.
4.4 The Malaysian Government’s Policies and Initiatives
During the late 1990’s, public policies were directed at developing an information
society which can be defined as “the creation, distribution, and manipulation of
information as the most significant economic and cultural activity” (IT Standards &
Organisation 2012). Liberalisation opened up the market and supported the provision of
telephony services. Further regulatory reform was required to improve the infrastructure
and support socio-economic growth while attracting FDI to enhance Malaysia’s global
competitive positioning (Salazar 2007).
Pivotal to this, was the creation of a world-class infrastructure for promoting innovation
and bridging the digital divide. Curwen and Whalley (2010) argue that several authorities
put forward differing factors relating to the term resulting in varying definitions for the
“digital divide”. Neuman and Robinson (2001) refer to access and use; Fink and Kenny
(2003) refer to access to ICT and ability and impact of ICT use; where are the OECD
(2009) and ITU (2009) focus on its dependence on geographical location. However, for
the purpose of this study the researcher adopted the OECD definition outlined below:
‘the gap between individuals, households, businesses and geographic areas at different
socio-economic levels with regard to their opportunities to access information and
communication technologies and to their use of the internet for a variety of activities
(OECD 2001, P.5)’.
This is an important national developmental objective in view of the wide differentials in
incomes, IT literacy and internet penetration between the rural and urban areas of the
country (EPU 2009)
In line with the National objective of creating a knowledge-based information society,
the Government launched five significant initiatives as outlined below:
77
i)
ii)
iii)
iv)
v)
The National IT Agenda (NITA)
The Multimedia Super Corridor
MyICM886 and Communications Content and Infrastructure
The Economic Transformation Plan
The Digital Malaysia Masterplan.
i). The National IT Agenda (NITA)
The NITA was launched in 1996 as the foundation for utilising ICT in supporting the
country’s transition to a value based knowledge society by the year 2020. The strategic
framework encompasses three key elements comprising people, infostructure and
applications., People, the first component is central to the framework. Transformation
involves managing change and the development of skills and capabilities of individuals
resulting in value creation and participation in a civil society. The second focuses on
impartial access to information through infostructure including development of secure
networks, related devices and appropriate regulation to improve the quality of life. The
third element is content and the development of pertinent applications for progression to
a knowledge based society. The policies underpinning these core elements support the
nation-building efforts towards vision 2020 (Chew 2007; Alsagoff & Hamzah 2008;
NITC 2010). While NITA continues to provide the foundation and framework for the
utilisation of information and communication technology (ICT), the nation continues to
face challenges with knowledgeable resources, inclusiveness and brain drain (Abang
2009). Furthermore, regulation is perceived to suffer interference from Government (Zita
2005).
ii). The Multimedia Super Corridor (MSC)
The MSC Malaysia, referred to as the Silicon Valley of Malaysia, was established in
1999. A Government supported initiative; its key objective was to attract world-class
technology firms alongside developing the local ICT industry. It covers an area of 750
square kilometres and covers three key landmarks, namely, KLCC, Putrajaya and KLIA.
Central to Malaysia’s strategic development (Ure 2000) it is positioned as a global hitech ICT hub, with the goal of attracting Multinational companies while driving the
nation towards a knowledge based economy (Zita 2005; Chew 2007; MDeC 2007). The
MSC Malaysia has over 20 cybercentres and has attracted over 2,000 companies,
78
including multinationals which enjoy a range of business privileges including favourable
taxation, superior infrastructure and expedited foreign employment passes. It is managed
by the Multimedia Development Corporation (MDC), rebranded as MDeC in 2006,
which has the primary role of advising the Government on legislative and policy matters
for multimedia operations (MDeC 2011; MSC 2011). While the MSC has been a driving
force in the industry and has succeeded in attracting foreign and domestic investments, it
faces challenges in delivering its Bill of Guarantees. Its bureaucratic culture and lack of
customer focus has resulted in firms questioning their value (Krishna 2010; GoM 2011).
However, it continues to expand its cybercentres and is playing a key role in the Digital
Malaysia Masterplan.
iii). Malaysian Information, Communications and Multimedia Services
886
(MyICMS886)
The regulatory framework introduced under the Communications and Multimedia Act
1988 led to significant growth in the industry with ICT revenues increasing from RM12
billion in 1999 to RM24 billion in 2004.
Accordingly, leveraging on existing investments to support the delivery of advanced
information communications and multimedia services to improve the quality of life of
Malaysians and enhancing Malaysia’s competitiveness (NITC 2010; MCMC 2010).
MyICMS, "The Malaysian Information, Communications and Multimedia Services” (My
ICMS), a five year blueprint, for the period 2006-2010, was primarily a private sector
initiative supported by the Government. It was aimed at leveraging on existing
investments to support the delivery of advanced information communications and
multimedia services to improve the quality of life of Malaysians and enhancing
Malaysia’s competitiveness (NITC 2010; MCMC 2010).With eight services, as shown
in Figure 4.3, and the development of eight essential infrastructures in six identified
growth areas, and succeeded in supporting the development of the industry.
79
Table 4.1: Overview of the MyICM886 Masterplan
Services
HSBB
3G & Beyond
Mobile TV
Digital
Broadcasting
Digital Home
Infrastructure
Growth
Hard
Multiservice
Convergence
Networks
3G Cellular Networks
Multimedia Satellite Networks
Soft
Short Range Communications
Content Development
ICT Education Hub
Digital Multimedia Receivers
Communications Devices
Embedded
Components,
Devices
Internet Foreign Ventures
Next Generation
Protocol
Internet Telephony/VoIP
Home Internet Adoption
Universal Service Provision - Information and Network
USP
Security
Competence Development
Product
Design,
Manufacturing
Source: MyICMS Master Plan, Ministry of Water, Energy and Communications 2006
iv). The Economic Transformation Plan
The 10th Malaysia Plan (2011-2015) also places emphasis on expanding the export of
services in line with the Economic Transformation Plan (ETP). While international trade
is a major contributor to Malaysia’s impressive growth, the country faces major
challenges in an increasingly competitive global market. Mindful of this and the
importance of achieving inclusive and sustainable development, the Government
introduced the Economic Transformation Plan (ETP) which incorporates fundamental
strategic and economic reform initiatives in 2010 (EPU 2010; MIER 2010; Pemandu
2010; Ratings Agency Malaysia (RAM) 2010). The ETP, requires investments of RM1.3
trillion largely from the private sector for 12 National Key Economic Areas (NKEA’s).
These have 131 entry point projects and 60 business opportunities. The NKEA projects
are expected to create 3.3 million jobs and contribute 73% of Gross National Income
(GNI) by 2020 (The Business Times, 22 Sept. 2010; ECM Libra 2010; The Star, 22 Sept.,
2010).
Towards this end, the Government is promoting the wider use of Information and
Communications Technology (ICT), communication networks and High Speed
Broadband (HSBB). These are fundamental for innovation and the achievement of the
80
national development agenda (The Star, 25 March 2010; Zita 2005). As at 13 September
2012, the ETP reported investments of MYR5.607b. However, while the ETP has been it
has also received criticism (GoM 2012).
Equally significant is the regional ASEAN ICT roadmap and strategic plan. It was
launched in January 2011 to provide better integration amongst the telecommunications
players across the ASEAN economies. It is also targeting lower roaming charges across
the region, particularly between Singapore and Malaysia (ASEANSEC 2011; MCMC
2011; The Star, 30 April 2011).
v). The Digital Malaysia Masterpla n – Digital Econom y
Digital transformation, underpinned by the internet, provides several opportunities for
socio-economic growth and development (BCG 2009). Acknowledging the importance
of the digital age, the Malaysian Government mandated the MDeC to develop the
innovation digital economy framework (IDE) in July, 2011. The outcome was a Digital
Masterplan with the objective of leveraging on opportunities for innovation and
collaboration between the public and private sector.
A key aim is to enhance the
customer experience by improving service delivery across channels (GoM Malaysia
2011; MDeC 2011).
(vi). Summary timeline of The Malaysian Government’s Policies and
Initiatives
A timeline of the initiatives discussed in this Section is shown in Figure 4.5.
81
Figure 4.4: Malaysian Initiatives Timelines
4.4.1 The Current Economic and Telecommunications Landscape
Public Policies are aimed at the country remaining competitive in the globalising world.
The emphasis therefore is on development of human capital, technology and knowledge
to achieve the long term goal of becoming a developed economy.
As discussed earlier, Malaysia is classified by the Asian Development Bank (ADB) as a
“newly emerging economy”, it had a per capita income of RM30,326 (USD10,108) as at
July 2012 (MIDA 2012). Malaysia’s GDP growth rates averaged 5.8% over the period
2007-2009 (ADB 2010, 2011). Although the country reported an impressive growth rate
of 5.1% in 2011 and in 2012, this was significantly lower than the 7.1% reported in 2010.
The economy is expected to be resilient and the forecast for 2013 between 4.5-5.5% on
the basis that world trade and growth improve (IMF 2011, 2012; ADB, 2012; MIER
2012).
82
There have been significant Malaysian regulatory reforms since 1987. These, together
with emerging technologies and rapid increases in consumer demands have resulted in a
major
transformation
of
the
sector
(Lee
2001).
Currently,
the
Malaysian
telecommunications market is one of the most advanced in the developing world (IDC
2009; elioe.com 2010; budde.com 2011; Fiercetelecom 2011; TNS 2011). Malaysia is
ranked fifth in the BMI business environment rankings, up from seventh in the previous
quarter (BMI 2011).
The mobile market grew at a rapid rate as compared to fixed wireline telephony. There
were 4.5 million direct exchange lines in Malaysia in early 2000 with a penetration rate
of 22% as compared to 2.5 million mobile telephone subscribers with a penetration rate
of 10.2%. However, between 1996 – 1999, mobile subscriptions grew at a faster rate of
63% per year as compared to a compound growth rate of 14.8% for fixed wireline
telephony between 1990-1998. The Malaysian telecommunications landscape comprises
both data and voice players. They are competing to meet consumer demand with
prevalent modern technologies to profitably deliver speed and quality service. Malaysia
is one of the most avid users of telecommunications services across the Asia Pacific
region. The rapid growth in the industry has resulted in the sector impacting the economy
from both a demand and supply perspective (Deloitte 2010; Oxford Business Group
2010). The sector contributed to 3.4% of the GDP in 2009, with a target of achieving
10.2% by 2015 (DOS 2010) and employs over 40,000 people. The market capitalisation
of
Malaysian telecommunications companies listed Kuala Lumpur Stock Exchange
(KLSE) more than doubled from RM48.5 billion in 2008 to an estimated RM115 billion
in 2010 (EPU 2010; bursamalaysia.com 2011).
Dominated by mobile subscriptions achieved a 137.7% mobile penetration rate with over
39,826 million mobile subscribers as at September 2012 (Economic Intelligence Unit
(eiu.com) 2011; Pyramid Research 2011; BMI 2012; MCMC 2012). The comparable
statistics were a 110.1% penetration rate with 31 million mobile subscribers in 2010, a
106.1% penetration rate with 30.38 million subscribers in 2009, and a 98.9% penetration
rate with 27.7 million subscribers in 2008 (BMI 2011; Pyramid 2011; Viewswire 2011;
MCMC 2012). Malaysia had the second highest mobile penetration rate in South East
Asia, after Singapore in 2009 (Bernama 2010; MCMC 2010). However, the market
average ARPU of RM47.3 in 2011 compared to RM50.3 in 2010, is likely to decline due
83
to intense competition and an increase in pre-paid, low net worth subscribers (BMI
2011). The sector currently employs over forty thousand people and the market reaching
saturation presents further challenges for operators.
The Household Broadband penetration reached an estimated 63.8% in 2012 compared to
approximately 22% in 2008 (Kugan 2010; Bernama 2011;NITC 2011; MCMC 2012).
However, in alignment with global trends, the domestic fixed line segment, dominated by
Telekom Malaysia (TM), declined to 3,908 million fixed lines in Q2 2012, compared to
4.37 million in 2009 (MCMC 2012).
4.5 New Telecommunications Products and Services in the
Malaysian Telecommunications Industry
The telecommunications industry is characterised by technological advances which in
line with changing consumer demand is driving new and innovative products and
services. This Section begins with an overview of early technologies. This is followed by
a discussion on the significant new products and services which are impacting on the
Malaysian telecommunications industry. These are listed below.
A. First and Second Generation (1G and 2G) Spectrum
B. Third Generation (3G) Spectrum
C. Broadband
D. Worldwide Interoperability for Microwave Access (WiMAX)
E. Mobile Virtual Network Operators (MVNO’s)
F. Subsea Communications Cables
G. Long Term Evolution (LTE) and 4G
A. First and Second (1G and 2G) Spectrum
Mobile communications have been commercially available since 1946, although mobile
networks commenced with the adoption of a cellular structure in 1983. This first
generation (1G) system was with an analogue system with FDMA (Frequency Division
Multiple Access) technology for modulation. Each user had exclusive use of a specific
frequency, narrowband, and services were provided with circuit switching. The
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Malaysian telecommunications sector, primarily JTM, a public monopoly, was viewed as
failing to respond to the demands of industry as Malaysia only offered fixed line
analogue services until 1984. In 1984, JTM introduced the first mobile phone, the
ATUR and its monopoly was extended to mobile telephony (Sivalingam 2007).
This has largely been replaced by 2G digital networks using the 900MHz band, also
known as the global system for mobile (GSM), which makes more efficient use of the
spectrum providing improved sound quality in voice calls (Curwen 2002; Curwen &
Whalley 2010). However, 2G was not representative of a high speed data network. In
1988, STMB set up the first mobile phone company, STM Cellular Communications, to
provide GSM mobile services which was subsequently sold to a private corporation and
renamed Celcom in 1992. With only two mobile players in the market, competition
stifled innovation (Zita 2005).
With rent seekers and politically connected businessmen seeking market entry licences,
the mobile market was opened up in 1995 and Celcom, the largest mobile player
upgraded its services to GSM 900. Telekom Malaysia introduced CDMA based mobile
homeline services in 1997 (Zita 2005; Salazar 2007). However, the Asian financial crisis
and Malaysia’s commitment to the WTO led to consolidation in the market.
B. Third Generation (3G) Spectrum
The growing demands and the need for speed, compatibility and multi-media mobile
services led to the development and adaptation of 3G solutions (ITU 2003). The 3G
evolution offered audio, video and graphics applications through mobile telephones. 3G
is known as high speed IP data networks and offers mobile broadband. In Malaysia, The
MCMC awarded two 3G licences to UMTS, a Maxis subsidiary, and TM in 2002 via a
beauty contest. In 2003, Celcom, part of TM, became the first provider to introduce video
call base on 3G WCDMA technology and both firms launched their services in 2005.
Two further licences were awarded to MiTV (U Mobile) and Time dotCom in 2006
which subsequently sold its licence to DiGi (MCMC 2006).
Motivated by consumer demand for data services, including social media and content, all
the four Malaysian mobile operators currently utilise the 3G network to provide services
85
to subscribers. The number of 3G subscribers increased from 9.2m at the end of Q4 2010
to an estimated 13,637 million as at Q2, 2012 (Business Monitor International (BMI)
2012; MCMC 2012). With pressures on margins and increased competition, several
operators have entered into infrastructure sharing deals. This is reflected by the Maxis
and U mobile RAN sharing deal as well as DiGi and Time dotCom (BMI 2012). Several
operators are planning to migrate to LTE.
C. Broadband
Policy makers and investors worldwide are directing attention at Broadband which has
the ability to transfer information at greater speeds than previous technologies (ITU
2011). Broadband can be fixed or mobile. Its benefits include the ability to transfer
information at greater speeds than previous technologies.
The technology benefits
include convergence and the ability to transfer voice and data through one channel.
In view of the importance of broadband, the Malaysian Government announced the
National Broadband initiative, HSBB in 2007. The target was of achieving a 50%
household broadband penetration by 2010, was surpassed with the achievement of a
55.6% penetration rate as at January 2011 and the MCMC reported a 63.8% penetration
rate with 6, 726m households as at Q3 2012 (EPU 2010; The Edge 2010; MCMC 2012).
Fixed broadband is predominantly led by the HSBB, UniFi, initiative with 1.3 million
subscribers. (MCMC 2012; Telegeography 2012).
Wireless Broadband access is growing rapidly and internet users are shifting from fixed
to wireless connections and devices. This is due to users upgrading to smartphones, and
the increased demands for data services (Adham, Said, Ramlee & Hainninen 2009;
MCMC 2010; Oxford Business Group 2010; BMI 2011; Frost & Sullivan 2011; Pyramid
Research 2011). There were an estimated 7.556 million broadband subscribers in 2011 as
compared to 4.722 million at the end of 2010. This is forecasted to increase to 15.718
million by 2015 (BMI 2011).
Mobile broadband, under the HSPDA is anticipated to lead market growth with users
upgrading to smartphones, and the increased demands for data services (Adham, Said,
86
Ramlee & Hainninen 2009; MCMC 2010; Oxford Business Group 2010; BMI 2011;
Frost and Sullivan 2011; Pyramid Research 2011).
While there has been much progress in the spread and uptake of Broadband technologies
and services (ITU2011) fixed broadband services are limited in urban areas, furthermore
internet access remains expensive in developing countries. This is aptly summed up by
(BMI, (Q4 2011 p.9) that “broadband tariffs remain high as to wholesale broadband
costs which have been passed onto the consumers”.
D. Worldwide Interoperabilit y for Microwave Access (WiMAX)
Malaysia’s commitment to ICT is also borne out by the creation of new market segments
to support and encourage broadband penetration. The MCMC awarded WiMAX, 2.3GHz
licences to four companies in Malaysia in 2007, P1, AsiaSpace, YTL and RedTone.
WiMAX is positioned as a 4G technology with the capability of delivering triple play
across broadband (telecomasia.net 2007; MCMC 2010). In 2008, Packet One Networks
Malaysia Sdn Bhd became the first provider to introduce Wireless WiMAX Service on
802.16e spectrum technology. While WiMAX has had a small impact on subscriber
numbers, the three mobile players continue to dominate the market.
E. Mobile Virtual Net work Operators (MVNO’s)
MVNO’s ‘lease’ bandwidth from the Mobile Network Operators (MNO) that own the
respective networks. This enables, through cellular agreements, related and adjacent
sectors to enter the high growth sector through cellular players (MCMC 2010). MVNO’s
present opportunities for via existing operators with alternative sources of revenue. The
Malaysia landscape had 12 MVNO players as at the end of 2011 and more are
anticipated to launch services in 2012 (MCMC 2012). The most prominent MVNO’s in
Malaysia are TuneTalk; Merchant Trade; RedTone and Happy. Celcom holds at least
50% share of total MVNO’s locally and is targeting to capture at least 2% of the total
mobile market by 2015.
87
F. Subsea Communications Cables
Subsea communications cables play an integral role in extending telecommunications
reach across nations. Currently, the majority of transoceanic internet traffic is transmitted
via subsea cables and their increasingly important strategic value is acknowledged by
Governments and corporates alike (ITU 2011). Malaysia’s ongoing commitment to
enhance communications is reflected by the recent announcement by Telekom Malaysia
to build a 400km submarine cable linking Malaysia to Indonesia. The arrangement is
between TM and its Indonesian partners PT XL Axiata and PT Mora Telematika
(MCMC 2011). Additionally, Time dotCom has been invited to participate in the Unity
Cable System, a 9,620km cable connecting Asia to the US. Other partners include,
Google, Bharti Airtel, SingTel, Pacnet and KDDI (The Star, 20 November, 2010).
G. Long Term Evolution (LTE) and 4G
The Third Generation Partnership Project (3GPP) Long Term Evolution for UMTS sets
the standards for improving UMTS based on GSM. Often referred to as Long Term
Evolution (LTE), which replaced Worldwide Interoperability for Microwave Access
(WiMAX) it provides high data speeds across mobile networks and handheld devices
(pcmag.com 2011). LTE sometimes referred to as a 3.9G standard (mobile88.com 12
January 2010) offers integration with other open standards increases spectrum efficiency.
LTE Advanced, approved in May 2011, along with WiMAX 2.0 and LTE, is now
accepted as a 4G technology (ltewold.org 2011; pcmag.com 2011).
The IT working definition for 4G, cited in Curwen and Whalley, (2008, p.46; 2010,
p.13), is “A downlink speed of at least 100mbs when fully mobile or (according to ITU
which is operating via working part 8F) 1GBS with limited or local mobility, although it
remains unclear for now exactly how this is to be measured”. 4G technology is designed
to deliver fast wireless broadband services to mobile devices using an encoding method
OFDM (Orthogonal Frequency Division Multiplexing).
Nine Malaysian companies were allocated blocks of the 2.6MHz LTE spectrum in
December 2011. These were the four cellular players namely, Celcom Axiata Berhad;
DiGi Berhad; Maxis Berhad; U mobile Berhad, all of which already have 3G networks
88
and the three WiMAX operators in the market, Packet One Networks Sdn. Bhd.;
REDtone International Berhad and YTL communications Sdn Bhd.
While this situation implies that consumers are set to benefit as price wars are likely to
ensue the award of spectrum did however raise questions about the transparency of the
process. This stemmed from Puncak Semangat Sdn. Bhd., a newcomer to the scene being
awarded the biggest bite of 30MHz as compared to the 20MHz block allocated to the
seven named firms. Equally surprising was the selection of AsiaSpace Sdn. Bhd. as the
firm had stopped offering WiMAX services for almost a year (The Star, December 6,
2011). This also raises the question as to whether doing business in Malaysia requires
dealing with the politically well-connected (BMI 2011). In line with global trends,
Malaysian operators are embarking on network sharing deals to roll out LTE. In
December 2012, the MCMC announced confirmation that eight of the abovenamed firms
were awarded the LTE spectrum. AsiaSpace was not successful. It is anticipated that
many of the firms will enter infrastructure sharing deals and LTE will assist in reducing
network congestion and latency (MCMC 2012).
4.6 The Major Malaysian Telecommunications Firms
Currently, the Malaysian telecommunications market is one of the most advanced in the
developing world (IDC 2009; elioe.com 2010; budde.com 2011; Fiercetelecom 2011;
TNS 2011; BMI 2012). In terms of mobile penetration, it ranked third in comparison to
its regional counterparts. In 2012, the Malaysian telecommunications sector had four
mobile players, 12 Mobile Virtual Network Operators (MVNO’s), seven Internet Service
Providers (ISP’s) and four WiMaX players. This section presents the salient features of
the pertinent key players: namely i) Telekom Malaysia; ii) Time dotCom; iii) Maxis; iv)
DiGi; v) Axiata and Celcom vi) U mobile. Of these players, Axiata is the most
internationally active.
4.6.1 Telekom Malaysia and TMI
Malaysia’s fixed line market is dominated by Telekom Malaysia, the previous Telekom
Malaysia (TM) which is listed on the KLSE. TM commenced its international ventures in
89
1994 when it entered the Sri Lankan market. It continued its international expansion as
shown in Table 4.1 below.
Table 4.2: TM International Ventures
Company
Country
Year
Type of
Investment
Joint Venture
(with local
Government)
Societe Des
Telecommunications
De Guinee
Republic of
Guinea
1995
Ghana
Telecommunications
Company Limited
(Ghana Telekom)
Telkom SA Limited
(TSA)
Ghana
Feb 1997
South
Africa
May 1997
Dialog Telekom
Limited (formerly
known as MTN
Networks (Private)
Limited (MTN)
TM International
(Bangladesh)
Limited (TMIB)
Samart Corporation
Public Company
Limited (SAMART
Cambodia Samart
Communications
Co. Ltd.
(CASACOM)
Telekom Networks
Malawi Limited
(TNM)
PT Excelcomindo
Pratama
(Excelcomindo)
Sri Lanka
February
1994
Bangladesh
October
1995
Joint Venture
Thailand
June 1997
Joint Venture
Cambodia
May 1998
Shareholder
Malawi
January
1995
Joint Venture
Indonesia
January
2005
Shareholder
MobileOne Limited
Singapore
August
2005
Joint Venture
Mobile
Telecommunications
Company of
Esfahan (MTCE)
Multinet Pakistan
(Pvt) Limited
(Multinet)
Spice
Communications
Iran
December
2005
Joint Venture
Pakistan
February
2005
Joint Venture
India
March
2006
Joint Venture
Shareholder
(local
Government
& partners)
Joint Venture
(with foreign
partners and
Government
of S. Africa)
Shareholder
Type of Partnership
Strategic partnership:
40% - Government of Guinea to form
Sotelgui s.a (national
telecommunication
operator);
60% - TM
Purchase of equity:
70% - Government of
Ghana 30% - TM
Joint with US-based
South Western Bell Corp
(9%) via Thintana
Communications LLC to
acquired TSA (total 15%); 6% - TM
TM majority shareholder
in MTN Networks
(Private) Ltd (100%)
30% - AK Khan & Co. Ltd
(a leading Bangladesh
business group) 70% - TM
Stake (19.22% of TM) in
Samart Corporation
Public Company Ltd
Partnership with Samart
Corp. Public Co. Ltd from
Thailand (100% - TM)
40% - Malawi
Telecommunications Ltd
60% - TM
59.7% - TM, 16.8% - Khazanah, 7.4%
(AIF Indonesia Ltd), 16.0%
(PT Telekomindo Primabhakti), 0.1%
(Employees & Public)
29.79% - SunShare. Investments Ltd –
consortium,TMI holds 80%;Khazanah
20%
Agreement between TMI and
Technology Resources Industries – to
transfer MTCE equity from TRI to
TMI
78% - TMI, 22% - local
investors
49% - TMI; 51% - Mcorp
Source: TM International 2006; Ahmad & Hashim 2007
90
After venturing overseas, forming strategic partnerships and acquiring equity stakes in
several regional entities, the TM Group underwent a demerger exercise in 2007. This
resulted in the formation of Telekom Malaysia (TM) and Telekom Malaysia International
(TMI), with TM focusing on the fixed market. TMI, concentrated on the mobile business
across regional markets, and was listed as a separate entity on the KLSE in 2008. It was
subsequently rebranded as Axiata in March 2009 (Axiata 2011; MCMC 2011; TM
2011).
In July 2011, Telekom Malaysia sold its remaining 92.4 million shares in Axiata to focus
on its rapidly expanding broadband network, UniFi (BMI 2011; TM 2011). The UniFi
project is targeted to boost GDP by 0.6% and create 100,000 jobs by 2017. The company
reported revenues of MYR7.2bn year to date as at September 2012, representing a 7.2%
year on year increase (TM 2012).
4.6.2 Axiata and Celcom
Celcom, formerly part of TM is now part of the Axiata Group. With 12.4 million
subscribers as at Q3 2012 and a 34.2% market share,
it is the market leader for
Broadband (Kettha.gov.my 2005; BMI 2011; Axiata 2012). Additionally, in line with its
customer segmentation strategy, Celcoms services are extended through its eight MVNO
partnerships. These include Tunetalk and MerchantTrade which have succeeded in
attracting over 2 million subscribers in the last 2 years (Celcom 2011).
Axiata, with its roots in Government, has a presence in 10 countries, as shown in Table
4.2 (The Edge, 30 August, 2010; Axiata 2012). It had an estimated 212.6 million
subscribers as at Q3 2012 compared to 120 million subscribers in 2009. The company
has experienced year to date increase its revenue by 8.6% with revenues of RM 16,448
million as at Q3 2012. Axiata is the market leader in Sri Lanka through its partnership
with Dialog and among the top three players in Indonesia, India, Bangladesh, Cambodia
and Singapore (Axiata, 2012; BMI 2012).
Axiata now faces challenges in its international ventures. It accrued losses in the highly
competitive Indian marketplace through its venture with poorly performing Idea Cellular
Ltd. The impairment losses of Idea cost Axiata US$1.08b. It has also divested its non91
core assets, withdrawing from its investments in Africa and recently announced the sale
of its stake in Iran (The Star, 13 December, 2011). Furthermore, Etisalat sold its equity
stake in XL, Axiata’s partner in Indonesia.
Table 4.3: Axiata Group Subsidiaries and Associates
Company
Country
Equity
Stake
Revenue
2012
100%
No of
subscribers
(Millions) 2012
12.400
Celcom
Malaysia
XL
Sept Market
Position
RM5,726 mn
#2
Indonesia
66.7%
42.3
RM5,268 mn
#3
Dialog
Idea
Sri Lanka
India
85%
19.1%
7.6
115.5
RM1,106 mn
INR54,035
#1
#5
M1
Singapore
29.6%
2.1
S$577.4 million
#3
Robi
Bangladesh
70%
30.4
RM1,084 mn
#3
Hello
Cambodia
100%
2.3
RM96 mn
#3
MTCE
Iran
49.0%
SamartiMobile
Thailand
24.41%
Multinet
Pakistan
Pakistan
89%
Source: Axiata 2012; Idea 2012; M1 2012
While witnessing strong growth in data revenues, intense competition impacted the
earnings margin of Axiata as reflected by its first quarter results for the period January –
March 2011. Earnings dropped by 40.4% year – on – year as pointed out by the
Chairman in his annual report,
‘the challenges that will continue to plague the company include stiff competition, rising
inflation and ringgit appreciation, since more than half of its revenue for the first quarter
was from overseas operations.’ (The Star, 2 June 2011).
Notwithstanding these challenges, Khazanah, which owns a 41% equity stake in Axiata
recently announced that it targets Axiata to be a regional champion by 2015 (The New
Straits Times, 21 May 2011). Benefitting from Government associated financial support,
Axiata is also modernising its network and has earmarked US$550 million for its
Indonesian operation. In line with its strategy of focusing on regional growth, Axiata
92
through its subsidiary, Dialog Broadband Networks obtained a share of the Sri Lankan
corporate telecommunications market through its US$34 million acquisition of Suntel
Limited on December 15, 2011. This firm provides voice solutions, data solutions and
manages services for corporate clients. It also holds 20% of the country’s fixed-line
market (Telegeography 2011).
Axiata’s foreign exchange translation losses and higher operating costs in some of its
ventures
have resulted in reduced profits. It has been affected by the Indian
Government’s decision to revoke 122 2G licences including the nine circles which were
held by Idea. Axiata profits from its India operation account for 5% of its total profits.
While this may be relatively small, it is significant that the company views India as one
of its fastest growing segment markets. As reflected by the statement from Axiata that it
had “A long term view on India which represented an important and strategic stake for
Axiata” The Indian Government has announced that it will hold an Auction for the
affected licences, and Axiata has stated that it will make a bid if invited to do so (The
Edge, financial Daily, 01 December, 2011; The Star, 4 February, 2012; The Star, 8
February, 2012).
4.6.3 Time dotCom
Time Telecommunications incorporated in 1996 was renamed as Time dotCom in 2000
and listed on the KLSE in 2001. Part of Khazanah’s media and communications
portfolio, It was awarded a 3G licence in 2006 (Malaysiawireless, 13 July, 2007). This
was later ‘sold’ to DiGi in a 27.5 million new share swap deal. This was also as a result
of Telenor’s requirement to reduce its stake to 49% to meet foreign ownership regulation
(Telegeography 2007). Although it had only an estimated 5% of the fixed line market in
2010. Time dotcom is the second largest fibre network with approximately 90% of its
revenues generated from wholesale, corporate and Government sales. Its revenues have
grown rapidly from RM286.8 million in 2009 to RM297.3million revenue as at Q3 2012
(NewSabahtimes, 15 March, 2010; MCMC 2010; time.com.my 2012).
The majority of the revenue came from the wholesale segment with 75% emerging from
the data services. Since the demand for voice services in the saturated domestic market is
declining, Time dotCom entered regional markets through acquisitions. These include,
93
AIMS, Malaysia’s leading data centre player; Global Transit Communications, a Global
IP network and Global Transit Limited which provides a Trans Pacific Cable System
(Time dotCom 2011; MCMC 2011; telecomasia.net 2011). In November, 2010, the
company announced further plans to restructure as a regional telecommunications player
(Time.com.my 2010). In April, 2011, Time dotCom launched additional High Definition
TV channels as part of a collaboration agreement with ASTRO, Malaysia’s market leader
for pay TV services The package, bundled with Broadband, is anticipated to protect
Astro’s market share as TM’s IPTV service expands (The Star, 21 April, Malaysia 2011).
4.6.4 Maxis
Maxis, formed in 1993, launched its operations in 1995 and was listed on the KLSE in
2002. (BMI 2011; Maxis 2011). With a market share of 44% and 14.2 million
subscribers, as shown in Table 4.3, it is the leading Malaysian cellular
telecommunications player. It was the first in the world to upgrade its 3G network to
HSDPA offering wireless broadband, and the first to launch the Blackberry and the
Apple iPhone in Malaysia (BMI 2010; MCMC 2010; Maxis 2012).
In the past, Maxis was overshadowed by TM. The situation has now changed and Maxis
is one of the three Malaysian telecommunications firms that have penetrated international
markets. The firm currently has a presence in India, where it holds a 74% stake of Aircel
which was acquired in 2005. As shown in Table 4.4, Aircel which is ranked number five
in India currently has 68 million subscribers (Oxford Business Group 2007; Aircel 2012).
It entered Indonesia via a 51% owned Joint Venture with the Lippo Group for NTS. It
bought a 25% NTT stake in Mobitel in May 2007, but the Government suspended the
transaction (Curwen & Whalley 2008). Significantly, the number of subscribers in their
overseas market is double that of the domestic market of Maxis.
However, India’s Central Bureau of Investigation (CBI) registered a corruption case in
2011 against the major shareholders of Maxis, the owners of the Indian partners, Sun TV
and the former Telecommunications Minister of India on the grounds that there were
elements of coercion and corruption surrounding the Aircel purchase (Indiapost, 6 Dec,
2011). Although the former Indian Telecommunications Minister is already in Jail on
corruption charges, Maxis has denied any wrong doing (The Business Times, 26 Dec
94
2011; The Star, 26 May, 2011). Binariang GSM which holds the 74% stake in Aircel
through Maxis communications, announced the decoupling of Aircel due its weak
financial performance (The Star, 28 December, 2011).
The situation has been compounded by the Indian Government’s decision to revoke 122
2G licences following the Supreme Court’s judgement delivered on 2 February, 2012
(The Malay Mail, 3 February, 2012). This development is bound to impact on the
medium and longer term growth strategies and the future of Aircel (telecompaper, 2
November, 2012).
In the domestic market, Maxis entered into a 10 year collaboration network sharing deal
with U mobile in 2011. This benefits both firms as it reduces cost and provides
opportunities for growth (The Business Times, 22 October 2011; Telegeography 2011;
the edgemalaysia.com, October, 2011; Maxis 2011; U Mobile 2011). Maxis is one of the
recipients of the LTE/4G spectrum and is preparing to upgrade its network and services
to meet consumer demand, especially for data (The Star, 28 January, 2011). Maxis
continued to strengthen its broadband services and announced its entry into the IPTV
market in October 2011 (The Star, 6 October, 2011). It also partnered with Western
Union to launch its mobile money transfer service in 2010 and is generating revenues
from advertising and broadband services (Maxis 2012).
Table 4.4: Maxis Entities
Company
Country
Equity
Stake
Maxis
Malaysia
100%
No of subscribers Revenue Q3 Market
(Millions)
Q3 2012
Position
2012
RM661 mn
13,930
#1
Aircel
India
74%
68
USD 1.159 bn
14.9%
17+
IDR
trillion
US$150.14
million
PT
Axis Indonesia
Telekom
Indonesia
(Formerly NTS,
formerly Lippo)
# 6; 22
circles
in India
1.3 # 5
Source: Aircel 2011; Axis 201; Maxis 2011, 2012
95
4.6.5 DiGi
DiGi, is part of the Telenor group which owns 49% of its shares. The Employees
Provident Fund (EPF) owns 15.57% with the remainder listed on the KLSE. It is the
market leader in prepaid services, with 10.3 million subscribers as at Q3 2012 of which
8.64 million were prepaid. A noteworthy recent development was the network sharing
deal between DiGi and Celcom which would enable both firms to collectively save
RM2.2 billion over the next 10 years (The Business Times, 4 April, 2011; Celcom 2011;
MCMC 2011; DiGi 2012).
Telenor which used to own 61% of DiGi had to sell 10.2 % stake to Time dotCom in
2007, to comply with the foreign shareholdings rule and acquired the 3G licence from
Time dotCom. Recent reports indicate that Telenor is now in talks with the Malaysian
Government to raise its stakes in DiGi.com. It is considering quitting the Indian market
after being affected by the Indian Governments announcement of revoking the licences.
Telenor had a joint venture with Unitech and delivered mobile services through its JV
firm, Uninor (The Star, 4 February, 2012).
4.6.6 U mobile
U Mobile is Malaysia’s fourth mobile player. It was assigned a 3G Spectrum in March
2007. From an early stage in its existence, the company formed several strategic
partnerships. On the domestic front, these included a domestic roaming agreement with
Celcom which enabled U Mobile to offer nationwide coverage to its customers.
Internationally, the firm attracted overseas investors, namely, KT Freetel and NTT Do
Co Mo who acquired a 16.5% equity stake each in the company in December 2007.
However, both firms subsequently sold their shares back to its parent and majority
shareholder, U Television, in 2009 citing lowered market expectations for U mobile in
Malaysia (Global Telecom Buisness 2009; Reuters 2009)
The firm continued to pursue growth through partnerships and in March 2010, ST
Telemedia acquired a 33% equity stake in the company, enabling U Mobile to leverage
on ST Telemedia’s expertise to capitalise on 3G opportunities in Malaysia. Furthermore,
in August 2010 it renewed its domestic roaming agreement with Celcom for three years,
96
extending nationwide access to it’s customer base. The company launched mobile
broadband in October 2010 and entered a 3G Radio Access Network (RAN) sharing deal
with Maxis in October 2011. The company registered two million subscribers as at May
2012 (U Mobile 2012).
4.7 The International Presence of Malaysian
Malaysian telecommunications firms and players in adjacent industry sectors have
ventured into international markets. A push factor for reverse investments is the intense
competition in the Malaysian telecommunications domestic market.
The process
commenced in 1994 with TMI moving into regional markets in line with the concept of
psychic distance. These countries were Sri Lanka (1994), Bangladesh (1995). Thailand
(1997) and Cambodia (1998) as these were psychically close. The entry mode was
largely through Joint Ventures and through purchase of shareholdings, reducing business
risks and provide for successful financing, marketing and networking (Ahmad & Hashim
2008; Asgari, Ahmad & Gurrib 2010).
Taking advantage of market access resulting from Government to Government
arrangements in the spirit of South-South corporation they expanded further afield into
several countries in Africa, namely the Republic of Guinea (1995), Ghana (February
1997) and South Africa (May 1997), (Ahmad & Hashim 2007). The entry mode strategy
was to have majority ownership with management control which did not quite fit the
Stages theory (Uppsala Model of Internationalisation 1977). The literature indicates that
the timing of entry was an important factor for determining TMI’s international ventures.
In addition to taking advantage of Government to Government business connections,
they also invested in countries like Malawi where penetration rates were low in order to
secure a first mover advantage.
The literature points to both successes and failures. The latter relates largely to the
overseas ventures by the then TM which had invested US$890 million in its international
ventures by September 2000. In late 2002, TM withdrew its investments in Ghana, where
it had had acquired a 30% equity in Ghana Telecom. The decision to withdraw was
triggered by the Government of Ghana terminating the contract of the Managing Director
97
appointed by TM. It also withdrew its investments in South Africa in 2004 on the
grounds that it was moving away from reaching a market saturation point. The exit was
also reflective of TM’s move to consolidate its strategic investment overseas and focus
on markets closer to Malaysia (Ahmad & Hashim 2007). The implementation of GATS
and the establishment of the ASEAN free trade area which was implemented in 2003 led
to another wave of overseas ventures by Malaysian firms. These included, Indonesia
(January 2005), Pakistan (2005), Singapore (August 2005) and Iran (December 2005).
They then expanded further afield, particularly into less developing countries like India
which had strong market potential and limited resources to make the necessary
investments in physical infrastructure
The literature suggests (Ahmad & Hashim 2007; Kitchen & Ahmad 2008) while
knowledge and experience of internationalisation is a prominent factor for successful
internationalisation (Johanson & Vahlne 1997; Reid 1983), TM’s knowledge and
experience of internationalisation was then limited. The pool of expert staff with
internationalisation knowledge was insufficient (Ahmad & Hashim 2007; Kitchen &
Ahmad 2008). Due to these shortcomings, TM’s experienced difficulties in securing
reliable local partners.
Another possible contributory factor for TM’s poor performance in its earlier African
ventures was its bureaucratic culture. This arose from the Government being the major
shareholder with the board of directors comprising retired senior civil servants and
politicians. Their lack of business acumen tended to result in politically, rather than
commercially motivated decisions (Abang 2009).
The increasing demand for mobile services was another contributory factor as Malaysian
telecommunications firms faced challenges in maintaining domestic growth. The limited
domestic market size, structural, cyclical and institutional factors have led players to
venture into foreign markets in pursuit of growth (Ariff & Lopez 2007; Shankar et al.
2010). Notwithstanding, only two major telecommunications firms now have significant
contributions from their overseas operations. As shown in Table 4.4, the majority of the
revenues for these firms are generated by their overseas ventures.
98
Table 4.5: Malaysian Telecommunications Players venturing overseas
Company
Description
Countries
Axiata
Formerly,
TMI, listed
on
the
KLSE
Listed
on
KLSE
10
countries
Maxis
2
countries
Total
Foreign
subscribers
2012
212.mn
Total
Malaysian
subscribers
2012
13 mn
Total
Revenue
2012
77 mn
14.2 mn
N/A
MYR13,2
28 mn
Total
Revenue
Malaysia
2012
MYR5,765
mn
MYR6,651
mn
Source: Axiata 2012; Maxis 2012
Currently, other Malaysian players now have a presence in foreign markets. While they
include small players like Greenpacket, RedTone and AKN messaging, the larger ones
are Maxis and Axiata. Their strategies include leveraging on opportunities in fast
growing markets with low penetration rates. The total investments which amounted to an
estimated RM2.5 billion of GNI in 2011, are anticipated to generate additional GNI of
RM4.8 billion by 2020 (GoM 2011).
4.7.1 Selected Target Regional Markets for Malaysian
Telecommunications firms
The principal regional target markets for Malaysian telecommunications firms as
reflected by their degree of involvement are India, Indonesia, Sri Lanka and Singapore.
Different entry modes were used by the telecommunications firms to penetrate these
markets. They took account of national licensing and regulatory policies. In the BMI’s
(2011), risk/rewards rating, Malaysia is ranked fifth with the developed countries of
Japan, Singapore, Australia and South Korea in the lead. While emerging markets
present opportunities, they also present challenges and risks. The role of the Government,
both host and home, as seen in the case of the Indian telecommunications sector, is
becoming imperative in entering foreign markets (BMI 2011; The Star, 4 February,
2012). The pertinent regional markets are discussed next.
99
4.7.1.1 India
India’s population in 2012 was 1.22 billion of which an estimated 50% were under the
age of 25 (CIA 2012). One of the fastest growing telecommunications markets in the
world, India’s teledensity increased to an estimated 79.28% by May 2012 with 929 mn
mobile subscribers as at May 2012 compared to an estimated 4% in March 2000 with just
under 2 million subscribers. While the fixed market declined from 37.96 million in
March 2009 to 36.96 million in March 2010 and 31.53 million in May 2012, broadband
subscribers were on the rise (Telegeography 2011; India Telcom News 2011; TRAI
2012).
The liberalised policy environment and entrepreneurial abilities have enabled Indian
firms to innovate and move up the value chain (Oswal 2010). The country’s regulatory
policies allow international firms to enter the sector with restrictive equity, capping
foreign ownership at 74% (Telegeography 2012). The key Indian players are shown in
Table 4.6.
Table 4.6: The Indian Telecommunications Market
Company
Equity Structure
Bharti Airtel
Sony Ericson, Nokia 252 mn
and SingTel
Reliance Group
13.41 mn
Reliance
Communications
Vodafone India
No. Of
subscribers
(Millions) 2012
Revenue
2012
(Millions)
Market
Position
$14,937mn
#1
INR
203,803mn
GBP4 bn
# 2 in India
# 4 globally
#3
Vodafone UK 70%
153.73 (Q2 2012)
Primal Healthcare 5%
Indian
Business
partners 25%
BSNL
Indian Government
119
mn
(Q2 INR32,045
2012)
Crore
Idea Cellular and Indian 11.8%
117.2 mn
INR363.6 bn
Spice
Promoters 46% (Aditya
Birla 25.3%)
Foreign Holding 42.2%
(Axiata 19.1%)
#4
#5
Source: Bharti Airtel 2012; Reliance communications 2012; Trai 2012
100
The demand for services is anticipated to remain high as opportunities exist across all
segments and the nature of increased competition has improved quality of service to
customers. India also has a large rural population with nearly half of its GDP coming
from rural areas (Budde.com 2010; BMI 2010; Trai 2012). 3G, number portability and
value added services across broadband with low penetration present opportunities for
growth.
Regulatory reforms as well as the availability of liquidity have enabled Indian firms to
capitalise on ownership and location advantages to leverage on opportunities in
international markets (Oswal 2010). Airtel has successfully penetrated 19 countries and
is the fifth largest mobile player in the world with an estimated 252 million subscribers
(Airtel 2012). Notwithstanding an increasing degree of rivalry, firms with access to
capital and innovative valued added services have an opportunity to leverage on the size
of the market.
However, the Indian Government’s decision in February 2012 to revoke 122 2G licences
issued in 2008, affected nine India mobile operators. Two of them, namely, IDEA and
Aircel have Axiata and Maxis, as their shareholders respectively. The court’s decision
has had a negative impact on foreign investors as reflected by the comment by Telenor’s
CEO, John Frederick Baksaas, “Telenor would from now on carefully consider every
option prior to making further investment” (cited in The Star, 14 February, 2012 p.2)
4.7.1.2 Indonesia
Indonesia’s population was estimated at 248 million in 2012 and the majority were
between the age of 15-64 years (CIA 2012). Recent major regulatory and structural
reforms altered the Indonesian telecommunications landscape and the country is now the
third largest wireless market in Asia after China and India with an estimated 265 million
subscribers in 2012. Although it achieved an estimated 110% mobile penetration rate in
2012 compared to 44.2% at the end of 2007, ARPU was one of the lowest in the region
at USD2.50.
Internet penetration was also only 12% (Frost & Sullivan 2011; The
Jakarta Post, 16 May, 2011). The landscape constitutes twelve mobile players of which
the top five are shown in Table 4.7 below.
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Table 4.7: The Indonesian Telecommunications Market
Company
Equity Structure
No. of
subscribers
(Millions)
2012
Revenue
2012 – Q3
Market
Position
Telkomsel
Government of Indonesia –
52.85%
Local – 7.20%
Foreign – 39.5% (SingTel 25%)
Qtel – 65%
Government of Indonesia –
14.29%
Skagen AS Entities – 5.57%
Public – 15.15%
Axiata - 66.7%
Etisalat 13.3%
Public – 20%
Hutchinson - 60%
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IDR39.8 tn
#1
55
IDR16.5 tn
#2
50
IDR18,921 Bn
#3
N/A
N/A
#4
Maxis - 14.9%
STC – 80%
17+
IDR 1.3 trillion
US$150.14
million
#5
Indosat
Axiata XL
PT
Hutchinson
CP (3)
Axis
Source: Axiata 2012; Axis 2012; Indosat 2012; Telkomsel 2012
Malaysian firms have penetrated the Indonesian market to leverage on the low
penetration and high growth opportunities. These include Axiata which owns 66.7% of
PT XL Axiata TBK and Maxis which now owns 14.9% of Axis Telekom, formerly, PT
Natrindro Telepon Selular (NTS). The Indonesian telecommunications sector continues
to present opportunities for firms with access to capital, willing to innovate and deliver
value added services, to leverage on growth opportunities in the mobile and data sector
(Oxford Business Group 2011).
4.7.1.3 Sri Lanka
The Sri Lankan market is on a path of recovery after the end of the civil Tamil Tiger war
in 2009. With a population of approximately 21.4 million as at 2012, mobile penetration
rates reached 90% in mid 2012 or an estimated 19 million compared to 70% in 2010
(TRCSL 2012) Internet penetration grew to 27% in 2011 with 5 million subscribers
compared to 1.7 million subscribers in 2010 (ITU 2011), whereas fixed line penetration
reached 17.1% in 2011 compared to 6% in 2006. A fifth mobile operator Bharti Airtel,
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launched its services in 2009 (Budde.com, 2010). Malaysia’s Axiata group owns 85% in
Dialog. Sri Lanka remains low on the BMI risk rewards, mainly due to its previous
unstable history, inflationary pressures and consumer demand (BMI 2011) The industry
players are shown in Table 4.8.
Table 4.8: The Sri Lanka Telecommunications Market
Company
Equity Structure
Dialog Axiata
No. of
subscribers
(Millions) 2012
85% Axiata
7.568
15% Public Listed
Mobitel Sri Lanka
Sri
Lanka 4.8 estimated
Telecom
Etisalat Sri Lanka Etisalat
4.0
(Previously Tigo)
Airtel Lanka
Bharti Airtel
1.8
Revenue
2012 – Q3
Market
Position
SLR41,5bn
#1
SL18.2bn
#2
N/A
#3
SLT 5.96 bn
#4
Source: Axiata 2012; TRCSL 2012
4.7.1.4 Singapore
Singapore with a population of 5.353 million as at July 2012 is the most globalised
nation in the world (Statistics Singapore 2012) It also has the most advanced and
developed telecommunications infrastructure in South East Asia (WEF 2011). Singapore
achieved a 148.5% penetration rate and 7.38 million subscriptions as at June 2011 of
which over 50% were 3G subscribers (IDA 2011). The main telecommunications players
are shown in Table 4.9.
As of December 2012, SingTel had 468 million subscribers in 26 countries, of which
only an estimated 1.6% were domestic. Due to its small population and saturated
domestic market, SingTel had to internationalise and move into Asia Pacific countries
(Curwen & Whalley 2008). Its brand is recognised across the region and it is the largest
telecommunications firm across Asia (Pyramid 2011; SingTel 2012).
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Table 4.9: The Singapore Telecommunications Market
Company
Equity
Structure
No. of subscribers Revenue
(Millions) Q3 2012 2012 – Q3
SingTel Mobile Temesek – 3.7
- Singapore
54.4%
SingTel
Starhub Mobile Starhub
2.18
M1
Axiata
2.059
29.6%
QMax
Qtel
N/A
Communications
Market
Position
S$18,625 mn
#1
S$ 2.18 mn
S$2.059 mn
#2
#3
N/A
#4
Source: IDA 2012; M1 2021; Starhub 2012; SingTel 2012
4.8 The Malaysian Telecommunications Sector’s Competitive
Strategies
As discussed in Section 2.2, Globalisation and the gradual lifting of trade barriers
through GATT and the WTO has enabled geographical reach for firms (Alam et al 2010)
since WTO membership requires countries to relax their trade and non-trade barriers to
permit the freer flow of global trade (WTO 2011; MITI 2011). An increasing number of
countries are also participating in Free Trade Agreements (FTA’s) at the global, regional
and the bi-lateral levels. These developments together with technology advances have
created a dynamic market landscape characterised by intense competition which compel
Malaysian Telecommunications firms to internationalise their operations for continuing
growth and development (Ahmad & Hashim 2008).
Trade liberalisation is making the global market place a much larger base for goods and
services. However, firms have to contend with a greater number of competitors (Kotler
2006). Consequently and in order to withstand the challenges emerging from
globalisation, organisations must be able to survive high intensity domestic competition
which is also critical for international success (Porter 1995). Success is also dependent on
a competitive strategy which is about addressing the question ‘How can we perform this
function better than our rivals?’ (Rumelt 1991).
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The purpose of a competitive strategy is to provide the organisation with a sustainable
competitive advantage for survival in the long term. An organisation that has created for
itself a “unique and sustainable competitive advantage is more likely to succeed than one
that simply trails behind somebody else’s practices” (Majaro 1995).
However, a more liberalised trading environment with new players and rivals could lead
to hyper competition which can be defined as:
‘an environment characterised by intense and rapid competitive moves, in that
competitors must move quickly to erode the advantage of their rivals. This speeds up the
dynamic strategic interactions among competitors’ (Grant 1998, p. 72)
It follows therefore that competitive advantage is transitory. Enterprises should
continuously generate new competitive advantage in order to neutralise their rivals’
competitive advantage. It is only by continually creating and renewing competitive
advantage, that firms can sustain market dominance and superior performance in both the
international export and domestic markets.
For the firm to compete globally it has to develop a global strategy which has three
essential elements (Yip 2003). These are:

Developing the core strategy – the basis of sustainable competitive advantage. It is
usually first developed in the home country.

Internationalising the core strategy through international expansion of activities and
through adaptation.

Globalising the international strategy by integrating its strategies across countries.
In pursuit of global competitiveness, the Malaysian Government has positioned its
strategies and policies to leverage on ICT for growth and development to compete in the
global arena in the late 1990’s (IMP3 2006; Chew 2007). In terms of its competiveness,
it has received differing rankings. The World Economic Forum (WEF) ranks Malaysia
25 out of 139 countries in its Globalisation Competitive index, a drop of in position from
105
24 in 2009-2010 (WEF 2012). Ernst and Young ranked Malaysia 28 out of 60 countries
in its, Globalisation Index in 2011. The country still maintains its position at number 3 in
AT Kearney’s Globalisation Services Location Index (GSLI), in 2010 (AT Kearney
2010; Ernst & Young 2011). The challenge for telecommunications firms is “whether
their distinctive capabilities in their existing markets provides them with an advantage
over incumbents and new market entrants” (IBM 2011). Therefore, achieving
competitive advantage is dependent on the ability to align distinctive capabilities
including strategic assets and customer relationships to deliver differentiated and
innovative customer experiences (ibid).
4.9 Critical Factors Impacting Successful International
Market Penetration
The growing interdependence of national economies resulting from globalisation
provides opportunities for integration to increase connectivity (Floyd 2001). The gradual
lifting of trade barriers through GATT and WTO have extended the geographical reach
of firms as capital flows are freed up (Dunning 1993; Wolf 2004).
However, globalisation and liberalisation, stimulated by the rise of the emerging
economies and the BRICS nations, have led to competitive pressures which create
challenges for firms and nations alike. Malaysian firms have to respond to these
challenges by securing competitive advantage, in order to compete in today’s
increasingly complex global arena (Abang 2009; Goh & Wong 2010). This is a
motivation for Malaysian telecommunications firms to venture into foreign markets for
growth. The drivers include the globalisation of industry and commerce, reducing trade
barriers, increasing competitive pressures, regulation asymmetry, new telecom
technologies and political needs (Ahmad & Hashim 2007).
Venturing into foreign markets for competitive advantage requires Malaysian
telecommunications firms to address the strategic issues and attendant challenges. The
situation requires them to formulate effective network level strategies and in parallel,
maintain domestic market share (The Edge, 7 June, 2010). Equally important is the need
to satisfy the rapidly changing customer preferences and to invest in the new emerging
technologies to take advantage of the data boom. There are seven key factors which
106
impact the successful international market penetration of Malaysian telecommunications
firms as shown in Figure 4.5 and discussed next
Figure 4.5: Factors impacting the successful international market penetration of
Malaysian telecommunications firms
Leadership
and a Global
Mindset
Branding and
Marketing
Government’s
Role
Factors
Impacting
Successful
International
Market
Penetration
Knowledge
and
Resources
Innovation
and R&D
Financial and
Performance
Management
Network
Externalities
4.9.1 Leadership and a Global Mindset
Curwen and Whalley (2004), highlighted effective leadership as being important for
shaping and executing company strategy and offered five different approaches to
strategic management; strategy, human assets, expertise, control and change. These
different aspects of strategic leadership are also important for the telecommunications
sector. Success in the new economy therefore requires Malaysian leaders who are agile
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and able to adapt to the changing environment (Carayol & Firth 2001; Bhagat et al.
2009).
Consequently, it is necessary for Malaysian telecommunications firms leaders to be
confident, trustworthy, enthusiastic, assertive, emotionally intellectual, customer-focused
and tolerant (Dubrin 2004). The ability to identify opportunities, manage risk,
communicate effectively, building a customer orientated culture and delivering the brand
promise are also crucial for success (Stoian & Rialp-Craido 2010; McKinsey 2012).
A global leader inspires and motivates the workforce, irrespective of location, by clearly
communicating the direction, vision and expected outcomes. Global leaders also have
strategic capabilities to enhance reputational advantage and create sustainable
competitive advantage of firms (Scherer et al. 1999).
A company’s performance is also affected by organisational culture and the national
culture (Shenkar & Lup, 2004 – cited in Hexter, Stoain, Phillips 2010). Malaysia’s
culture is steeped in the New Economic Policy (NEP) that favours Bumiputeras and this
has resulted in an economic and business environment which is characterised by quota
systems and a lack of meritocracy. Leadership positions, especially in the Government
and its associated sectors, are reserved for Bumiputeras. The somewhat closed
environment impacts innovation and potentially impedes competitiveness (Salazar 2007;
The World Bank 2010).
Oviatt and McDougall, 1995, p.35 state that “To be global, one must think global”. A
global mindset integrates diversity across cultures and markets (Gupta & Govindarajan,
2002) and evaluates organisational and environmental factors to exploit capabilities and
strategies to achieve international superior performance (Fletcher 2001; Bellin and Pham
2008). Jeannet, (2000, p. 43), describes the global mindset as “a state of mind able to
understand a business, an industry, a sector, or a particular market on a global basis”.
The characteristics of a global mindset include (i) a positive attitude to the world and the
concept of the global village. (ii) a positive attitude to global business and openness to
local and international developments. (iii) a positive attitude to organisational standards
and processes, and (iv) a positive attitude to people and their respective cultures.
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Viewed in this context, it is necessary for the senior management of Malaysian
telecommunications firms to embrace a global perspective with a global strategic outlook
(Nesadurai 2011). In order to have a successful international presence, they should also
have an understanding of different value systems, legal structures, fiscal issues incurring
risks as well as cultural and language differences (Norton 2007). It is equally important
to master languages related to global business, in particular English (Fong 1999). This is
reflected by the “fast leapers who are the ones that speak more than two languages,
embrace a just-do-it approach and simply excel with greater streets-manship or be
streetwise” (Mok 2007, p. 53).
The global dimension of ‘think globally, act globally’ as defined by (Kefalas 1998)
requires the senior management of Malaysian telecommunications firms to have a full
understanding of the regulatory environment in the targeted new market as well as to
have a global orientation in order to successfully meet the regulatory requirements.
However, notwithstanding exposure to diversity, cultural integration and often
international education, there is a shortage of Malaysian leaders with global mindsets.
Due to this shortage, Malaysia has to import foreign talent with the necessary skillsets to
achieve global competitiveness (The World Bank 2011).
4.9.2 Global Competition and Network Externalities
Liberalisation and regulatory reform has resulted in hypercompetition (Grant 2005) and
Malaysian telecommunications firms are threatened by new entrants and rivals in both
the domestic and international markets. Porter (1985) argues that a firms performance is
underpinned by its ability to create competitive advantage through 1) marketing, 2)
research and development, 3) organisation advantages, 4) firm functional area advantages
and 5) network relationship advantages.
Competitive advantage in international markets can be derived from the firm’s products,
markets, technology orientation, and resources (Cavusgil & Nevin 1981). In the
telecommunications industry network externalities exist when the value of a product to
any user is greater, the larger the number of users. The value placed on subscribers is
dependent on the number of users with whom they can communicate. Network
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externalities may result in aggressive internationalisation strategies as firms pursue
competitive advantage (Laanti 2009).
While network externalities present opportunities and can act as push factors for first
mover advantage, they also present risks (Fjeldstad et al. 2004). Government and
regulatory factors can create barriers to entry. These include, regulatory standards,
licensing
and
foreign
ownership
restrictions.
Accordingly,
Malaysian
telecommunications firms need to and use their knowledge base workforce to pursue
competitive advantage (David 2005; NEAC 2010).
4.9.3 Government’s Role
The
role
of
the
Government
remains
critical
in
network
industries
like
telecommunications. The arrival of new entrants and increased competition has resulted
in decreasing prices for customers and lower revenues for telecommunications firms.
However, the successful transformation of monopolistic markets into competitive ones
generated the parallel need for regulatory and industry oversight (ITU 2010). This
includes the allocation of strategic investments, a regulatory framework for the orderly
development of the industry and supporting socio-economic growth (Lee 2002; Zita
2005; Salazar 2007; Laanti 2009).
While
the
Government
of
Malaysia
has
launched
initiatives
to
improve
telecommunications infrastructure, equal access and improve the quality of services,
foreign ownership restrictions, capped at 49% in the telecommunications sector create
barriers of entry and impede competition. There is also less transparency between
Governments and individual stakeholders in comparison to developed countries (Ure &
Vivorakij 1997; Ure 2000; Salazar 2007; Sivalingam 2007). However, TM remains a
monopoly in the fixed line sector and was awarded the HSBB project in 2008. It’s mobile
arm, TMI (currently Axiata) received support to enter into international markets from
1990’s until 2005. As a GLC, it continues to receive support from the Government. Time
dotcom is also a GLC and despite its losses over the last decade, the firm has received
much support from the Khazanah (The Star, 31 January, 2009). It is viewed that the
Government has a dominating role in the management of GLC’s ‘Ostensibly, the GLCs
110
have no political agenda, but in Malaysia, politics is never far away from any decision’
(Asiamoney, September, 2007 cited in Abang 2005).
4.9.4 Knowledge and Resources
Globalisation has transformed the new economy, sometimes referred to as the
“knowledge economy” and is impacting the way business is conducted (Kanapathi 2003).
Advances in communications and technology, including the internet, have enabled the
development of a global market in which sustainable competitive advantage is gleaned
from intellectual capital linked to the firms knowledge management processes (Drucker
1993; Nonaka & Takeuchi 1995; Marr & Schuima 2001). The increasing importance of
intangible assets and intellectual capital has led to knowledge impacting the value of a
firm. A firms knowledge resides in its human capital and is the driving force for
economic, business and corporate success (Nonaka & Teece, 2001; Stehr 2005, NEAC
2010).
Accordingly, Malaysian telecommunications firms require professional management
structures to support knowledge-based resources that are able to use the innate strengths
of the firm to compete effectively in the new economy (David 2005). With the evolution
of convergence and competition, these structures need to foster seamless horizontal
collaboration across functions, nurture innovation, manage the ecosystem and leverage
on global leadership teams with good governance practices (McKinsey 2012). Firms
need to be able to attract a high quality workforce that is competent with an
understanding of the competitive landscape, are able to identify pertinent opportunities
and adapt to the dynamic market landscape to enhance the intellectual capital of a firm
(Tan 2008; Abang 2009). Furthermore, in the telecommunications sector, resources need
to be able to meet the regulatory requirements of host countries in which they intend to
operate (Norton 2007).
However, a firms resources are only valuable when they exploit opportunities or
neutralise threats (Dowling, Festing & Engle 2008). Therefore, the capabilities of
managers and leaders to recombine resources that are knowledgeable, innovative and
productive, especially in uncertain times, are keys to success (Teece et al. 1997). This
also underlines the importance of developing managers who are capable of developing
111
and managing strategy of the division at the national and international level (Curwen &
Whalley 2004). Furthermore as competition intensifies and traditional business areas
face growth challenges, leaders with strategic capabilities are required to foster a culture
to support innovation and a customer-focused philosophy (McKinsey 2012).
As
Consumer
demand
increases,
ARPU’s
are
declining
and
Malaysian
telecommunications firms are further challenged to innovate and remain competitive. A
firm cannot innovate without knowledge, therefore it follows that knowledge is a source
of innovation to achieve competitive advantage (Ichijo 2002). Operators require
knowledge in balancing price vs. innovation and making services profitable for them
while making them affordable for customers. Operators strive to differentiate and meet
customer demands as they consider the adoption of new technologies which may be
costly and risky. Accordingly, industry players require knowledgeable resources to be
more innovative in their pricing strategies to increase their ARPU and review
opportunities with equipment suppliers for bundling smartphones for packages of voice,
text and mobile internet (Ovum 2012; ZDNet 2012).
Although switching costs in Malaysia remain low, a key differentiator impacting the
customer experience is the quality of service. Market based reforms and increased
competition have improved the quality of service to end users, however, firms are faced
with challenges of delivering service quality while managing operational issues. The
OECD and ITU undertake reporting of quality of service indicators in a limited capacity
and these include: Waiting times for new connections; Number and availability of
payphones; Faults incidence and repair times; Billing practices (OECD 2010) Successful
termination of outgoing international calls (answer/seizure ratios). Firms need clear
processes and metrics. Achieving quality of service involves firms to invest in resources
with technical and managerial competencies, including ITIL and eTOM. These resources
need to be able to multi-task, often across a multi-channel environment (PWC 2012).
These resources and knowledge can be acquired through network partners and a
collaborative business environment. Perlmutter & Heenan (1994) and Ohmae (1999)
stress the importance of cooperation in order to compete globally. Equally important are
human resources with personal attributes, multi-tasking skills,
flexibility and
adaptability (Abang 2009). Specialised technical and professional knowledge along with
112
the ability to analyse and respond to market and customer needs are critical to compete in
the global arena (Homann, Koslowski & Luetge 2007). These have to be underpinned by
flexible, professional management structures, policies, procedures and processes that
enhance competitive positioning (Tan 2008; David 2005 cited in Abang 2009).
Malaysian telecommunications firms entering foreign markets must be knowledge based
(Kitchen & Ahmad 2008). This includes knowledge pertaining to cultural, economic,
political and social aspects. Shorter product life cycles and time to market require leaders
to have capabilities to identify market opportunities and leverage on the firms capabilities
to innovate. Firms need to manage their talent and cultural change. Capabilities can be
enhanced by upgrading skills education and training which are the most important
investments in human capital (Becker 1993).
However, Malaysia faces a shortage of knowledgeable and skilled resources, particularly
in the ICT sector. This is as a result of the mismatch between industry needs and
graduate outputs from educational establishments (Khoo 2010; Wahab 2011; NEAC
2010). Notwithstanding, the Government’s efforts to enhance human capital
development, inclusiveness and productivity, Malaysia is suffering from a brain drain
and there remains a shortage of knowledge workers (Mustapha & Abdullah 2005;
Schellekens 2011). This impacts Malaysian telecommunications firms as demand for
highly skilled and qualified knowledge workers are continuously seeking opportunities to
enhance their career prospects, in other professions or in foreign countries. The demand
exceeds the supply and the gap is widening (Chew 2007). Graduates who have studied
overseas are also reluctant to return home (PEMANDU 2010; World Bank 2011). The
success of telecommunications firms to achieve intellectual capital ultimately comes
down to management decisions about building professional management structures with
knowledgeable skills and resources and how they are nurtured.
4.9.5 Branding
An important element of any business strategy is to build and retain the customer base
since market share is an important indicator of the health of the company (Ure 2009).
More so in a highly competitive landscape where the customer experience has the
potential to be the real differentiator (MCE 2011; Ogilvy 2012). Brands are the sum of
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the total expectations and perceptions and brand innovation goes merely beyond the
name (ASLI 2006). With the proliferation of services and new entrants in the
telecommunications arena, the need for brand differentiation will increase.
A firms’ brand can be a strategic asset to the business for customer loyalty (Interbrand
2008). ‘Telcos need to become the brand of choice rather than of necessity’ (Ovum
2007). Malaysian telecommunications firms featured high on the list of top digital list of
Malaysia’s
top
digital
brands
(TNS
2009),
This
implies
that
Malaysian
telecommunications firms are emphasising on the importance of a strong brand strategy,
However, the involvement of Malaysian telecommunications firms in external markets is
through equity ownership and joint ventures with leading operators in the external
markets. This is reflected by the Maxis partnership with Aircel and Idea in India and
Axiata with Dialog in Sri Lanka, XL in Indonesia. Due to this entry mode, both Axiata
and Maxis operate under the brand names of their respective partners in the countries
concerned. Axiata’s heavy investment in rebranding the firm is reflected in its integrated
marketing initiatives for supporting its regional presence (TNS 2009).
4.9.6 Innovation and R&D
Innovation involves amalgamating knowledge to transform and improve ideas, products,
services or processes with significant improvements to be competitive (Prahalad &
Hamel 1990; Luecke & Katz 2003; Baragheh et al. 2009). Innovation creates new wealth
and societal well-being in addition to providing adaptive talent, enabling Malaysian
companies to be competitive (Krishna 2011). While innovation brings opportunities in
today’s competitive environment, it also creates uncertainties and risks if resisted
(Ahmed 1998).
The telecommunications industry is dynamic and innovation for network technologies is
undertaken by infrastructure providers which are potentially adopted by operators that
primarily focus on innovation of services. Price regulations impact decisions on timing
and market entry as well as revenues and therefore the pace of innovation (Bourreau &
Dogan 2007). In line with the Government’s commitment of, “People First Performance
Now”, Innovating Malaysia was launched in 2010 as shown in Figure 4.6. Its objectives
114
include nurturing and developing intellectual capital for wealth creation, inclusiveness,
enhancing education as well as developing world-class research institutes (GoM 2011).
Figure 4.6: NIP Framework
Source: GoM 2011
Innovation results in greater productivity and has a positive impact on a firms revenue
and performance. Research and development (R&D) is critical to the innovation process
as it supports business expansion, drives new business and broadens and deepens
technological capabilities. Accordingly, Malaysian telecommunications firms have
invested in research to innovate. These include TM which has a dedicated Research
subsidiary; Celcom which has a research lab to focus on customer insight. However,
there are also firms which are failing to innovate (pc.com 2010). Malaysia is lagging
behind in Innovation as reflected by the Malaysia being granted 181 patents by UPSTO
in 2009 as compared to Taiwan (7,781), Singapore (493), South Korea (9,566), Japan
(38,066) and China (2,270) (Wong 2012).
Innovation is vital for survival and success of Malaysian firms and move out of the
middle income trap. “Moving to High-Income status requires growth in Malaysia to
result increasingly from knowledge, innovation, combined with a deeper stock of
physical and human assets” (Zeufack et al. 2011). To meet the international
115
recommendations for sustainable technological innovation, Malaysia needs to increase
the R&D expenditure to 2.5% of GDP (The Star, 9 April, 2010) as well as foster a culture
for investing in human capital and knowledge accumulation.
4.9.7 The Financial Challenges
The telecommunications sector is a capital intensive sector and access to capital impacts
the
growth
strategies
for
Malaysian
telecommunications
players.
While
telecommunications spending in the country is expected to increase by 5.3% in 2011 to
USD7.3 billion (NITC 2011), much of the investment is in the domestic market.
Furthermore, recent results indicate that Malaysia telecommunication firms are facing
financial challenges. Maxis Q2 profit fell 16% reporting a profit of RM464 m compared
to RM551M a year ago. However, the CEO stated “In line with growing demand for data
and mobile internet, we will continue to offer innovative products, the latest devices and
smartphones to market”. Greenpacket also reported a further loss from RM15.24m a year
ago to RM17.9m in Q2 2012. However, Axiata reported a slight Q2 net profit rise
RM666.6 m from RM 663.1m a year ago (The Sun, 31 August, 2012) and it had RM6.5 b
in cash.
Although several firms have attracted inward FDI to support growth, there are only a few
telecommunications
firms
which
have
invested
in
international
markets.
Telecommunications firms require capital for the following:

R&D for product innovation and processes

Knowledgeable Human resources

Strategic brand and marketing development

Relocation of key management team
To succeed in international markets, Malaysian telecommunications firms need a
financial discipline culture underpinned by economic and risk based analytics (Bingham
2007).
116
4.10 Chapter Summary
This Section highlighted the challenges that Malaysian telecommunications firms now
face in a liberalising world. Local firms have to contend with challenges and seize the
opportunities for growth in international markets. There are several factors that impede
successful international penetration. These include the need for firms to have a global
strategic outlook, utilise relationships, manage risks and the choice and timing of entry
mode in selected relevant markets. These require supportive knowledgeable human
resources, professional management structures, access to capital for branding and
marketing as well as research and development for new product innovation and
technology upgrading. The next Chapter, analyses the secondary data that emerged from
the literature review. The discussion led to the selection of an appropriate theoretical
model for this research. It then identifies identified the research gaps which serve as the
basis for the development of the research questions.
117
Chapter 5 - Research Issues and Research
Questions Development
5.1 Introduction
The earlier Chapter reviewed the pertinent literature on the research topic. This chapter
focuses on the development of the research questions which necessitate the collection of
primary qualitative data through the personal interviews as detailed in Section 6.4.1.
Accordingly, this Chapter has three (3) sections. It begins with an introduction in Section
5.1. Section 5.2. discusses the key research issues that emerged from the literature review
and identifies the gaps in body of knowledge. These serve as the basis for the
development of the research questions. Section 5.3. sets out the conclusions.
Figure 5.1: Structure of Chapter Five
5.1: Introduction
5.2: Key Research Issues, Gaps, Questions Development
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5.2 Research Issues, Research Questions
There was much scholarship and prior research on the pertinent background theories on
international market penetration.
There was also much literature on the global
telecommunications industry in terms of the market, products and services, the key
players, the nature of competition and identifies the trends emerging from the
liberalisation of the telecommunications sector. However, as depicted in Table 5.1 there
were gaps in the existing scholarship with respect to four pertinent issues for this
research that emerged from the literature and these are:
i) The push and pull factors that impact on the internationalisation of Malaysian
ii) The appropriate corporate strategies for successful internationalisation by Malaysian
iii) The challenges that must be addressed by Malaysian telecommunications firms for
successful internationalisation
iv) The Malaysian Government’s policies for supporting the internationalisation efforts
of Malaysian telecommunications firms.
These gaps in the literature show that there is a limited prior research on these issues
despite their importance to the Malaysian economy. These therefore reaffirm the
relevance of the Research Problem as stated in Section 1.4 – ‘Addressing the Critical
Success Factors for the Successful International market penetration by Malaysian
telecommunications Firms’.
119
Table 5.1: Identification of Research Gaps
RESEARCH ISSUES
PRIOR
LITERATURE
Malaysian Economic Policies
Adequate
Internationalisation Theories
Trends in the Global
Telecommunications Industry
The Malaysian Telecommunications
Industry
Adequate
RESEARCH GAPS
Adequate
Adequate
Competitive positioning of Malaysian
Telecommunication Firms under WTO
Inadequate
Yes

National legislation
Inadequate
Yes

Competences, expertise and
strengths to compete in world
markets
Inadequate
Yes

Industry preparedness for
Inadequate
Yes
The Malaysian Government’s support
policies and programmes for the export
of telecommunication services
Adequate
Adequacy of Malaysian Government
support policies and programmes for
Telecommunications exports.
Inadequate
Yes

Effective Policy frameworks
Inadequate
Yes

International promotion
Inadequate
Yes

Support schemes
Inadequate
Yes
Appropriate strategies for venturing
abroad
Inadequate
Yes

Strategy adoption for SCA
Inadequate
Yes

Competent staff: global mindsets
Inadequate
Yes

Effective leadership
Inadequate
Yes
Research Questions Development
‘Empirical research is driven by research questions’ (Punch 2005, p. 34). Research
questions ‘define an investigation, set boundaries, provide direction, and act as a frame of
120
reference for assessing the research work’ (O’Leary 2005, p. 33). To address this
research problem and based on the research gaps identified from the research issues, four
research questions are developed in this Section.
5.2.1. Key Determinants for the Internationalisation of Malaysian
Worldwide telecommunications revenues are predicted to grow from an estimated $3.3
trillion in 2011 to over $5.1 trillion in 2016 of which carrier revenue alone is predicted to
grow from $1.9 trillion in 2010 to nearly $5 trillion in 2015. Worldwide mobile
subscriptions reached an estimated 5.9 billion in 2012, equivalent to nearly 85% of the
world’s population, compared to 1.41 billion in 2003 (ITU 2011 via mobithinking 2012;
Pyramid Research 2012). However, telecommunications operators, now have to contend
with the issues of convergence, regulatory developments, changing consumer demands,
business transformation (Laanti, 2009; Bain & Company 2012). The emergence of new
and adjacent players has forced firms to review their value chains due to new market
entrants, including equipment and handset suppliers, MVNO’s and Media players and the
resulting increased competition This is changing the telecommunications landscape
(Salazar 2007; Ure 2009; Accenture 2010; McKinsey 2012).
Another major change agent is consumer behaviour as telecommunications operators
strive to maintain customer loyalty. They also have to unlock customer value through the
delivery of innovative, multi-media rich services (Sandberg 2008; Bain & Company
2010). In a world of Facebook, blogging and tweeting, industry players are under
pressure to meet ongoing demands for data, speed and ubiquitous connectivity which
require technological innovation. Furthermore, the increase in a number of industry
players, combined with low switching costs creates the challenges of creating customer
loyalty. Staying abreast with changing consumer demands, results in short product life
cycles, and consequently, increases the financial resource requirements for research and
development to create new products and services (Mathews 2010; Deloitte 2012; IBM
2011).
The Malaysian telecommunications sector is experiencing dramatic growth. Mobile
subscribers, led by the 4 main mobile telecommunications players, Maxis, Celcom
121
Axiata, DiGi and U Mobile achieved over 137% mobile penetration rate with over 39
million mobile subscribers as at Q3 2012 (BMI 2011; MCMC 2012). The market is
dominated by pre-paid subscribers, largely from Generation Y who are demanding
content and value added services.
The domestic market is reaching saturation and future growth has to be dependent on the
increased demand for new services. The Malaysian telecommunications firms face the
challenges of a limited domestic market, increased competition, price wars and, declining
revenues. The small market size, structural, cyclical and institutional factors now compel
Malaysian firms to actively internationalise (Ariff & Lopez 2007; Salazar 2007; Curwen
& Whalley 2008; Shankar et al. 2010). Accordingly, Malaysian telecommunications
firms actively pursued internationalisation strategies in the 1990’s through acquisitions
and the purchase of equity (Sarkar et al. 1999; Curwen & Whalley 2008).
The internationalisation of Malaysian telecommunications firms is also influenced by
pull factors. These include reduced transaction costs, economies of scale, increased
revenue from foreign markets, internationalising customers and technological advances.
These provide opportunities for growth and profitability in developing countries with
market potential.
Another factor is the lowering or removal of the barriers of entry brought about by
Malaysia’s participation in the WTO, ASEAN and the bilateral free trade agreements as
well as Government to Government arrangements under South-South Cooperation
Agreements have also encouraged Malaysian telecommunications firms to venture
abroad (Salazar 2007).
However, there is limited literature on the extent to how the external environmental
factors, particularly, the changing global telecommunications landscape impact on the
motivation and strategies that Malaysian telecommunications firms should adopt for
successful international market penetration. This research gap leads to Research Q1
which is:
RQ1: How are the Dynamic changes in the global telecommunications industry
influencing the strategic choices of Malaysian telecommunication firms?
122
5.2.2 Corporate Strategies for Succ essful International Market
Penetration
The global landscape in which telecommunications firms operate has changed radically.
The dynamic situation requires firms to emphasise on competitive strategy (Oviatt &
McDougall 1994; Dunning 1997; Fletcher 2001; Friedman 2005; IMF 2008).
For the firm to compete globally it has to develop a global strategy which has three
essential elements (Yip 2003). First, the development of the core strategy – the basis of
sustainable competitive advantage. It is usually first developed in the home country.
Second, it has to internationalise the core strategy through the international expansion of
activities. Third, it has to globalise its international strategy by integrating its strategies
across countries (Yip 2003).
Internationalisation decisions are guided by three important considerations. The first is
foreign market selection as this is critical for successful internationalisation (Driscoll
1995). The second relates to the financial resources to invest in R&D, physical
infrastructure and marketing development (Bain & Company 2010; Deloitte 2010). The
third is regulatory compliance. This involves obtaining licences, spectrum or buying
bandwidth from network operators in the targeted country (Freeman & McVea 2001).
As discussed in Section 2.2, there are several pertinent theories and frameworks for
internationalisation. However, few reflect the dynamic nature of the industry and the
impact of external environmental factors, including globalisation and the role of
Governments in this regulated sector. As discussed in Section 2.3.1.7, the network theory
which proposes a more recent behaviourial approach to the internationalisation was
considered appropriate for this study.
Malaysian telecommunications firms ventured into overseas markets in the 1990’s with
the state-owned TM being the first telecommunications firm to internationalise. The
internationalisation process was reinforced by G2G relationships during the Mahatir era
(Ure 2000; Zita 2005; Salazar 2007). TM’s internationalisation process accelerated as the
firm invested in several ventures in Africa, as part of its vision to be a leader of southsouth trade agreement, however, it has had to subsequently withdraw from many of its
123
earlier ventures (Zita 2005). While Maxis had to dilute its shareholding in its Indonesian
operation, it now faces problems in India (BMI 2012). Other firms that have faced
problems with their internationalisation alliances and partnerships include U Mobile, P1,
RedTone, DiGi and Merchantrade.
The cited examples point to the need for Malaysian telecommunications firms to review
their internationalisation strategies. However, the literature is limited on the
internationalisation strategies of Malaysian firms; particularly in respect of market
selection, network partners, choice of entry mode, and timing. This research gap leads to
Research Question 2, can be posed as:
5.2.3 Challenges faced by Internationalising Malaysian Telecommunications
Firms
As discussed earlier, there are several motives for internationalisation. These include,
market opportunities, cost benefits, competitors moves and Government drivers (Yip
2003). The telecommunications sector is a technology and capital intensive sector and
access to capital impacts the growth strategies for Malaysian telecommunications
players. Increased competition, ongoing liberalisation and technology innovation in the
TMT sector, requires firms to address issues relating to shortening product life cycles,
market differentiation, and cost-optimisation. Motivated by the need to secure new
revenue sources and managing customer demands, telecommunications firms are
rethinking their business models to remain competitive (Schoener 2008; IHS Global
Insight Research Corporation 2009). The situation also applies to Malaysian
telecommunications firms. Due to the emerging challenges that threaten their growth and
sustainability, they are giving more emphasis to increase their overseas presence by
venturing into new markets.
As discussed in Section 4.9, Malaysian telecommunications firms seeking growth from
international ventures.
124

Require effective leadership with a global mindset (Nesadurai 2011), sound
understanding of diverse cultures, and a good command of the English language
as this is the international language for business.

Have to address the issue of trust and ability to build relationships as well as to
manage cooperation and competition across network relationships (Gulati et al
2000; Kim et al, 2009; 2011).

Should have access to knowledge and capable human resources for successful
international operations (Kanapathi 2001).

Require R&D capabilities for technological innovations, to meet consumer needs
(Baragheh et al. 2009).

Should have access to the capital required for successful international ventures
(Ernst & Young 2011)
However,
there
was
limited
literature
on
the
challenges
that
Malaysian
telecommunications face in international venture and the impact on their respective
performance. Accordingly, this leads to Research Question 3, which can be posed as:
What are the challenges that Malaysian telecommunications firms face in
5.2.4
Government
Support
for
Internationalising
Malaysian
The forces of globalisation have led to market liberalisation, structural reforms and deregulation of the sector in several markets (Wolf 2004, Ure & Lovelock 2009). The
lowering of trade barriers, the growing interdependence among world markets and
increased connectivity have generated opportunities as well as challenges. The industry
has moved from a situation of sectoral dominance, to a ‘boom and bust’ scenario
(Curwen 2002; Curwen & Whalley 2008), as evidenced by the market capitalisation of
the dominant telecommunications firms plummeting in the early 2000’s. This triggered
125
structural reforms as well as further mergers and acquisitions, consolidation,
infrastructure sharing and managed services (IBM 2010). The structural reforms
contributed to economic sustainability and flexibility and the resulting benefits are
greater than the gains from trade liberalisation (Lee, Ure & Lee 2010).
The literature indicates that the Malaysian Government recognises the strategic
importance of the telecommunications sector for Malaysia’s social and economic
development. This is reflected by the reforms in the telecommunications sector as
evidenced by (Ure 2000). The National IT Agenda launched in 1996, and the National
Telecommunications policy (1994-2020) which is aimed at encouraging competition.
Other supportive policies of the Government include the establishment of the MCMC in
1999, MSC, the Malaysian Information Communications Masterplan, MyI886 and the
HSBB.
There was much literature on the Malaysian Government’s policies and the institutional
framework, however, there was little information on
the adequacy of government
policies in respect of Malaysian telecommunications firms entering new international
markets. Based on this research gap, Research Question 4 reads as :
How adequate are the Government policies and initiatives for supporting the
internationalisation efforts of Malaysian telecommunications Firms ?
5.3 Summary
This Section critically analysed the secondary data that emerged from the literature
review which indicated that while worldwide telecommunications revenues are predicted
to grow rapidly, the emergence of new competitors, changing consumer behaviour,
domestic market saturation and the dynamic telecommunications landscape, compel
firms to review their internationalisation strategies, impact of changes and Government
policies. It focused on the identification and the development of the research questions
for the qualitative and exploratory stage of the research. The next Chapter discusses the
research methodology and design.
126
Chapter 6 - Research Methodology
6.1 Introduction
Chapter 5 reviewed the literature that was pertinent to the research topic (Berg 2004;
Neuman 2006). It rationalised the significance of the problem; identified the key research
issues and how they have been previously addressed.
This Chapter presents the methodology selected for this research including the research
approach, the research design and the research plan. It then discusses the data collection
instruments and the measures taken to ensure the quality and validation of the findings.
The chapter proceeds with a description of the data analysis techniques used in this
research before concluding with a section on ethical considerations.
Accordingly, as shown in Figure 6.1, this chapter has ten (10) sections. Section 6.1,
provides an introduction and overview of the chapter.
Section 6.2 outlines data theory. It examines the research approaches and describes the
theoretical paradigms that were considered for this research. The chapter proceeds to
justify the preferred mixed methodology for achieving the objectives of this research.
Section 6.3 discusses the research design, the research plan and the dimensions of the
research.
The discussion in Section 6.4 details the exploratory stage of the research which utilises a
qualitative approach whereby data was collected through the literature review and personal
interviews. Section 6.5 explains the analysis for each of the two stages.
Section 6.6 details the descriptive and confirmatory stage of the research, focusing on the
collection and analysis of quantitative data though a questionnaire, namely a web survey,
using a five (5) point Lickert scale for attitude measurement. This Section also discusses
the administration of the survey, including the pilot testing of the questionnaire.
127
Section 6.7 examines the procedures for establishing the reliability and validity of the
findings and Section 6.8 presents the data analysis procedures for the collected qualitative
and quantitative data.
Section 6.9 addresses the pertinent ethical considerations with the final Section, 6.10,
presenting the conclusions.
Figure 6.1: Structure of Chapter 6
6.1: Introduction
6.2: Research Methodologies
6.3: The Research Design and The Research Plan
6.4: Stage I: Exploratory, Qualitative Theory
Generation
6.5: Stage II: Descriptive, Theory Testing
6.6: Stage III: Confirmatory, Theory Confirmation
6.7: Research Quality
6.8: Data Analysis
6.9: Ethical Considerations
128
6.2 Justification for the Selected Paradigm and Research
Methodology
This Section justifies the paradigm for this research, the methodology and the research
design.
6.2.1 Theoretical Paradigms
‘Paradigms are the lenses through which we choose to view the social world’ (McMurray
2008, p.23). An appropriate paradigm underpins good research and provides a set of
guidelines as to how research is conducted (Guba & Lincoln 1994; Hussey & Hussey
1997).
There are several definitions of the term paradigm and its meaning varies in different
contexts (Kuhn 1962; Patton 1990; Guba & Lincoln 1994; Babbie 1995; Perry, Reige &
Brown 1998; Neuman, Ticehurst & Veal 2000; Patton & Applebaum 2003; Mertens 2005;
Denzin & Lincoln 2008). A pertinent definition is that of, Kuhn (1970, p.11), who viewed
it as a “framework of beliefs, values, orientations and techniques shared by the members of
a specific professional community”.
There are a number of paradigms to guide research. The choice of paradigm is influenced
by several factors as shown in Figure 6.2. The starting point is the researcher’s ontology,
which is a philosophical stance reflected by the researchers nature at form of reality.
Ontology specifies ‘what’ and ‘how’ reality exists (Parkhe 1993; Bryman & Bell 2007;
McMurray 2009).The researcher’s ontology influences his or her epistemology which
refers to the process of how knowledge is acquired and the relationship between the
researcher and that which is to be known (Guba & Lincoln 1994). This in turn, influences
the methodology or the techniques the researcher selects to acquire data required for the
research (Zikmund 2003; Guba & Lincoln 2004).
129
Figure 6.2: Business Research Approach and Influencing Factors
Ontology
Research Design
and Approach
Researchers
Values
Selected Research Topic
Prior Theory
Epistemology
Practical
considerations
Source: Adapted from Bryman and Bell 2007; McMurray 2009
There are four main scientific paradigms, positivism, realism, critical theory, and
constructivism (Guba & Lincoln 1994). Underpinned by the need to create knowledge,
they are generally grouped into two methodological approaches; qualitative and
quantitative (Zikmund 2003). inductive and deductive as well as; positivist versus
interpretivist paradigms (Patton 1990; Easterby-Smith, Thorpe & Lowe 1991; Parkhe
1993; McMurray 2009). The typology, as shown in Table 6.1 merits elaboration.
130
Table 6.1: Comparative Research Approaches
Quantitative – Deductive
Research
Problem
Paradigm
What
Ontology
Reality is real, but apprehensible
Epistemology
Purpose
Positivist
Qualitative – Inductive
How
Why
Critical Realism/Interpretivist
Reality is “real”, but only
imperfectly,
however,
probabilistically
apprehensible.
Truth is subjective, multiple
realities
Objective: finding the truth, values Modified objectivist: findings
free
probably true; value-mediated
findings as researcher is involved
in the research process
Generalisability
Contextualisation
Data Analysis
Inductive – holistic: Case studies,
convergent
interviews.
Triangulation of methods using
structural equation modelling.
Contextualisation
Researcher
is
independent, Researcher is close, involved to a
objective and remote
degree
Respondent is distanced from the Respondent is part of the research
data
process
Statistical,
numerical
data, Contextual, discovery orientated
Verification orientated
data, non-statistical, based on
participants viewpoints
Statistical, objective
Subjective, interpretive
Quality
assessment
Rigour, reliability, internal and Transferability,
external validity
construct validity
Methodology
Researcher’s
Role
Respondent’s
Perspective
Data Collection
Deductive - reductionalist: Testing
of theory; surveys, experiments,
verification
of
hypotheses.
Generalisation
credibility,
Source : Adapted from Guba and Lincoln 1994; Moser 1999; Perry, Riege & Brown;
1999; Thomas and Perry 2004; Sobh and Perry 2006; McMurray 2009.
6.2.1.1 The Qualitative Paradigm
The qualitative research paradigm is inductive in nature and focuses on examining data for
generating theory (Glaser & Strauss 1967; Veal 2005). It is concerned with the role of
human perceptions in understanding reality (Cavana et al. 2001). The ontological stance
of this paradigm assumes that a real world exists out there, albeit, an imperfect one
(Tsoukas 1989; Guba & Lincoln 1994; Perry, Alizadeh & Riege 1997; Perry et al, 1999). It
does not believe that perception alone is reality, and posits that there are ‘multiple realities’
(Hirshman 1986; Perry, Alizadeh & Riege 1997).
131
The epistemology of this paradigm is characterised by the researcher being involved in the
research process. With the researcher being a passionate participant, the researcher’s
values and motives could influence the research process and this may result in subjective
findings (Denzin & Lincoln, 2003; Pauwels & Mattheysens 2004; Guba & Lincoln 2005).
Triangulation addresses this weakness by providing for objectivity and the opportunity to
examine more complex situations (Guba & Lincoln 1994; Leedy & Ormrod 2005).
Qualitative research is concerned with structures and mechanisms in experiences to
understand new phenomena rather than frequency. The data which is generally nonstatistical, and focused on the perceptions of people or organisations are collected through
case studies, analyses of text and interviews (Ticehurst & Veal 2000; Silverman 2001;
Maxwell 2002).
Qualitative research has several advantages and these include: (i) providing more in-depth
insights and perspectives into the phenomena in question for new theory development. (ii)
identify causal links in complex situations (Guba & Lincoln 1994; Miles & Huberman
1994; Creswell 2003; Ghauri 2004; McGaughey 2004).
This paradigm also has limitations with the findings being subjective and interpretive
(Sekaran 2000) and therefore generalisable only to theoretical hypotheses, and not to
populations (Yin 1989). (iii) concerns relating to reliability and validity. Silverman defines
validity as “by validity, I mean truth: interpreted as the extent to which an account
accurately represents the social phenomena to which it refers”: (Silverman 1990, p.57).
This paradigm depends on the triangulation of several perceptions of reality to achieve an
objective account of events. Denzin and Lincoln (2003) support the use of triangulation to
address the limitations of qualitative research.
6.2.1.2 The Quantitative Paradigm
Quantitative research is based on deductive interpretation with the objective of measuring
a phenomenon (Patton 1990; Perry et al, 1999).
Positivists are focused on testing
theoretical hypotheses to determine if such hypotheses are true (Easterby-Smith, Thorpe,
& Lowe 1991).
132
Underpinned by an ontology of naive realism, the positivist perspective assumes that only
science is able to discover the true nature of reality. This paradigm views reality and real
knowledge as external, precise, measureable and objectively determined rather than
subjective (Perry, Alizadeh & Riege 1997; Gephart 1999).
The epistemological point of view of the positivist paradigm is that the researcher is
considered to be independent, objective and remote from the research process. According
to positivist perspectives, this results in findings which are values-free and theory free
(Guba & Lincoln 1994; Denzin & Lincoln 2003; Cameron & Miller 2008). The aim of the
quantitative, positivist approach is focused on confirmation of the existing theory rather
than discovery and confirmation of new theory (Guba & Lincoln 1994).
The quantitative or positivist approach is concerned with numerical or statistical analysis,
emphasising relatively large-scale and representative sets of data to ensure rigour, external
and internal validity (Easterby-Smith, Thorpe & Lowe 1991). The researcher is
independent from the research process
and the findings can be replicable and be
generalised in different contexts (Blaxter, Hughes & Tight 2006). This paradigm’s
methodology focuses on quantitative measurement and analysis of causal relationships
between variables (Tsoukast 1989; Neuman 2006).
The quantitative paradigm has several strengths. It can generate results from large data
samples and considers causal relationships through rigorous research design and control of
extraneous variables. However, it also has weaknesses. The use of values-free data infers
that the researcher is unable to benefit from the use of personal judgment (Easterby-Smith,
Thorpe, & Lowe 1991).
6.2.1.3 Discussion on the Theoretical Paradigms
The earlier Section reviewed the strengths and weaknesses of both qualitative and
quantitative approaches. While the quantitative approach provides objective, values-free
findings which can be replicated and generalised (Limerick & Cunnington 1993; Blaxter et
al. 2006), a purely quantitative approach alone was considered to be unsuitable for this
research for the following reasons.
133
First, although there is a recent emergence of studies on internationalisation of the services
sector and network industries like the telecommunications sector (Gerpott 2006; Curwen &
Whalley 2008; Jakopin 2008; Whalley 2008; Kenny 2009; Laanti 2009; Ure 2009;
Gabrielsson 2010), as discussed in Chapter Two (2), there is limited theory on the
international market penetration of telecommunications firms, particularly in the
Malaysian context. Accordingly, this makes theory testing alone unsuitable.
Furthermore, a purely quantitative approach alone is not suitable as positivism does not
take into account the influence of human factors and social contexts upon individual
actions.
(Cavana et al. 2001; Machengete 2004). Internationalisation strategies and
decisions, including market selection and choice of entry mode, rely on people’s
motivations, prior experience, knowledge and perceptions (Laanti 2009).
In contrast, the qualitative research methods are suitable for understanding complex and
specific social phenomena as well as the discovery or development of new theory (Miles &
Huberman 1984; Bonoma 1985; Parkhe 1993; Cavana et al. 2000; Deshpande 2003;
Ghauri 2005). This research requires an understanding of the critical success factors that
impact the international market penetration of Malaysian telecommunications firms. The
qualitative approach is therefore more suited for providing new information on the critical
factors. However, the researcher could not subscribe to a purely qualitative approach due
to its subjective nature with interpretation based on multiple realities which limit its
credibility in the real world (Gephart 1999).
6.2.2 Justification for the Mixed Methodology
As discussed, the quantitative methods weaknesses are the strengths of the qualitative
methods (Bonoma 1985; Eisenhardt 1989). Guided by this, the researcher adopted a mixed
methods approach which is an emerging methodological choice for social and business
research (Brannen 1992; Creswell 2003; Creswell & Plano Clark 2007, 2011; MolinaAzorin, 2007; Cameron & Miller 2009; Bryman 2010; Sharlene, Nagy Hesse, Biber &
Levy 2010; Miller & Selvanathan 2011).The mixed methods philosophy is underpinned in
pragmatism.
134
Regardless of the controversy using mixed methods (Mingers 2001; Tashakorri & Teddlie
2003; Onwuekbuzie & Collins 2007 cited in Cameron 2011), an integration of both
qualitative and quantitative methods provides different dimensions and perspectives of the
phenomenon and organisational behaviours being investigated (Das 1983; Amaratunga et
al. 2002; Johnson et al, 2007; Easterby & Smith et al. 2008,). Triangulation removes any
potential bias of a single method approach (Collis & Hussey 2003). Based on these
considerations, both research methods were used in a complimentary manner at different
phases of this research to provide a more complete picture (Miles & Huberman 1984;
Brannen 1992; Stekler et al. 1992; Zikmund 2000; Yin 2003; Bryman 2010).
However, guided by the objectives of the research, the qualitative stage of the research can
be considered to be more dominant as the research relied heavily on the secondary data
from the literature review as detailed in Chapter 5, and the primary data from the personal
interviews as detailed in Chapter 7.
6.2.2.1 The Preferred Type of Mixed Methodology
There are several types of mixed methods and the next step was to decide on the
appropriate one for this research. A number of topologies were considered (Greene &
Caracelli 1997; Angell & Test 2002; Creswell 2003; Tashakkori & Teddlie 2003;
Cresswell & Plano Clark 2007). Guided by the objectives and the purpose of this research,
the researcher adopted the priority sequence model offered by Morgan, (1998). As shown
in Table 6.2, there are four basic research designs depending on, (i) whether the principal
method is qualitative or quantitative and (ii) whether the complementary method is a
preliminary follow up stage of the principal method. Since this research was fundamentally
aimed at generating new theory, it emphasised on the qualitative approach with a
complementary quantitative follow up stage. This was for the purpose of confirming the
initial findings and to enhance the trustworthiness of the finding from the research
(Caracelli & Greene 1997; Morgan 1998; Creswell & Plano Clark 2007).
135
Table 6.2: Mixed Method Design Types
Priority Decision
Principal Methods :
Quantitative
Principal Methods:
Qualitative
Qualitative Preliminary
Quantitative Preliminary
Complementary Method:
Preliminary
Qual
quant
Sequence Decision
Qualitative Follow-up
Quantitative Follow-up
Complementary Method:
Follow Up
QUANT
QUAL
QUANT
qual
QUAL
quant
Source: Adapted from Morgan 1998
This was further justified by the exploratory design type in the Mixed Methods Design
Types defined by Creswell (2003) as shown in Table 6.3. The exploratory design
emphasises that the qualitative stage is sequentially followed by the quantitative stage and
the data between the two phases is connected. This is detailed in Section 6.3.1.4.
Table 6.3: Creswell - Mixed Method Design Types
Design Type
Timing
Triangulation
Concurrent:
Merge the data QUAN + QUAL
Qualitative
and during
the
Quantitative at the interpretation of the
same time
analysis
Concurrent
and Embed one type of QUAN (qual)
Sequential
data within a larger
design using the Or
other type of data
QUAL (quan)
Embedded
Explanatory
Exploratory
Sequential:
Quantitative
followed
by
Qualitative
Sequential:
Qualitative followed
by Quantitative
Mix
Weighting/Notation
Connect
between
phases
the
the
data QUAN
two
qual
Connect
between
phases
the
the
data QUAL
two
quant
QUAL = Qualitative; QUAN = Quantitative
Source: Adapted from Creswell & Plano Clark, 2007, P.85
136
The secondary data emerging from the literature review was analysed and is presented in
Chapter 5. The analysis of the primary qualitative and quantitative data which was
undertaken sequentially are presented in Chapters 7 and 8 of this thesis.
6.3 Research Design
The earlier sub-section discussed the preferred methodology for this research. This Section
outlines the research design or the framework and structure for the collection and analysis
of the required data to address the research problem (Zikmund 2003; Bryman & Bell
2007). In essence, it outlines the “plan on how the study will be conducted” (Berg 2004,
p.31). In designing the research, the researcher gave full consideration to the dimensions of
the research and these are discussed next.
6.3.1 Dimensions of Research
Research can be categorised into three main types, namely, exploratory, descriptive, and
explanatory or causal. The purpose and characteristics of each are outlined in Table 6.4.
below.
Table 6.4: Dimensions of Research Design
Exploratory Research
Purpose
Features/
Characteristi
cs
Descriptive Research
Explanatory
or
Causal Research
 Clear definition of
research problem
 Identification
of
cause and effect
relationships
 Clarifying
 Research problem is
ambiguous problems
known
 Generate new ideas  Describing
the
and hypothesis
characteristics of the
 Preliminary research
market, population
or phenomena
 Identifies important  Pre-planned
and  Manipulation
of
variables
to
be
structured design
one
or
more
studied
variables
 Flexible
 Control
of
mediating variables
Methods




Pilot studies
Experience surveys
Secondary data
Focus groups
 Secondary data
 Experiments
 Surveys
 Panels
and
observational data
Source : Adapted from Neuman 2006, Easterby-Smith et al, 1991, Malhotra 1999
137
6.3.1.1 Exploratory Research
This research is useful for gaining background information about the research problem,
clarifying the problem and for generating hypotheses for subsequent research (Babbie
1998; Denzin & Lincoln 2003;
Sekaran 2010). It is characterised by its flexibility,
identifying patterns of interest to the research topic and serves as a basis for future research
(Rubin & Babbie 1994; McDaniel & Gates 1996).
6.3.1.2 Descriptive Research
Descriptive research is aimed at ascertaining and describing ‘the characteristics of the
variables of interest in a specific situation’ (Sekaran 2000, p.123), and seeks answers to
the ‘who’, ‘what’, ‘when’, ‘where’ and ‘how’ questions (Zikmund 2000). The outcomes of
descriptive studies can assist in understanding characteristics of a group in a given
situation, understand aspects of that situation, present ideas and information for further
research (Malhotra 1996; Cavana, Delahye & Sekaran 2000).
6.3.1.3 Explanatory or Causal Research
Explanatory studies are concerned with the question of ‘why’ and identifying the actual
reasons why a phenomenon occurs. It explores ‘cause and effect’ relationships between
variables (Sekaran 2000). Based on experiments, explanatory research is conducted in an
environment which is controlled. Explanatory research is usually undertaken subsequent to
an exploratory or descriptive study (Zikmund 2003).
6.3.1.4 Combining Research Approaches
A key justification for this research as discussed in Section 1.4 was the need to extend the
existing body of knowledge on Malaysian telecommunications firms that venture abroad.
The discussion in Chapter 5 identified several research gaps which indicated that the
research problem was ambiguous (Zikmund 2009). This highlighted the need for an
exploratory approach with the purpose of determining the research problem. However, the
purpose of this research extended beyond the mere identification of the research problem.
It was also aimed to secure important descriptive information on the Malaysian
138
telecommunications sector in order to address research objectives 1-5 that were listed in
Section 1.2. This necessitated the use of a descriptive stage. The research also considered
important for a confirmatory stage that permits the validation of the findings on the critical
issues for the successful international market penetration by the Malaysian
telecommunications sector. The three stage approach is shown in Figure 6.3 below.
Figure 6.3: The Three Stage Research Approach
Stage 1
Stage 2
Inductive
Exploratory


Deductive
Descriptive
Develop
Hypotheses
Test Research
Model

CFA
Test Theoretical
Model

Develop Structural
Equation Model

Confirm theoretical
Model

Generalise
Research Findings
Web Survey
Establish Research Problem

Developing Theoretical
Framework

Research
Propositions


Confirmatory

Review Prior Theory

Appraising critical issues
impacting successful
international market
Refine
penetration
Theoretical
Model

Research
Questions
Personal
Interviews
Stage 3
Initial Theory
Preliminary Theoretical Model
Source : Adapted from Carson et al, 2011
As set out in the outline research plan which is shown in Table 6.5, the first and
exploratory stage commenced with a critical review of the existing literature with the aims
139
of (i) selecting the preferred theoretical model for the study, (ii) identifying the key
research issues and (iii) developing the research questions. It then involved the conduct of
personal interviews for the collection of qualitative data. This activity was followed by an
analysis of the qualitative data that emerged from the literature review and the personal
interviews for the purpose of refining the theoretical model identified for this research and
the crafting of the research propositions for the second stage of the research (EasterbySmith Thorpe & Lowe 1991; Parkhe 1993; Miles & Huberman, 1994; Carson et al. 2001;
Zikmund 2003).
The second and descriptive stage of the research involved the testing of the refined
theoretical. As presented in Table 6.5, the process involved the (i) The definition of
variables and constructs for testing the model (ii) Designing the web survey (iii) Validating
the survey questionnaire through the use of knowledgeable persons and the Delphi
technique and (iv) Administering the survey and analysing the collected data through the
use of SPSS. For this purpose, four propositions were crafted based on the research
questions that were developed from the literature review. This is discussed in Section 6.5.
The third stage also presented in Table 6.5, was confirmatory in nature. For this purpose,
four hypotheses were developed based on the findings from the first two stages of the
research and CFA as well as SEM were used to seek confirmation of the tested theoretical
model.
The three stage approach involved a 17 step process. These are presented in the outline
research plan which is shown in Table 6.5. The methodology for each of the three stages
are elaborated upon in Section 6.4.
6.3.1.5 The Outline Research Plan
The outlined research plan, based on the research master plan, is shown in Table 6.5. It
outlines a 17 step process for the research.
140
Table 6.5: The Outline Research Plan
Research
Stage
Stage 1
Step
Process
Desired Outcome
1
Literature Review.
2
Critical Review of pertinent
theories and models.
Development of Research
questions.
Research Protocol and Ethics
approval.
Exploratory
3
4
5
6
Conduct interviews
Analysis of qualitative data
(literature
review
and
interviews).
Crafting of Research of
Propositions
7
Research
Stage
Step
Process
8
Definition of variables
constructs for
testing
model.
Web Survey design
sample selection.
Knowledgeable persons
Delphi technique.
Pilot test of questionnaire.
9
10
11
12
13
Research
Stage
Stage 3
Confirmatory
Familiarisation with the background and
focus theories to set the theoretical
foundations for this research.
Identification of the preferred theoretical
model for this study.
Developed Research Questions.
Participants for the personal interviews and
web survey.
Ethics committee approval.
Refining the theoretical model
Refined research model
Developed Research Propositions
Desired Outcome
and
the
Linking Exploratory Stage to Descriptive
Stage of the research
and
Comprehensive survey designed, adequate
representative sample.
Increased Validation of the survey
questionnaire.
Increased Validation of the survey
questionnaire.
Adequate respondents for comprehensive
analysis.
Tested theoretical model.
for
Administer
and
conduct
survey.
Analysis of quantitative data,
questionnaire using SPSS
Step
Process
Desired Outcome
14
Development of Hypotheses
for confirmatory stage
Authorities
supporting
hypotheses
CFA and SEM for testing
hypotheses and model.
Conclusions
and
Recommendations.
Hypotheses
15
16
17
Increased Validation: constructs &
hypotheses
Confirmation of the final model
Conclusions on each research proposition
and the research problem.
Confirmation of proposed model for
international market penetration.
Implications for theory, recommendations
for policy and further research.
141
6.4 Methodology for Stage 1: Exploratory
As discussed in Section 6.3, a three-stage mixed methodology was selected for this
research. The first and exploratory stage required the collection of qualitative data. The
second and descriptive stage focused on testing the theory and the collection of
quantitative data. The third, confirmatory stage, used CFA and SEM for analysis for
confirmation of the model. This section describes the framework and methodology for the
qualitative stage of the study as shown in Table 6.6 below.
Table 6.6: Stage 1: Steps in the qualitative research process
Step
Process
1
Design,
qualitative
collection methods
2
Protocol and Questions
3
Sampling strategy
The Targeted Outcome
data
Define and select the most appropriate design for the
qualitative exploratory stage.
Determine the most suitable qualitative data collection
methods for this study.
Determine information required, craft protocol and
design questions for the qualitative data collection
process.
Determine adequate sample for qualitative stage
Source: Adopted from Fontana and Frey 2008; Mason 199; Krueger 1988
6.4.1 Qualitative Design and Data Collection methods
The design of the qualitative exploratory stage and data collection methods took into
consideration the epistemology and ontology of the researcher. The choice of instruments
was also dependent on time and cost constraints (Sekaran 2003). The researcher was
mindful that due to the intense competition in the Malaysian telecommunications sector
staff members of the identified firms could be reluctant to disclose much information
regarding their strategic choices, particularly with reference to international ventures.
Guided by this, the data collection instruments that were considered are shown in Table
6.7.
142
Table 6.7: Qualitative Data Collection Methods
Type
Description
Literature Review
The literature review is analysed using textual analysis
which is a methodology used to analyse how human beings
make sense of the world (McKee 2003). Generally used in
cultural studies, media studies and mass communications,
texts are analysed to ascertain the most likely interpretation
that may be made of the text. Texts “provide rich, naturally
occurring, accessible data which have real effects in the
world” (Silverman, 2001, p. 152)
“Case study methodology is an empirical enquiry in which
the focus is on a phenomena within its real life context”
(Yin, 2003, p.13)
Interviews are used in both qualitative and quantitative
research. Qualitative interviews are becoming prominent
research method in social sciences and generally use small
samples. They can be structured on unstructured using
open-ended or fixed questions (Silverman, 2001; Hair et al,
2007; Denzin & Lincoln 2008; King & Horrocks 2010)
Focus Groups are a form of group interview that capitalises
on communication between research participants to
generate data (Kitzinger 1995). “Focus groups rely on
interaction within a group based on topics supplied by the
researcher” (Morgan, 1997, p.12). The groups consist of 710 participants and are used to gather information which
would be challenging to obtain using other data collection
techniques (Krueger 1988).
Content analysis involves investigating content of
communication media, including interviews The researcher
compares content across texts and can analyse the data
using quantitative techniques (Gillham 2000; Neuman
2006).
Case Studies
Interviews
Focus Groups
Content Analysis
The researcher considered the various tools for the collection of qualitative data described
in Table 6.7 and the selected data collection instruments are outlined below.
1) Literature Review
A comprehensive literature review is an essential first step in building the foundation for a
research project (Boote & Beile 2005; Neuman 2006). Accordingly, as discussed in
Chapter 2, and as guided by Yin, (2003) the review included internationalisation theories
and models, telecommunications trends. Several sources including, books; journals;
newspaper articles; web articles; blogs; press releases; analyst papers; analyst reports;
143
investor relations presentations; company annual reports; academic journals and papers;
conference papers; Government economic plans and reports, and webinars were utilised to
investigate the body of knowledge to ensure coverage, relevance, authority and currency of
the information.
ii) Case Studies as a Data Collection Tool
In selecting the number and type of cases, the researcher took into consideration views of
several authorities (Guba & Lincoln 1985; Hedges 1985; Romano 1987; Perry 1988;
Pettigrew 1988; Eisenhardt 1989; Yin 1989; Patton 1990). Firstly, the criteria for case
selection was based on the purpose of replication or cases that predict contrary results
(Cavana et al. 2001; Ghauri 2004). The researcher was mindful that the cases must
constitute extreme situations and polar types as well as be rich in information to offer
insights pertinent to the research issues (Pettigrew 1989).
Hedges, (1985), recommends that in practice four to six cases form a reasonable minimum
for a serious project. Accordingly, six companies were selected. Representatives from the
chosen cases participated in the interviews, and the web survey.
iii) The Personal Interviews
“The purpose of interviewing is what is in and on somebodies mind” (Patton 2002, p.208).
Qualitative research interviews seek to describe and comprehend central themes in the life
world of subjects (Kvale 1996). Interviews have the potential to offer a access to “a rich
source of data” (Silverman 2001, p.114) and are well suited for collecting comprehensive
and valuable data from the target population (Cavana, Delahaye & Sekaran 2001). The
researchers role, and personality impacts engagement with the respondent. Researchers
benefit from participants views and experiences as they probe to pursue in-depth
information around a topic (McNamara 1999; Rubin & Rubin 2005; Fontana & Frey
2008).
There are various types of interviews. These include: (i) face-to-face; (ii) telephone
interviews; (iii) computer mediated communication tools using tools like messenger and
144
electronic mail (Opdenakker 2006). These techniques are compared and the advantages
and disadvantages are shown in Table 6.8.
Table 6.8: Summary of Interview Types
Criteria
Face-to-face
Telephone
Computer
Systems
Data Collection Speed
Geographical
Location
Respondent
Cooperation
Versatility of
questioning
Respondent
misunderstanding
Interviewer influence
Anonymity of
respondent
Ease of call back or
follow up
Cost
Moderate
Limited and
confined
Very high
Very Fast
Unlimited
Instantaneous
Unlimited
Good
Variable
Very versatile
Moderate
Modest
Low
Average
High
High
Low
Moderate
Moderate
None
High
Difficult
Easy
Difficult
Very high
Low
Low
Source: Adapted from Zikmund 2000
The researcher considered several factors including the nature of the topic, and resources
available, when selecting the modality for data collection. In respect of the former, the
researcher was mindful the cross-cultural interviewing is intriguing, challenging rewarding
and if not a little precarious (Rheingold 1988, p.59). Particular attention was given to
respondent cooperation and the versatility of questioning. It was also considered important
for the researcher to select a modality that provides for probing for in-depth information
and the opportunity to clarify details where required (Patton 1990; Zikmund 2003; Berg,
2004;
Hair et al. 2007; Sekaran 2010). For these reasons, the researcher selected
individual face-to-face interviews. Although they were costly to conduct.
Approaches to qualitative interviewing fall into three broad categories (Patton 2002). The
characteristics, strengths and weaknesses of each are summarised in Table 6.9 below.
145
Table 6.9: Interview Approaches Summary
Type
Characteristics
Strengths
Informal
conversation
al interview
No predetermination of
topics or questions;
emerge as interview
progresses.
Outline
topics
are
defined in advance. The
researcher
determines
question sequence &
wording
during
the
interview.
Topics, wording and
sequence of questions
are determined in
advance.
Interviews
can
be Less systematic and
context
specific, comprehensive. Data
matched to individuals. analysis & organisation
can be difficult.
Outline
provides Differing responses can
comprehensive
and result in important
system data collection. points being omitted.
Interview,
Comparability
is
conversational.
reduced.
Interview
guide
approach
Standardised
open-ended
interview
Weaknesses
Complete data for Little flexibility for
respondents
- individuals
and
comparable. Reduces circumstances.
interview bias.
Source: Adapted from Patton 2002
The nature of the study involved collecting sensitive and often confidential information on
strategies for international market penetration which vary from firm to firm. Based on this,
the researcher combined the interview guide with standardised open-ended questions. This
semi-structured approach involved a number of basic questions, however, enabling the
interviewer to probe and explore specific areas in greater depth when appropriate (Yin
1994; Remenyi et al. 1996; Mason 2002). This had the advantage of permitting an open
dialogue, flexibility and a flowing conversation rather than a more rigid structured format.
It also added credibility to the data collected whilst reducing interview bias where strategic
issues of international market penetration may be perceived to be sensitive.
6.4.2 The Target Population : Composition and Selection of the Personal
Interviews
Neuman (2006) defines the target population as the ‘the concretely specified large group of
many cases from which a researcher draws a sample and to which results from a sample
are ‘generalised’ (Neuman 2006, p. 224). Accordingly, the target population had to
comprise individuals who were fully familiar of the range of issues that impact upon the
TMT firms that are internationalising their operations.
146
Particular attention was given to culture and language differences. In respect of the former,
the researcher was mindful as the cross-cultural interviewing is intriguing, challenging,
rewarding and a little precarious (Rheingold 1988, p.59).
As the Malaysian population is heterogeneous, each of the three principal racial groups,
namely, Malays, Chinese and Indians, take pride in their individual cultures. Furthermore,
not all Malaysians are fully familiar with the English language and the researcher was
aware that an interview conducted in the English language could have its limitations
(Rheingold 1988; Hofstede 2001; Patton 2002).
A pre-qualification exercise was undertaken to ensure that the opinions and responses of
those participating in the personal interviews were both relevant and valid. For this
purpose, profiles were established for each of the 4 groups of interview participants as
shown in Table 6.10.
Table 6.10: Profile of Interview Participants
Group
Category
A
Operational Staff
B
C
D
Description
Staff from the selected case study firms and related industry firms
who are involved in operational matters.
Management
Senior Managers from the selected case study firms who are
responsible for management. This included the firms which had
been involved in international operations.
Industry Experts
Knowledgeable persons including industry experts, consultants,
individuals involved in academia who had interest and knowledge
about internationalisation.
Government and Participants from Government and regulatory bodies. The
Regulators
participants selected were involved in policy matters pertaining to
internationalisation and the telecommunications sector.
Guided by this, the researcher used her industry contacts to seek the assistance of the
MCMC and MDeC for the identification of persons who fell within the defined target
population. Participants were selected based on their knowledge and experience. The
contacted agencies offered useful suggestions on suitable interview participants from the
regulatory bodies, academia, Government agencies and the telecommunications firms. The
researcher then wrote to each nominated participant
to secure their support and
147
involvement with the research. 35 prospective participants were identified and approached,
however, the process resulted in 20 positive responses and the breakdown is shown in the
Table 6.11 below.
Table 6.11: Interview Participants
Group
Category
A
Operational Staff
Number of
Participants
3
B
Management
8
C
Industry Experts
5
D
Government and
Regulators
4
The prequalification exercise that was undertaken contributed to the selection of the
interview participants who were both relevant and valid for the research since they
comprised management and operational staff of the case study firms as well as industry
experts and regulators, they were well positioned to participate in the interviews. However,
the respondents were not anonymous and therefore could well have been reluctant to
provide honest and straight answers to questions that were sensitive. Furthermore
Malaysians, like most Asians, consider it inappropriate to relate to strangers their personal
views on the political situation and Governments (Hofstede 2007; Patton 2002). This could
be termed as a weakness for the interview exercise.
6.4.3 Conducting the Interviews
The face-to-face interviews were held in the respective offices of the interview
respondents or at a suitable hotel location. The duration of the interviews were wideranging and lasted from an hour to two hours and the researcher took detailed notes during
the interviews. The researcher expressed the wish to record the interviews to capture the
data in its entire form including quotations. However, as discussed in Section 6.4.2 crosscultural challenges along with the request for anonymity and confidentiality excluded the
148
use of recording devices. The researcher followed an interview protocol which is discussed
in Section 6.4.4.
6.4.4 Interview Protocol and Questions
An interview guide with open-ended questions was adopted for this research. The semistructured approach was designed to engage participants to share insights, challenges and
dimensions of internationalisation of Malaysian telecommunications firms. Guided by
authorities, an interview protocol was designed and used to increase reliability and
credibility in the data collection (Eisenhardt 1989; Yin 1994; Perry 1998). It provided a
level of environmental control and objectivity and retained objectivity while maintaining
empathy and a “personable” demeanour (Hair et al. 2007). As stated earlier, the researcher
combined the interview guide approach with standardised open-ended questions as this had
the advantage of permitting an open dialogue, flexibility and flow in conversation. The
key discussion points as well as the questions in respect of each of the research
propositions are shown in Table 6.12.
The researcher adhered strictly to the designed interview protocol in order to retain
objectivity while maintaining empathy.
149
Table 6.12: Key Discussion Points and Interview Questions
Research Questions
Research Question 1
Research Question 2
Research Question 3
Research Question 4
Some Interview Questions
IQ1
 What are your views on the current state of the global market
and emerging trends? How do you believe these influence the
Malaysian market
IQ2
 In your view, do you consider it necessary for Malaysian
telecommunications firms to venture abroad? If so, what are
the push/pull factors for them to do so?
IQ3
 In your view, are Malaysian telecommunications firms well
positioned to compete globally?
IQ4
 What strategies do Malaysian telecommunications firms
employ for international market penetration? Do these
strategies take into consideration, product and operations
strategies? If so, please describe.
IQ5
 How do Malaysian telecommunications firms select
international markets, Entry mode and timing?
IQ6
 How important is it have strong leadership and a global
mindset?
IQ7
 What benefits do you believe can be gleaned from
establishing network relationships?
IQ8
 How important are the attributes of. Trust, Commitment, and
Learning for successful international market penetration?
IQ9
 What is the role of knowledge and how easy is it to transfer?
IQ10  What are the challenges that Malaysian telecommunications
firms face in international ventures?
IQ11  How are Malaysian telecommunications firms financing their
international ventures?
IQ12  In your view, how effective are the brands of Malaysian
telecommunications firms for successful overseas ventures?
IQ13  How effective are the efforts of telecommunications firms in
building international network relationships?
IQ14  How innovative are Malaysian telco firms products and
services?
IQ15  How adequate are the structures and resources to address the
challenges that Malaysian Telco’s face in international
ventures?
IQ16  What are the Government’s initiatives and policies for
encouraging telecommunications firms to enter international
markets?
IQ17  What is your view on the regulatory authority and how
effective are regulatory policies?
IQ18  What are your thoughts on improving the regulatory
environment?
The key discussion points and questions were mapped to the four research propositions as
shown in Table 6.13.
150
Table 6.13: Mapping Interview Questions to Research propositions
Research Proposition
1
RP1: The dynamic changes in the global
X
telecommunications industry have a
strong influence on the competitive
strategies of Malaysian
RP2: Malaysian telecommunications
X
firms have appropriate strategies for
successfully internationalising their
operations
RP3: Malaysian telecommunications
X
firms that are internationalising their
operations face significant challenges.
RP4: The Malaysian Government is
fully supportive of the efforts of the
Malaysian telecommunications firms to
internationalise their operations
Interview Questions
2
3
4
X
X
X
X
X
X
X
6.5 Methodology for Stage 2: Descriptive
This Section describes the methodology for the descriptive
stage of the study. The
findings from the exploratory stage resulted in a refined theoretical model and the
development of four research questions. These were translated into propositions
for
testing by a web survey in the second and descriptive stage of the research. Descriptive
statistics were used to analyse the responses and these permitted the testing of the refined
theoretical model. The hypotheses for this research was also developed during this stage
and this is detailed in Section 6.6.1.
6.5.1 Defining the Variables and Constructs
The preliminary findings from the qualitative, exploratory stage, enabled the definition of
variables and constructs to test the proposed research model. SEM is based on multivariate
regression models with the aim of studying relationships among variables. Accordingly,
151
guided by Tabachnick and Fidell, (2001) and Hair et al (1998, 2010) four constructs and
three to five indicators for each variable were determined. These are shown in Table 6.14
Table 6.14: SEM Variables and Constructs
Variable
Dynamic Market
Landscape
Strategy
Challenges
Government
Defined By
Construct
The belief that Malaysian Telco firms take into
account the external environment and are
successfully positioned to compete in international
ventures in the new economy.
The belief that Malaysian Telco firms have strategies
and leadership to take into consideration the dynamic
trends and evolving landscape.
The belief that Malaysian Telco firms will be
challenged to survive if they rely on the domestic
market for growth.
The belief that Malaysian Telco firms are innovative
taking into consideration that dynamic sector and
consumer demands.
The belief that Malaysian Telco firms are focusing on
emerging markets for growth.
The belief that Malaysian Telco firms are directed by
leaders with a global mindset, experience, knowledge
and are motivated to drive international growth.
The belief that Malaysian Telco firms strategies
include international market penetration and markets
are selected based on risk analysis.
The belief that Malaysian Telco firms have effective
network relationships to support international
ventures.
The belief of the business community that Malaysian
Telco firms have capable leaders to drive
international ventures successfully.
The belief that Malaysian Telco firms do not require
research and development or innovation.
The belief that Malaysian Telco firms brands are
effective in international markets.
The belief that Malaysian Telco firms have adequate
HR strategies for firing and retaining skilled
resources required for international markets.
The belief that the Malaysian Government has
adequate policies for internationalisation and nit will
encourage and support Telco firms to venture
overseas.
The belief that Malaysian Telco firms are encouraged
and incentivised to venture overseas.
The belief that the Government plays a proactive role
to support growth and development of Malaysian
Telco firms in international ventures.
The belief that the Government are independent of
the regulatory body.
Positioning
Capability
Strategic Intent
Customer-Orientation
Market Selection
Global Outlook
Risk
Network Relationships
Leadership
Insight
Trust
Knowledgeable
Resources
Policies
Incentives
Governments Role
Independent Regulation
152
6.5.2 The Web Survey
The descriptive stage used a web survey as the main data collection method. Surveys are
commonly used as a quantitative data collection instrument where a relatively large
representative sample of a wider target population is required (Ticehurst & Veal 2000;
Zikmund 2001). The selection of the type of survey is dependent on the research
propositions, the research questions and time and resources available. Accordingly, the
researcher selected a cross-sectional survey which is ‘a one-shot survey as data is gathered
just once to answer a research question’ (Sekaran, 2000, p. 137). The researcher used a
self-administered online web survey tool, Zoomerang, as the main response mechanism.
Invitations to participate were emailed separately containing a link whereby contact details
of the respondent were not collected in Zoomerang, thereby assuring anonymity.
The web survey process shown in Figure 6.4 comprised six steps as below. The first step
was to determine the information required and to develop the research propositions for
testing by the web survey. The propositions based on the research questions that emerged
from the literature review were developed in Section 7.5
Figure 6.4: The Web Survey Process
Determine Information Required
Theoretical Propositions
Questionnaire Design
Modality
Measurement
Design
Feedback: Delphi method; Refine
Sampling Design
Target Population
Sample Size
Select Sample
Identify respondents: pilot test and finalize
Administration of the Survey
E-Survey
Record Data
Data Entry
Statistical Analysis of Data
Data Analysis
Reliability
Validity
Credibility
Reliability and integrity of data
Findings
Refinement of model; SPSS for confirmatory stage
153
The second step was the scripting and design of questionnaires Particular attention was
given to ensure that the questions were linked to the information requirements identified.
A five point Likert scale was selected as the attitude measurement tool. The draft design
was tested using the Delphi method. The questionnaire was amended in line with the peer
review. Third, the target population was identified and a sample of 1025 prospective
respondents were selected. The survey was pilot tested and finalised. Fourth, the e-survey
was administered using Zoomerang and data collected as it requires each individual to
respond to the same set of questions in a predetermined order (De Vaus 2002).The data
was entered into SPSS v 17. Fifth, the data was checked for reliability and validity and
analysed. Finally, the findings were used for the confirmatory stage of this study.
Additionally, invitations to participate were emailed separately containing a link whereby
contact details of the respondent were not collected in Zoomerang, thereby assuring
anonymity. However, a questionnaire is only as good as a questions it asks (Zikmund
2003). Therefore, several factors may impact the rate of response for surveys. These are
discussed next.
6.5.2.1 Scripting Questions for the Web Survey
The questionnaire for the web survey comprised 16 questions. As shown in Table 6.15,
they were linked to the four propositions that were developed to test the refined theoretical
model during the descriptive stage of the research.
154
Table 6.15: Scripting Questions for the Web Survey
Proposition
The dynamic changes
in
the
global
telecommunications
industry have a strong
influence
on
the
competitive strategies
of
Malaysian
telecommunications
firms
Malaysian
telecommunications
firms have
appropriate strategies
for successfully
internationalising
their operations
Malaysian
telecommunications
firms that are
internationalising
their operations face
significant challenges.
The
Malaysian
Government is fully
supportive of the
efforts
of
the
Malaysian
telecommunications
sector
to
internationalise their
operations
Interview
Q’s
1, 2, 4 and
5
Scripted Web Survey Statement
Construct Tested
1
Positioning
1,2 and 3
2
4,5, and 10
3
1,10,
4
1,4, 12 and
13
5
2,4,6, and 8
6
5
7
7,8,9 and 13
8
6,8,12
9
4, and 14
10
6,8, and 12
11
6 and 15
12
16
13
16
14
17
15
18
16
Malaysian telecommunications firms are well
positioned to achieve sustainable competitive
advantage in the highly competitive global
Malaysian telecommunications firms have the
strategic capabilities to accommodate the changes in
the global telecommunications industry.
The intense competition in a saturated domestic
market compels Malaysian telecommunications
firms to venture into overseas markets.
Malaysian telecommunications firms are meeting
the challenges presented by changing consumer
demands in the global marketplace by providing
new products and services
Emerging countries with low penetration rates and
high growth potential are the preferred investment
destinations for Malaysian telecommunications
firms.
required global strategic outlook to successfully
venture into international markets.
The internationalisation strategies of Malaysian
telecommunications firms take full account of the
risk factors in the targeted international markets.
Malaysian telecommunications firms have strong
external networks and effective foreign partnerships
for successfully venturing into new international
markets.
Malaysian telecommunications firms benefit from
capable leadership for successfully operating in
international markets
Malaysian telecommunications firms are not giving
adequate emphasis to research and development for
creating innovative market driven products and
services.
reputational and brand advantage for competing in
overseas markets.
Malaysian telecommunications firms have qualified
staff with demonstrated knowledge and capabilities
to effectively operate in international markets.
The Malaysian Government’s policies for the
telecommunications sector create a conducive
environment to enable them to become key regional
players.
The Malaysian Government has adequate measures
and incentives to support the growth and
development of Malaysian telecommunications
firms.
Malaysian Government agencies can play a more
proactive role for supporting the internationalisation
efforts of Malaysian telecommunications firms.
The Malaysian Government has a strong
administrative machinery to enhance the
competitive
positioning
of
Malaysian
telecommunications firms that are competing in the
global arena..
Capability
Strategic Intent
CustomerOrientation
Market Selection
Global Outlook
Risk
Network
Relationships
Leadership
R&D
Brand
Knowledgeable
Human Resources
Policies
Incentive
Role
Independent
Regulation
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6.5.2.2 Questionnaire Design
Questionnaire design is critical to ensure the validity, reliability and accuracy of findings.
Guided by numerous authorities, (Tanur 1992; Blair & Presser 1994; Ticehurst & Veal
2000; Zikmund 2003; Neuman 2006), the researcher took into account the following
factors for designing the questionnaire.
 Significance of the questions
 Wording of the questions
 Number of questions and length of the questionnaire
 Order of the questions
 Attitude measurement
 Appearance of the questionnaire
Significance of the questions
In designing the questionnaire, the researcher considered the relevancy of the questions.
Only questions that related directly to testing the research hypotheses were considered
significant and were included (Singh 2000; Sekaran 2000). Additionally questions which
provided an option for ‘neutral - no opinion’, were included (Neuman 2006). These
enabled the respondent to assume a neutral stance on aspects to accommodate individuals
who were reluctant to express their views or opinion.
Wording of the questions
The researcher gave much attention to the language and phrasing used in the questionnaire
(Zikmund 1993; Sekaran 1999; Neuman 2006). To achieve accuracy, questions were
phrased clearly and specifically to avoid ambiguity. Leading and emotionally sensitive
questions were avoided. As the target population consists of several races, whereby
English may not be the first language, double barrelled questions were also avoided. In
summary, the language of the questionnaire was matched with the level of understanding
of the respondent (Cavana, Delahaye & Sekaran 2001). Closed ended questions which
made little demands on the respondents memory were used and were phrased negatively
and positively.
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Number of questions and length of the Questionnaire
Recent research publications reveal that 20 minutes is the critical time for survey
respondents. Rathod (2004) argues, ‘if researchers work to keep their surveys shorter, this
will help achieve quality and more motivated respondents’. Taking into consideration the
environment and the nature of the research, the researcher, drafted a 4 page questionnaire
consisting of 16 questions. This was tested using the Delphi technique as discussed in
Section 6.5.1.3. The finalised questionnaire was pilot-tested before being sent to the survey
participants.
Order of the questions
Due care was given to the sequence of the questionnaire. The questions were aligned with
the four Propositions being tested. Taking into consideration the target population and the
research objectives, the researcher selected the funnel approach (Festinger & Katz 1966).
Neutral questions were placed at the beginning of the questionnaire and ones which
required further thought were placed at the end.
Attitude Measurement
The aim of the questionnaire was to collect quantitative data. Responses are based on the
attitudes and beliefs of participants. An attitude is an inferred construct from peoples
reality whereby there is an indisposition towards responding in a consistent manner
(Summers 1973; Zikmund 2003). Measuring participants responses required the researcher
to select an appropriate measurement tool.
Ranking scales were not considered for this research as the questionnaire did not require
participants to rank responses. The questionnaire required respondents to select the most
suitable category reflecting their attitude. Accordingly, rating scales were considered the
most appropriate for this research (Sekaran 2000). There are several rating scales which
are used in business research and these are outlined in Table 6.16. below.
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Table 6.16: Attitude Rating Scales
Rating Scale Type
Nature
Advantages
Simple Attitude
State
their Ease of Response
agreement
or
disagreement to a
question
or
statement.
Category Scale
Several response Flexible
and
categories requiring sensitive measure
respondents’
agreement
of
disagreement
Likert Scale
Statements
Easy to administer.
evaluated on a five Able
to
draw
point scale
distinctions in the
attitudes
of
respondents
Disadvantages
Fails to provide a
fine distinction in
the attitudes of
respondents.
No provision for a
neutral reply.
Wording is crucial
and
statements
require
different
descriptive
dimensions. May
cause ambiguity.
Challenging
to
judge what a single
score means
Source : Cavana, Delahaye & Sekaran 2000; Zikmund 2000
The Likert scale, simple and versatile was considered the most suitable for this survey as it
has the advantage of being able to draw distinctions in the attitudes of the respondents.
Additionally, it presented the respondent with an option to adapt a neutral stance on
matters of which they were uncertain or had no opinion. The five point Likert scale used in
this research is shown in Figure 6.5.
Figure 6.5: Likert Scale
Source : Developed for this Research (Likert 1932).
158
Appearance of the questionnaire
The layout and appearance of the survey is important. The questionnaire was designed in a
clear and concise manner to enable a smooth process for completion. The researcher used
Zoomerang to design the questionnaire.
6.5.2.3 The Delphi Technique
The Delphi method is an iterative process that is used to reduce anonymity and to improve
the understanding of a phenomenon or problem (Skulmoski, Hartman & Krahn 2007). The
researcher identified eight individuals with in depth knowledge about the strategic issues
impacting the successful internationalisation of Malaysian telecommunications firms
comprising a cross section of academia, Government, industry and consulting firms. They
provided feedback on the questionnaire. Amendments were made before pilot testing the
questionnaire.
6.5.2.4 Pilot testing the questionnaire
A pilot test collects data from a small population of a research project to serve as a guide
for the larger study (Zikmund, 2003). Guided by Sekaran (2000) and Zikmund (2003), the
researcher selected a sample of 20 participants to pilot test the questionnaire before
releasing it to the target population. The purpose was to gain feedback on various aspects
of the questionnaire including, relevancy, clarity, ethics, look and feel, wording,
questionnaire length, sequence and flow. The feedback suggested reordering some of the
questions and adding a box for additional comments. Amendments were made and the
questionnaire was finalised.
6.5.2.5 The Finalised Questionnaire
The finalised Questionnaire consisted of four research propositions and 16 close-ended
questions and these are attached as Appendix V.
159
6.5.2.6 Sampling Design
A sample is a subset of a population selected to estimate the behaviour or characteristics of
the population (Sekaran 2000; Babbie & Mouton 2001). It is important to design a sample
properly to reduce gaps between the selected sample and its population (Kumar 1996 cited
in Abang 2009). A population is the total collection of elements about which we wish to
make some inference (Cooper & Schindler 2003, p.179). Accordingly, the researcher gave
due care and consideration to the sampling method to determine the survey sample size
and composition.
6.5.2.7 Sampling Methodology
There are three main types of sampling techniques. These are simple random sampling,
stratified sampling and purposive sampling. Random sampling technique is where every
element of the population has a known and equal probability of being included in the
sample. It is the simplest form of sampling and is the least bias. Stratified sampling is used
when some significant characteristics of the population are already known. This enables
the selection of a sample which can mathematically represent significant characteristics.
Purposive sampling is a selection of a group that is typical of the population as a whole.
Data from purposive sampling are adequate for indicating conclusions (Sekaran 2000).
These techniques fall into two main categories of sampling methods, namely, probability
and non-probability sampling (Saunders, Lewis & Thornbill 2003 cited in Chew 2007).
Probabilit y Sampling
In probability sampling, each member of the population has a chance to be selected into
the sample. This method includes random, stratified sampling discussed in the previous
section as well as cluster sampling. Cluster sampling involves aggregating units of the
population into larger sampling units, clusters. Although probability sampling reduces
bias, it is costly to conduct and requires planning. Therefore, the researcher considered it
inappropriate for this study.
160
Non-Probabilit y Sampling
In non-probability sampling, the chance of an element of the population to be chosen is
unknown and therefore difficult to generalise to the population (Tan 2008). However,
Non-probability sampling is preferred by qualitative researchers since the distribution of
characteristics is not important, neither its relevance to the research topic. The types of
non-probability sampling are shown in Table 6.17.
Table 6.17: Non-Probability Sampling
Type
Convenience Sampling
Judgmental Sampling
Purposive Sampling
Quota Sampling
Snowball Sampling
Characteristics
Relies on available respondents and
can be the most convenient methods
as it the respondents can be selected
quickly and inexpensively.
The selection of the respondent is
based on their knowledge or expertise.
Generally inexpensive.
A stratified convenience sampling
strategy. There is a fixed quote for
each subgroup.
Primary
used
for
exploratory
purposes. It involves recruiting an
initial respondent by a probability
method who then identifies further
respondents for participation.
Source : Adapted from Zikmund 2003; Sekaran 2003; Davies 2005
Convenience Sampling is the most convenient method of collecting information from
members of the population who are conveniently available.
Members of the target
population can be selected quickly and inexpensively. However, the findings may lack
objectivity and do not lend themselves for generalisation. Convenience samples are often
used for qualitative research where time and money are critical constraints (Zikmund
2000; Davies 2005).
Judgmental or Purposive Sampling involves gathering information pertinent to the
research from specific target groups (Cavana, Delahaye & Sekaran 2000). It involves “a
161
highly specific difficult – to reach population” with a specific purpose in mind (Neuman
2006, pp. 222). The researcher selects subjects who are best suited to provide the
information required. While this type of sampling may limit the generalisability of the
findings, in view of the nature of the investigation, it was appropriate for this research.
Quota Sampling involves the selection of predetermined categories to reflect the diversity
of the target population (Neuman 2006). While it limits generalisability of the findings, it
is necessary when a sub-set of population is under-represented in the target population
(Davies 2005).
Snowball Sampling is used when the characteristics of the desired sample is rare. It relies
on initial participants referring additional subjects. While this sampling method can be low
in cost, an element of bias exists and the cross section in the sample is likely to be limited
(Neuman 2006).
Guided by the research problem and the research objectives, the researcher selected nonprobability sampling for this research. As it was necessary to select individuals who were
knowledgeable about the telecommunications industry, selection was based on relevance
rather than representativeness (Flick 1998). Taking into consideration time and cost
constraints to obtain the large sample of data required, the researcher adopted a
combination of judgment and quota sampling. By using i) Judgment sampling allowed the
researcher to reach specific target groups for pertinent information regarding the research
and ii) quota sampling the researcher was able to include participants from pertinent group.
6.5.2.8 The Target Population and the Survey Sample
There are several players in the Malaysian telecommunications sector. Furthermore, the
nature of the research topic required responses to strategic issues and challenges. Due to
cultural attitudes, the majority of Malaysians find it difficult to freely and candidly express
their views on contentious issues (Hofstede 2001; Salazar 2007). Government officials in
particular are not permitted to express their personals opinions on issues related to their
official duties and responsibilities. Mindful of this, the researcher wrote to industry
committees, Malaysian telecommunications firms and associated firms requesting
162
assistance with identifying suitable participants. The researcher then contacted individuals
as per the details provided.
Roscoe (1975) suggested that sample sizes ranging between 30 and less than 500 are
appropriate for most research. Accordingly, the researcher identified 1025 persons to
constitute the sample size. The target population comprised Malaysian telecommunications
firms, Government, Academia and Knowledgeable persons, that included industry experts
and consultants. The composition of the survey sample size is shown in Table 6.18.
Table 6.18: Survey Sample Composition
Telco
Operational
Group
Sample Size
% Sample Size
Telco
Management
Knowledgeable
Experts
Academia
Government
Total
A
B
C
D
305
370
210
140
1025
29.76%
36.09%
20.49%
13.66%
100%
Source : Developed for this Research

Group A: This group comprised Staff from the selected case study firms and related
industry firms who were involved in operational matters.

Group B: Senior Managers from the selected case study firms who were in
management positions.

Group C: This comprised knowledgeable persons including industry experts,
consultants, and academics who were knowledgeable about internationalisation issues.

Group D: This constituted participants from Government agencies and the regulatory
bodies. The selected participants were familiar with policy matters pertaining to
internationalisation and the telecommunications sector.
6.5.2.9 Administration of the Web Survey
This recruitment and selection of participants for this study was guided by the National
Statement
on
Ethical
Conduct
in
Human
Research
163
(www.nhrmc.gov.au/publications/synopses/e35syn.htm). This is discussed further in
Section 6.9.
As discussed earlier, the survey was designed and administered through Zoomerang.
Potential respondents were sent an email to participate in the research. This included a
brief summary, the objectives of the research and the link to the web survey which
included the information sheet and ethics statement. The survey was administered using
the dedicated Gmail account set up for this purpose. This ensured confidentiality as
Zoomerang has specific features which allow for the anonymity of respondents. The
response rates were monitored regularly to provide an indication of the expected outcomes
and also acted as a trigger for reminders to be sent out as required. The overall response
rate for this survey was 20% as shown in Table 6.19.
Table 6.19: Survey Response Results
Group
Sample Size
Response
Rate
Percentage
Telco Firms Operational - A
305
30
9.84%
Telco Firms Management - B
370
104
28.11%
Knowledgeable Experts Academia C
Government - D
210
55
26.19%
140
15
10.71%
1025
204
20%
Total
While the response rate of 20% was adequate for the purpose of quantitative data analysis,
it is significant that more than half of the 204 respondents were in Group B which
comprised the management of the telecommunications firms. Another 55 were from Group
C comprising the knowledgeable experts and academia. The participants of both these two
groups accounted for 77.9% of the total web survey participants. The research
acknowledges that this could result in skewed responses. The next Section discusses the
confirmatory stage, Stage 3 of this research.
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6.6 Methodology for Stage 3 : Confirmatory
The findings that emerged from the exploratory and descriptive stage of this research
permitted the defining of the variables and constructs. CFA and SEM was to confirm the
refined model that was tested during the descriptive stage of this research. Guided by
Tabachnick and Fidell, (2001) and Hair et al (1998, 2010) four constructs and three to five
indicators for each variable were determined.
6.6.1 Development of the Hypotheses
Four research hypotheses were also developed from the findings of the literature review.
The four hypotheses, coded H1 to H4 inter-relate the four variables of ‘Dynamic Market
Landscape’, ‘Strategy’, ‘Challenges’, ‘Government’.

H1: The “Dynamic Market” Landscape influences Internationalisation strategy

H2: “Internationalisation Strategy” is influenced by the dynamic market landscape
combined with the ability to overcome challenges

H3: “Challenges” impact the successful international market penetration of

H4: The “Government” plays a moderating role in the international market
penetration of Malaysian telecommunications firms
The defined variables and hypotheses are supported by the body of knowledge from the
literature review. These are shown in Table 6.20.
165
Table 6.20: Authority References supporting Variables and Research Propositions
Variable
Supporting Authorities
The
Dynamic Laanti 2009; Ure 2009; Curwen & Whalley 2010; Kenny 2010;
Market Landscape
Ovum 2010; Pyramid 2010; Arthur D. Little 2011; Bain & Company
2011; BMI 2011; IBM 2011; IDC 2011; ITU 2011; Kagan 2011;
Budde.com 2011; TIA 2011; Deloitte 2012;
Johanson & Mattson 1988; Gabrielsson 2007; Johnson & Valhne
Strategies
2009; Dunning & Lundan 2008; Ure 2009; Laanti 2009; Curwen &
Whalley 2008, 2010; Asgari, Ahmad & Gurrib 2010; Mathews 2010;
Oswal 2010
Challenges
Ahmad & Hashim 2007; Markova 2008; Juniper 2009; Ure &
Lovelock 2009; EY 2010; IBM 2010; Accenture 2010; MCMC 2010;
The Yankee Group 2010; Alcatel-Lucent 2012
Government’s Role Ure 2001; Li & Whalley 2002; Zita 2005; Salazar 2007; Ure, Lee, &
and Policy
Lee, 2009; MCMC 2010; Sivalingam 2007; Laanti 2009; McKinsey
2010; Oxford Business Group 2010

‘Dynamic Market Landscape’ is supported by various authorities and is described
as one of the most dynamic industry sectors. It is characterised by technological
advances which are shaping the future of the global telecommunications industry as
consumer demand for seamless, ubiquitous access intensifies amid increasing
competition. Industry players have to review their positions and participation in
the value network as they strive to achieve growth and competitive advantage,
often in international markets.

‘Strategy’ considers a firm’s ability to achieve competitive advantage and
sustainable growth.
Factors requiring consideration include market selection,
timing of entry, consideration of the risk factors and the importance of building
trust and commitment in network relationships for integration.

‘Challenges’ reflects the critical internal and external factors that impact successful
international market penetration by Malaysian telecommunications firms. The
regulatory authorities in both the Host and Home Government’s play a critical role
in growth and ensuring that firms meet their obligations to consumers.

‘Government’ considers the impact of public policy, incentives and independent
regulation.
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6.6.2 Confirmatory Factor Analysis (CFA)
Confirmatory Factor Analysis (CFA) is a statistical technique that verifies the factor
structure of a set of observed variables. CFA tests the uni-dimensionality to establish a
valid measurement model (Byrne 2001) and allows the researcher to test the measurement
of relationships of indicators (observed variables) to factors (latent variables). CFA relies
on statistical methods and explains the relationships among variables and the fit indices.
The chi-square indicates the amount of difference between expected and covariance
matrices; a value close to zero indicates little or no difference. It measures the goodness of
fit of the model, however, is unsuitable for smaller sample sizes.
The Goodness of Fit Index (GFI) measures the “relative amount of variances and
covariances jointly accounted for by the model” (Joreskog & Sorbom 1986, p.41). The
closer the GFI to 1.00, the better the model fit.
The Comparative Fit Index (CFI) (Bentler 1990) makes adjustments for the discrepancy in
smaller sample sizes. The values fall between 0 and 1 and a score of above 0.90 is
considered to be an acceptable fit.
Root Mean Square Error of Approximation (RMSEA) relates to the residual in the model
with values ranging from 0 to 1. It takes parsimony into account and values of 0.06
indicate a better model fit (Hu & Bentler 1999; Hair et al. 2006).
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6.6.3 Structural Equation Mode lling (SEM)
Structural Equation Modelling is a statistical tool for testing and estimating the causal
relationships between variables. The aim of SEM is to study complex relationships among
variables, where some variables can be hypothetical or unobserved (Wothike 2010). SEM
is confirmatory rather than exploratory.
The responses from the web survey were ascribed numerical values and were subjected to
CFA using AMOS 20.0 SEM software. Guided by several authorities, the process had two
phases. The first, CFA which was discussed in Section in 6.6.5, was used to assess
construct validity and second SEM, which consists of two stages, was used to empirically
test the hypotheses (Andersen & Gerbing 1988; Hair et al, 2010). The first stage was a
measurement model which considered the variations between the dependent and
exogenous variables in the model for maximum reliability. The second stage involved a
structural model to review and define the relationships and correlations between the
variables (Byrne 2001).The goodness of fit of the model to the observed data was tested
using AMOS 20.0 SEM. The outputs and findings of the confirmatory stage are detailed in
Chapter 8.
6.7 Research Quality
An important element of any research is to ensure its quality and credibility. Accordingly,
this Section discusses the pertinent issues relating to the quality assessment of research.
This includes the possibility of errors, reliability and validity (Kothari 1990; Bryman &
Bell 2007).
6.7.1 Minimising Errors
The researcher adopted several measures to minimise errors. The questionnaire was tested
with the Delphi technique to obtain feedback from selected knowledgeable persons (Witt
& Moutinho 1994). This was then further pilot tested through a representative sample.
Based on the feedback, the questionnaire was finalised and then distributed to the target
population. Additionally, to minimise error source, respondents with comparable positions
168
were selected for each group (Cooper & Schindler 2003; Flick, Kardoff & Steinke 2004;
Kumar 2005).
All interview participants benefited from an information guide which outlined the research
objectives, expectations and confidentiality. It also stated the expected outcomes and
benefits of the research.
6.7.2 Reliability
Reliability in research is concerned with consistency and stability in the research process
(Riege & Nair 1996). It aims to reduce errors and bias in measurement (Sekaran 2000; Yin
2003) by demonstrating that the research procedures and process can be replicated with
similar outcomes and findings. The researcher took the following measures to ensure
reliability. i) The questionnaires were tested using the Delphi technique to gain feedback
on clarity, length and look of the questionnaire. ii) pilot-tested by using a small
representative sample. iii) the administration of the survey was through Zoomerang, a
specialist data collection software tool which provided for anonymity and accurate data
collection and iv) All interviews were documented.
6.7.3 Validity
Validity focuses on the right concept being measured for addressing the identified research
problem (Chew 2007). Construct validity is the extent to which a measuring instrument
measures what it intends to measure. There are two aspects to validity, internal validity
and external validity.
External validity is concerned with the generalisability of the findings to the external
environment (Zikmund 2000). The researcher took the following measures to ensure
validity. First, a large sample size was collected. In this environment, a response rate of
20% is considered adequate. Second, the Questionnaire was comprehensive and covered
the issues being investigated. Third, interview participants and knowledgeable persons,
including industry experts and academics provided valuable feedback on the research
topic. Finally, Multiple sources of evidence were used as well as an. electronic audit trail.
169
Internal validity is concerned with inferences regarding causal relationships between two
variables The researcher addressed the issues of internal validity by ensuring that the
Questionnaire and interviews were comprehensive in their coverage of the content
pertinent to the research problem (Kumar 2005).
6.7.4 Triangulation
‘Triangulation is an attempt to map out, or explain more fully, the richness and complexity
of human behaviour by studying it from more than one standpoint’ (Cohen & Manian 2003
cited in Kennedy 2009). The quality of research is enhanced by triangulation as it
improves accuracy (Neuman 2006). Accordingly, the researcher triangulated the findings
in the following ways.
The researcher used a mixed methodology of quantitative and qualitative methods in a
complementary manner (Greene & Caracelli 1997). Qualitative data was collected through
a comprehensive literature review, and interviews. These provided insights into prior
research, methods used and identified gaps in the study of internationalisation of the
telecommunications sector. Values-free quantitative data was collected in the second
stage. The amalgamation of the qualitative and quantitative data strengthened internal and
external validity.
6.8 Data Analysis
Data collected is generally in the raw form and has to be converted into information for
analysis and interpretation (Malhotra 1999). The analysis procedures for the collected
qualitative and quantitative data are discussed next.
6.8.1 Qualitative Data Analysis
Qualitative data consists of words not numbers and is a dynamic and intuitive process of
inductive reasoning and theorising (Basit 2003; Neuman 2006). It involves translating
words into meaningful information that can be interpreted. The qualitative data analysis
process comprised the following sequential steps:
170
 Data Reduction: The first step of the qualitative data analysis process was to
understand the information collected.
Detailed notes from the interviews and the
literature review were condensed and summarised to make sense of the information
collected (Taylor-Powell & Renner 2003).
 Coding: The data was coded to identify themes and categories. The developed codes
were then examined in terms of possible causes and consequences, conditions, and
interactions to permit further analytic categories or concepts that cluster together
(Neuman 2006).
 Content Analysis: The third stage was content analysis, including the examination of
the content of interviews and the communicative medium (Neuman 2006). The objective
of content analysis was to distinguish patterns in the display tables (Patton 1990;
Cavana, Delahye & Sekaran 2000; Yin 2003).
 Conclusions: Finally, the themes between the categories were investigated for inducing
conclusions on each research question and these are presented in Chapters 7.
6.8.2 Quantitative Data Analysis
Guided by Malhotra (1999), the quantitative data analysis process included checking,
editing, coding, categorising, transcribing and data cleaning. The data was keyed into
SPSS version 17.0 for the descriptive stage of the research and Structural Equation
Modelling was used for the confirmatory stage. The analysis process is outlined below.
 Editing : The questionnaires were reviewed to identify eligible, incomplete, inconsistent
or ambiguous responses to increase accuracy.
 Coding :The collected data was translated into codes for the purpose of computer
analysis.
 Transcribed: Survey responses were converted into a format that could be analysed by
the computer.
 Cleaned: Cleaning was done for consistency and to identify and treat the missing data.
171
Descriptive statistical analysis techniques were used to calculate the mean, standard
deviations and cross tabulation of the results. This involved the use of SPSS version 17 for
the descriptive stage of the research:
The SPSS data were subjected to Confirmatory Factor Analysis (CFA) using AMOS 20.0
SEM software. Guided by several authorities, the process involved CFA to test construct
validity and model fit and SEM to test the hypotheses.
6.9 Ethical Considerations
This research entailed the collection and distribution of information pertaining to several
parties, the respondent and the University. It was necessary to meet ethical and moral
standards and assure that no harm was caused to the respective parties involved (Ticehurst
& Veal 1999). Accordingly, the research was guided by the provisions of the ‘National
Statement on Ethical Conduct in Research Involving Humans’. The researcher required
ethics approval before commencing primary data collection and had to meet the following
requirements.
 Voluntary Participation: The researcher stressed that participation was purely
voluntary with no offer of financial remuneration. The participant had the option to
withdraw from the research at any time without explanation (Neuman 2006).
 Informed Consent: Research participants were fully informed of the nature and
objectives of the research. Information sheets for participants of the Expert Panel and
Interviews were provided.
 Confidentiality and Anonymity: Anonymity and Confidentiality were guaranteed to
the participants as the respondents contact details were withheld when responding
through Zoomerang.
 Integrity: Guided by Cooper & Schindler, (2003) and Zikmund (2003), the researcher
undertook precautions to ensured that data was accurate and objective underpinned by
scientific investigation.
172
The data collection phase only commenced after the researcher was awarded ethics
approval which was granted on 19 July 2010, Ethics approval number ECN-10-122.
6.10 Chapter Summary
This Chapter presented and justified the selected research methodology and research
design including the data collection instruments for a three-stage approach. The first was
exploratory to identify the theoretical model for the research and reaffirm the relevance of
the research problem. The second and descriptive stage, was to test the theoretical model.
The third and confirmatory stage was to validate the refined theoretical model. The
Chapter discussed the data analysis procedures, research quality as well as the measures
taken to address ethical concerns.
173
Chapter 7 - Qualitative Data Analysis
7.1 Introduction
The earlier Chapter presented the methodology and research design for this research on
Addressing the critical issues for successful international market penetration by
firms. As discussed in Section 6.3.1.4, this research
comprised three stages. The first, exploratory and qualitative stage was aimed at refining
the theoretical model that emerged from the literature review. The second and descriptive
stage tested the refined theoretical model. The final and confirmatory stage permitted the
validation of the tested model.
In line with the outline Research Master Plan presented in Chapter 6, this Chapter has two
primary aims. First, to analyse the primary data from the personal interviews for the
purpose of refining the proposed theoretical model. Second, to develop the research
propositions for testing through a web survey in the descriptive stage of this research.
7.1.1 Chapter Structure
This Chapter has six Sections as shown in Figure 7.1. This Section provides an
introduction and overview of the Chapter.
Section 7.2 presents the results and analysis of the data sourced from the personal
interviews for refining the preferred theoretical model that emerged from the literature
review. Section 7.3 outlines the coding for content analysis and Section 7.4 links the
findings of the literature review with the findings of the personal interviews. Section 7.5
develops the propositions for testing by the web survey in the descriptive stage of this
research. The final Section 7.6 is a summary of this Chapter.
174
Figure 7.1: Structure of Chapter Seven
7.1: Introduction
7.2: Analysis of the Personal Interviews
7.3: Coding for Content Analysis
7.4: Refining the Theoretical Model
7.5: Crafting the Research Propositions
7.2 Analysis of the Primary Data: Personal Interviews
The analysis of the secondary data, as discussed in Chapter 5 permitted the development of
four research questions. Primary qualitative data were collected from the personal
interviews to address the research questions which are restated for ease of reference.
Research Question 1
How are the dynamic changes in the global telecommunications industry influencing the
strategic choices of Malaysian telecommunications firms?
Research Question 2
175
Research Question 3
What are the challenges that Malaysian telecommunications firms face in international
markets?
Research Question 4
How adequate are the Government’s policies and initiatives for supporting the
internationalisation efforts of Malaysian telecommunications firms?
Personal face-to-face interviews were conducted with 20 participants who were involved
in the telecommunications sector in Malaysia. As discussed in Chapter 4, these were prequalified in alignment with the criteria shown in Table 7.1
Table 7.1: Personal Interview Participants
Group
Category
Description
A
Operational
Staff
B
Management
C
Industry
Experts
D
Government
and
Regulators
Staff from the selected case study firms and related
industry firms who are involved in operational
matters.
Senior Managers from the selected case study firms
who are responsible for management. This included
the firms which had been involved in international
operations.
Knowledgeable persons including industry experts,
consultants, individuals involved in academia who
had
interest
and
knowledge
about
Participants from Government and regulatory
bodies. The participants selected were involved in
policy matters pertaining to internationalisation and
the telecommunications sector.
Number of
Participants
3
8
5
4
Several key discussion points, framed as 18 interview questions, were drawn up to cater to
each of the four developed research questions and these are shown in Table 7.2. The
interview participants were also encouraged to express their views on issues that they
considered to be important and which fell outside the framework of the 18 interview
questions.
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Table 7.2: Research Questions and Related Interview Questions
Research Questions
Some Interview Questions
Research Question 1
IQ1

IQ2

IQ3

IQ4

IQ5

IQ6
IQ7


IQ8

IQ9
IQ10


IQ11

IQ12

IQ13

IQ14
IQ15


IQ16

IQ17

IQ18

Research Question 2
Research Question 3
Research Question 4
What are your views on the current state of the global market and
emerging trends? How do you believe these influence the Malaysian
market
In your view, do you consider it necessary for Malaysian
telecommunications firms to venture abroad? If so, what are the
push/pull factors for them to do so?
In your view, are Malaysian telecommunications firms well
positioned to compete globally?
What strategies do Malaysian telecommunications firms employ for
international market penetration? Do these strategies take into
consideration, product and operations strategies? If so, please
describe.
How do Malaysian telecommunications firms select international
markets, Entry mode and timing?
How important is it have strong leadership and a global mindset?
What benefits do you believe can be gleaned from establishing
network relationships?
How important are the attributes of. Trust, Commitment, and
Learning for successful international market penetration?
What is the role of knowledge and how easy is it to transfer?
What are the challenges that Malaysian telecommunications firms
face in international ventures?
How are Malaysian telecommunications firms financing their
In your view, how effective are the brands of Malaysian
telecommunications firms for successful overseas ventures?
How effective are the efforts of telecommunications firms in building
international network relationships?
How innovative are Malaysian telco firms products and services?
How adequate are the structures and resources to address the
challenges that Malaysian Telco’s face in international ventures?
What are the Government’s initiatives and policies for encouraging
telecommunications firms to enter international markets?
What is your view on the regulatory authority and how effective are
regulatory policies?
What are your thoughts on improving the regulatory environment?
As discussed in Section 6.8.1, the analysis process for the data collected from the personal
interviews involved translating words into meaningful information to permit interpretation.
For this purpose, detailed notes were taken during the interviews and summarised to make
sense of the information collected (Taylor-Powell & Renner 2003). These were then coded
to identify themes and categories. The final stage was content analysis to identify patterns
as a basis for drawing conclusions on each research question.
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7.2.1 Data Analysis for Research Question 1
How are the dynamic changes in the global telecommunications industry influencing
the strategic choices of Malaysian telecommunications firms?
The interview participants offered useful views on the three interview questions that were
related to this research question and these are restated below.
IQ1: What are your views on the current state of the global market and emerging trends
and how do you believe these influence the Malaysian market
IQ2: Do you consider it necessary for Malaysian telecommunications firms to venture
abroad? If so, what are the push/pull factors for them to do so?
IQ3: In your view, are Malaysian telecommunications firms well positioned to compete
globally?
7.2.1.1 Analysis of responses to IQ 1:
What are your views on the current state of the global market and emerging trends and
how do you believe these influence the Malaysian market.
The majority of interview participants were of the view that the global market was
undergoing constant change and highlighted several emerging trends. These included
convergence, challenges in managing consumer expectations; security; entry of nontraditional industry players; emerging technologies, cloud computing, challenges to
monetise content; changes in regulation globally. The trends applied to both the fixed and
mobile segments. Liberalisation and regulatory reforms globally are impacting the industry
and creating a dynamic market landscape. The ITU continues to foster economic, social,
political and technological regulation. With spectrum remaining a finite resource,
regulatory bodies are tasked with balancing market structures for a competitive landscape,
price regulation while ensuring operators deliver quality of service to consumers (Markova
2008). Advances in technology are directed towards consumer led demand for mobility
and data (McKinsey 2012).
178
One participant highlighted that “fixed players were in survival mode” as mobile was
dominating the sector. This is in alignment with the surge in mobile connections in
Malaysia which have soared from 21.8% in 2000 to over 136% as at the end of Q3 2012
(MCMC 2012).
An industry participant commented that for telecommunications firms “voice revenue in
the medium term was declining and data was the future”. This was reflected by the
declining downturn trend of -2% y-o-y in voice revenue among Axiata, Maxis and DiGi
which reported from an estimated RM14bn revenue in 2010 to RM13bn revenues in 2011
(ECM Libra 2012). Another participant maintained that although voice revenue would
decline, this would not be uniform for all countries. While another stated “voice revenues
would continue to grow, however, the technology which supports voice will be different
e.g. VoIP”. Although VoIP services such as Skype have increased in popularity, Analysis
Mason (2010) argue that VoIP traffic will have minimal impact on total network traffic
until LTE deployment in developed markets in 2015. A similar view is shared by the CEO
of DiGi who stated “in Malaysia, with the advent of 4G technology and smartphones,
long-term evolution (LTE) networks also play an integral part in the industry. This will
enable substantially higher speed, stability and internet access to more Malaysians through
greater coverage”.
Furthermore, fixed operators remain under pressure to unbundle the local loop. Salazar
(2007) argues that the Malaysian telecommunications sector lacks transparency and rentseekers have hindered competition and growth in the industry. Telekom Malaysia remains
the dominant fixed line player in Malaysia and continues to receive support from the
Government. Regulators on a global basis face challenges of ensuring bottlenecks are
administered effectively. Whilst remaining flexible, governance in licensing, spectrum
allocation, price regulation, infrastructure sharing, dispute resolution and mediation, net
neutrality, convergence, universal access along with enforcement remains challenging
(ITU 2010). Malaysia’s regulatory authority, MCMC, faces similar challenges.
Some of the participants maintained that the global trends were generally driven by
innovation from vendor organisations who supply the equipment rather than the
telecommunications providers. Innovation as identified by these industry players remains
key to competitive advantage. This is supported by several authorities (Baragheh et al.
179
2009; McKinsey 2012; The World Bank 2010; GoM 2012). However, Malaysian firms as
outlined in Section 4.96 face challenges with innovation and R&D.
Participants agreed that ARPU’s were declining in most parts of the world and technology
trends were driving innovation. This is supported by evidence in ARPU in Malaysia
declining at a CAGR of 6.3 per cent for the period between 2005 and 2010. As at 2012,
average industry ARPU stood at RM52 (BMI 2012). The decline in ARPU also suggested
that competition in the voice market space had a significant impact as the rates pressure set
in (The Borneo Post, 4 September 2011).
The challenging economic climate made it necessary for the industry to become more costefficient and consider infrastructure sharing. The situation was also conducive for mergers
and acquisitions on a global basis. Several participants stated that Malaysia is likely to see
further consolidation. This is supported by views from industry analysts and players which
highlighted that talks have begun on mergers and acquisition. An industry analyst stated
“There are clearly too many players for a market like Malaysia and it would naturally
result in some form of consolidation” (The Star, 22 February 2012). In terms of global
growth, all participants maintained that the emerging markets like China, India
and
Indonesia would lead the way due to rapidly growing domestic demand.
The participants were divided on how these trends influence the Malaysian market. One
participant stated “Although some are following the trends, others are thinking about what
to do”. Another made the pertinent comment, “knowing and doing are different things;
preparation may not necessarily lead to success”. Several participants were of the view
that Malaysian firms were lagging behind the global trends, however, Malaysia is reported
to be ranked in the top three in a study conducted by McKinsey & Company on the
economic impact of the Internet on the Gross Domestic Product (GDP) of nine aspiring
countries (NST Malaysia, 1 February, 2012).
A participant stated “Malaysian telecommunications firms need to understand that global
business is growing rapidly because of governmental policies on international trade and
resources. Malaysia needs to catch up”. Other participants were of the view that the
Malaysian market is still protected and more needs to be done to create a level playing
field.
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Convergence is also providing customers with greater choice and new market entrants with
opportunities. This is reflected by the pertinent response that “Malaysian firms are
following the trends and as an organisation, as a firm we have transformed ourselves to
meet the changes in the global marketplace and this is evident in our results”.
Those interviewed believed that Malaysian customers, like their global counterparts were
always seeking new mobile gadgets with multi-function capabilities. Dynamic consumer
demands made it necessary for telecommunications firms to give priority attention to the
next generation networks. This is reflected by the pertinent comment:
“it’s challenging to differentiate to meet customer needs. Customers can be fickle and tend
to wait for the next technology trend. They are also price conscious and it is detrimental to
enter a price war in the limited domestic market of Malaysia. We need to get close to our
customers to gain some form of loyalty”.
Furthermore, several participants commented that Malaysian firms lacked adequate
resources to be competitive as reflected by the comment “Unfortunately, like the majority
of Malaysian businesses, the local management do not understand the need to look
outward to become a sustainable and successful business”.
In your view, do you consider it necessary for Malaysian telecommunications firms to
venture abroad? If so, what are the push/pull factors for them to do so?
The industry participants believed that the domestic market, with its many players is
highly competitive. While liberalisation and privatisation have provided opportunities for
inward investment in Malaysia, several participants were of the view that the Malaysian
market structure needs to be reviewed to allow for fair competition to strengthen firms
capabilities to enable them to compete in the regional and global markets. Whilst mobile
penetration reaches near saturation, industry players grapple with the challenge of
sustainable growth in an evolving industry. One participant commented “My observation is
that the Malaysian market is saturated and for Malaysian telecoms to sustain their growth
in the telecom business, there is need for them to internationalise into emerging (markets)
181
countries where cultural differences are not a barrier. There is need for Government to
give the required support to them while going international”.
Majority of the participants were of the view that the push factors for Malaysian
telecommunications firms was domestic competition. Firms were challenged to achieve
ongoing growth as ARPU’s were declining and firms had to achieve cost-efficiencies. The
issuance of LTE licences to 9 players was also identified as a likely push factor as this
would intensify domestic competition and lead to Malaysian telecommunications players
venturing abroad. One participant stated “The licences were not issued on meritocracy”
However, participants agreed that successful international market penetration was
dependent on a firm’s ability to build long term relationships as reflected by the comment,
“its challenging to build relationships with strategic partners. It means that both parties
have to trust each other”. One participant stated “we envisage mergers and acquisitions
to take place as there are too many players for the limited domestic market size”.
The pull factors stated by most participants were market liberalisation, technology
advances, increased revenue and leveraging on economies of scale. Several participants
considered
governmental
support to
be
a
determining
factor
for Malaysian
telecommunications firms to successfully venture abroad. A participant from Group D,
which comprised the Government and Regulators, maintained that the Governments
policies were aimed at encouraging Malaysian telecommunications firms to venture abroad
as this would generate export earnings for the country. Another participant from Group C
comprising the industry experts stated that despite such policies, “few firms have
international markets on their radar as part of their strategy - they are ‘comfortable’ in
Malaysia”.
While
a
participant
from
Group
B
commented
“Malaysian
telecommunications operators are opportunistic rather than strategic in terms of regional
expansion and Malaysian telcos are still not ready for international market penetration”.
This is reflected by only two firms venturing into overseas markets, namely, Axiata and
Maxis. Axiata, formerly TM, commenced its international ventures in 1994 as a result of
Government to Government opportunities and it subsequently divest its interest in its
African ventures to focus on the region (Ahmad & Hashim 2007). Several participants
were quick to highlight TM’s failures in its ventures in Africa.
182
In your view, are the Malaysian telecommunications firms well positioned to compete
globally?
Four criteria were considered as being important for successful entry into global markets.
The first related to knowledge and competencies to create innovation. The industry experts
and a few senior managers from the telecommunications firms believed that the firms
lacked the necessary capabilities to effectively and successfully penetrate international
markets. Among the cited reasons were inadequate knowledge of global markets and the
inability to build long term sustainable business relationships. This is reflected by TM
having to withdraw from its ventures in Ghana and more recently, Etisalat announcing
plans to sell most of its stake in Indonesian mobile operator XL Axiata, aiming to raise up
to USD502 million in what will be the Asian country’s biggest block offering since
December 2010. The UAE-based group owns 13.29% of the Indonesian company, which it
acquired in 2007 for USD440 million, but has struggled to develop a working relationship
with XL Axiata’s main shareholder, Axiata Group of Malaysia (Telegeography 2012).
One participant commented
“The telecommunications sector locally has a lot more to grow in order to compete
internationally. It must learn from other well established companies overseas in order not
to be left behind” while another commented “Malaysia "continues to struggle" the
availability and quality of talent. Skills and acumen in technical, communication and
business management domains are underdeveloped, and resource allocation for talent
development and retention is insufficient to meet the needs”
The second was the importance of effective leadership with managerial and visionary
attributes as these were considered as key factors for achieving international
competitiveness. This was illustrated by the comment, “if Malaysian telecommunications
firms had the capabilities, then more firms would have been successful in international
ventures”. Competitive advantage is dependent on a firm’s ability to build intellectual
capital (David 2005; Marr & Shuima 2001). Leaders need a global mindset to compete
effectively in the new economy (Jeannette 2000). A participant commented “The executive
183
leadership and strategy concerned with international investment is generally driven by
non-Malaysians as opposed to 'home grown' talent”.
The third related to reputational advantage and the promise of a strong recognisable global
brand. Several participants were of the view that Malaysia Inc. as a global/regional brand
needs to be developed. These were considered to be constraining factors for Malaysian
firms operating abroad as reflected by the comment, “how many Malaysian brands are
recognised in the global arena?”. A participant commented “from a consumer perspective,
brands equate to trust”.
The fourth was customer responsiveness. Several participants believed that Malaysian
firms need to be more customer focused as reflected by the comment “The ability to
understand customer needs and wants and achieve customer satisfaction was generally
given ‘lip service’ in Malaysia”.
7.2.1.4 Summary of Findings on Research Question 1
The analysis of the responses to all the three interview questions revealed common themes
and these were the basis for the following findings:
The global telecommunications market is undergoing dramatic changes fueled by market
liberalisation, mergers and acquisitions, technological advances and increasing consumer
demands. Trends in telecommunications lean towards mobility, wireless and convergence.
These emerging trends are underpinned by technology innovation, particularly
convergence and NGN, regulatory reforms and consumer demand. The desire to remain
“always connected” is fostering a culture of ubiquitous connectivity and impacts social and
economic activity.
Although there was an apparent awareness of the dynamic changes
and emerging trends in the global telecommunications industry, there was limited
empirical evidence to confirm the level of influence of these trends on the selection of
competitive strategies of Malaysian telecommunications firms to achieve sustainable
competitive advantage.
Global market liberalisation has permitted Malaysian telecommunications firms to
internationalise. Growing competition in the domestic market is also compelling the major
184
Malaysian players to venture abroad for long term growth and sustainability. The pull
factors are privatisation, reduced transaction costs, increased revenue and leverage on
economies of scale, however, while these present opportunities, only two firms have
ventured into international markets.
To compete globally, firms must have knowledge and competencies to build intellectual
capital, effective leadership and reputational and brand advantage. Malaysian
telecommunications firms have to develop their knowledge base competencies in order to
better position themselves to successfully venture into foreign markets.
Majority of the interview participants were of the view that Malaysian telecommunications
firms, while aware of the dynamic trends in the global marketplace, presented little
evidence that these trends were influencing their strategic choices to remain competitive.
Accordingly, on the basis of these views, the interview participants rejected Proposition 1.
RQ2: What are the appropriate corporate strategies for successful international market
The six interview questions that were related to this research question are restated below.
IQ4: What strategies do Malaysian telecommunications firms employ for international
market penetration? Do these strategies take into consideration, product and operations
strategies? If so, please describe.
IQ5: How do Malaysian telecommunications firms select international markets? Entry
Mode and Timing?
IQ6: How important is it to have strong leadership and a global mindset
IQ7: What benefits do you believe can be gleaned benefit from establishing network
relationships
185
IQ8: How important are the attributes of Trust, Commitment, and Learning for successful
international market penetration?
IQ9: What is the role of knowledge and how easy is it to transfer?
What are the strategies that Malaysian telecommunications firms employ for
international market penetration? Do these strategies take into consideration, product,
operations and marketing strategies? If so, please describe.
Malaysian telecommunications firms, being large corporate bodies have business plans
and strategies. While many firms are focused on the domestic market, the effectiveness of
the strategies for international market penetration were questionable as evidenced by the
losses incurred by TM when it ventured into African countries. “TM had to retract from
its early ventures as these were really opportunistic supported by Mahatir wanted to
leverage on the South-South corporation”. Another participant highlighted “while we had
Government assistance in the early days, we were forced to review our initial international
ventures and have had to subsequently retract from some of the markets we initially
entered as they were not commercially viable. Our focus is now on the region”.
Furthermore, TM faced challenges with its bureaucratic culture (Salazar 2007).
One participant cited the problems faced by Maxis in Indonesia and regarded it as a case of
“poor strategic planning”. The participants offered several reasons for this. These included
poor market selection due to lack of knowledge about market opportunities; wrong entry
modes; poor relationships with host Governments and the selection of network partners
who were unable to discharge their commitments. This is reflected by the comment “one
needs an understanding and knowledge of cultural diversity and how business is done in
an international arena, not just Malaysia”. However, “most Malaysian firms tend to think
short term and remain complacent about sustainable growth; they will eventually have to
change if they want to compete in the global economy”.
Of the firms that have ventured overseas, industry participants stressed that their strategies
were driven by leaders with an orientation towards international growth. The attributes of
186
these leaders include having a global strategic outlook, the ability to build relationships
through trust, foster innovation, build international knowledgeable teams and be customer
focused (Abang 2009; Wong 2012). This is reflected by the comment “driving successful
internationalisation of the telco sector in Malaysia is highly dependent upon the nature of
the leaders and their employees capabilities”.
Participants considered market entry to be reliant on licensing requirements which meant
that all strategies involved relationships with network partners, mainly through a JV
involving the purchase of an equity stake.
Participants had divided views on product strategies and these, ranged from providing
professional services to focusing on network service partnerships. However, they agreed
that these were dependent on the selected local market. While one participant commented
“we need to stick to our core competency” another stressed “we need to move with the
times and although our focus is mobile, we need to consider value added services and
content along with bundling opportunities”. However, all participants agreed that
innovation should command
more emphasis as this was necessary to address the
challenges of convergence. A few participants were of the view that it is very hard to find
good people in product development in Malaysia and the industry was reliant of foreign
expertise.
The interviews revealed that operation strategies were generally through joint ventures
and equity purchase. This is illustrated by the comment “we need to have skin in the game.
Even if we have an initial minority stake and then increase this as we progress, it’s
important that we have a lock-in value”. All participants stressed that they were guided by
the foreign ownership regulations of selected markets.
One participant shared “our
philosophy is to work with partners who share our values and are keen to build long term
relationships. We require majority stakes in most markets that we enter. This is to support
our product development and management control structure”.
How do Malaysian telecommunications firms select international markets? Entry Mode
and Timing
187
Participants were of the view that strategies were based on a phased approach which took
into account economies of scale and foreign ownership guidelines. Accordingly, the
markets selected were close in culture and geography in alignment with Ahmad and
Hashim (2007). This is illustrated by the comment “our focus is on the region, not just for
cultural reasons, but also because of the distance”. One of the participants stated that
entry mode was through joint ventures and they selected “Partners which have attained a
top three position in their respective market”. However, they were mindful of “poorly
regulated emerging markets”.
In this context, the participants commented on TM’s
failures in venturing into poorly regulated and unfamiliar markets in Africa. Several
participants believed that market selection was based Government to Government
relationships and were opportunistic rather than based on market knowledge, local culture
and understanding of consumers. Most participants agreed that timing of entry was
determined by the leadership and was a key determinant to success. One participant
commented “TM’s timing of entry into Africa was all wrong – the market wasn’t ready”,
and another reaffirmed “Axiata (formerly TMI) was now focusing on region where we
have easier reach and cultural affinity”.
Participants were also of the view that although trade agreements were important, there
was little reliance on Government and most markets were selected through individual
relationships. However, ventures built on individual relationships have also faced
challenges. Two international firms, NTT Do Co Mo and KT Freetel have withdrawn from
its ventures with U Mobile in Malaysia. NTT docomo cited a difference of opinion related
to the cellco’s management between the Japanese company and other stakeholders
(telegeography 2009). while KT Freetel withdrew to avoid further losses.
How important is it to have strong leadership and a global mindset?
Strong leadership and a global mindset are intrinsic for a firm to be successful. Participants
believed that the firms that were successful in the overseas ventures were driven by leaders
with a growth orientated international outlook. This was illustrated by the comment “just
take a look at the CEO’s of the firms which have been successful internationally; all of
them have worked overseas”. Strong leaders were also focused on market selection which
188
included entry modes and timing and consider the risk factors as part of their corporate
strategy. Another pertinent comment was “the international telecommunications firms in
Malaysia have leaders with a global outlook and seem to be able to guide their respective
firms to compete successfully”. A strategic global outlook and a global mindset is
important to support an understanding of diverse cultures, foster innovation, and
internationalisation. It is noteworthy that Axiata has employed a number of expatriates for
its international ventures. A participant commented. “Axiata under the capable leadership
of Datuk Jamaluddin (ex Maxis) in recent years has made significant inroads into the
regional telecommunication market”.
7.2.2.4 Analysis of responses to IQ 7 :
What benefits do you believe can be gleaned from establishing network relationships
and how effective are Malaysian firms in building such relationships?
Network relationships are critical for venturing abroad. This was reflected by the comment
“licences are hard to come by, therefore, it’s important to build a relationship with
someone who has a network licence”. A related comment was “our philosophy is to work
with partners who share our values and are keen to build long term relationships. We
require majority stakes in most markets that we enter. This is to support our consistent
branding and management control structure”.
In line with Ahokangsas (1998) participants were also of the view that access to resources
and knowledge could be gained through network relationships as reflected by the
following comments, “it’s good to gain an insight into how other companies work, both
domestically and internationally” and “we anticipate cost-savings by sharing
infrastructure with one of the local partners”. However, while several participants
acknowledged the importance of building international network relationships for
internationalisation, few had been successful in achieving in building effective
relationships.
189
How important are the Attributes of Trust, Commitment and Learning for Successful
There are several definitions of trust. Kim et al., (2011) suggest that trust involves
cooperative acts, catalyses networks and reduces conflicts between organisations and
unnecessary cost. Previous studies provide definitions of trust based around the opponent.
Doney and Cannon (1997) suggested that it has confidence in the opponent whereas Mayer
et al (1995) defined trust as enduring damage from the opponent’s action and Schurr and
Ozanne (1985) defined trust as confidence in the opponent’s intention to develop a faithful
business relationship and the reliability of his or her words or appointments. In simple
terms, Moorman, Desphandé and Zaltman, (1993) define trust as the willingness to rely on
an exchange partner.
Trust is an important aspect of the relationship between two entities and is critical in
coordinating activities across networks and building relationships (Adali et al, 2010).
Telecommunications operators build trust across countries in several ways. Trust is
developed over time with persistence of communications to gather information and
identify prospective partners and their capabilities (Gulati 1995b). Operators identify areas
of participation and coordinating activities and resources for partners to engage in
collaboration over time. Trust is important for knowledge transfer (Johnson et al 1997,
Abrams et al 2003) and a major driving force for collaboration and reducing reduce
contracting costs in network industries like telecommunications (Kenny 2010).
‘Trust’ is important in building relationships and penetrating international markets. This is
illustrated by the comment that “we often deal with individuals, namely, leaders, with
whom the relationship is built with. Therefore, it is the individual’s integrity that we rely
on and trust”.
Some believed that “commitment means different things to different people, particularly in
different cultures”. A few were of the view that the degree and nature of commitment is
based on earlier experiences and the lessons learnt from network relationship in
international markets. This was reflected by the comment: “if we are doing well, then we
190
will increase our commitment and resources; if we are not, then our commitment will
decrease”.
Firms can gain knowledge about overseas market through continuous learning. This would
make them better placed to make decisions on market selection and mode of entry. This is
reflected by the comment “learning and sharing information is critical to ensure we
succeed. We need to understand local customers and once we enter a market, knowledge
transfer is critical to ensure brand consistency”. However, “although our people are
hungry for knowledge, it’s not always easy to get them to transfer knowledge – it’s a
cultural thing”.
What is the role of knowledge and how easy is it to transfer?
Innovative knowledge enables a firm to lead its industry and competitors and to
significantly differentiate itself from its competitors (Zack 1999). Knowledge is a source
of competitive advantage. Several participants acknowledged that Malaysia was striving to
becoming a knowledge economy and knowledge is the driver for growth. However,
participants were of the view that few firms were successful in implementing a knowledge
management strategy. This was reflected by the comment “Unless its part of your KPI’s
employees are reluctant to share their knowledge”. Furthermore, another participant stated
“tacit knowledge is challenging to acquire in the Malaysian marketplace and employees
often walk away with valuable information in their heads”. Overall, majority of
participants were of the view that transferring knowledge was challenging. However,
knowledge will continue to be important in the internationalisation process. Particularly
knowledge about markets, partners and customers.
7.2.2.7 Summary of Findings on Question 2
The analysis of the responses to all the six interview questions could be summarised as
follows:
191
The strategies of Malaysian telecommunications firms are variable. While there are several
push and pull factors for Malaysian telecommunications firms to enter international
markets, including, technological advances, network externalities and a limited domestic
market size, few have ventured abroad. “most Malaysian firms tend to think short term
and remain complacent about sustainable growth; they will eventually have to change if
they want to compete in the global economy”. While Product strategies of firms that have
penetrated international markets vary, firms need to innovate to address the challenges of
convergence.
Market selection is supported by psychic distance “our focus is on the region, not just for
cultural reasons, but also because of the distance”. However, firms have to consider
foreign ownership regulation and network partners reflecting their operation strategies
which are generally through JV’s and equity purchase. This often starts of as a minority
stake and is increased as trust is built thereby increasing commitment to the venture. While
network relationships bring many benefits, including, resources, cost-efficiencies and
knowledge, they require strong leaders with global mindsets. Trust, commitment learning
through knowledge sharing are key determinants to successful international market
penetration.
firms, firms have yet to develop appropriate internationalisation strategies and appropriate
resources for innovation and international marketing. Accordingly, on the basis of these
views, the interview participants rejected Proposition 2.
What are the challenges that Malaysian
telecommunications
firms face in
The interview participants offered valuable insights on the six interview questions that
were related to this research question and these are restated below.
IQ10: What are the challenges that Malaysian telecommunications firms face in
192
IQ11: How are Malaysian telecommunications firms financing their international
ventures?
IQ12: In your view, how effective are the brands of Malaysian telecommunications firms
for successful overseas ventures?
IQ13: How effective are the efforts of telecommunications firms in building international
network relationships?
IQ14: How innovative are Malaysian telco firms products and services?
IQ15: How adequate are the structures and resources to address the challenges that
Malaysian Telco’s face in international ventures?
What are the challenges that Malaysian telecommunications firms face in international
ventures?
The participants agreed that internationalising Malaysian telecommunications firms face
several challenges. This is reflective of only two firms having ventured into overseas
markets. The challenges included acquiring knowledgeable resources; appropriate business
models; knowledge about foreign markets; developing sustainable relationships; keeping
pace with technological innovations ; securing licences; developing branding and effective
marketing to meet changing consumer demands. Malaysian telecommunications firms in
international ventures have to comply with regulatory requirements with host
Governments. Furthermore, they are often reliant on local partners and need to build
trusting relationships.
Although the firms that have penetrated international markets had capable leadership, they
faced challenges. This was illustrated by the pertinent comment “it’s challenging to
manage teams remotely and adapt to differing cultures”. However, another participant
reflected “you can build an international team based on meritocracy. You have to manage
diverse cultures and idiosyncrasies by keeping an open mind”.
193
Several participants also believed that leaders who had exposure to international markets
were better equipped to build relationships and gain trust over time; therefore it was
“beneficial to be open to recruiting expatriates”. However, some participants were of the
view that Malaysia had adequate talent, however, “institutional policies were forcing
talented individuals to leave the country”. This is supported by the brain drain report by
Schellekens (2011).
Majority of the participants believed that the competitive landscape and consumer demand
required them to be innovative and differentiate. However, the ability to drive innovation
was highlighted as an obstacle. This was reflected by a participants comment “Malaysian
telcos are way to inwardly driven and not market driven”. Another stated “Research &
development in Malaysia in the area of telecommunications is lacking in terms of the value
that it brings to overseas ventures”. Several participants stated were of the view that there
should be more emphasis and focus on content and bundling of solutions and not just
products.
While highlighting the importance of business models, the participants also believed that
firms should give emphasis to seeking suitable network partners. Branding and marketing
in different cultural environments were also considered to be challenging as well as the
difficulties arising from regulatory changes as reflected by “it’s challenging when the rules
of the game keep changing”.
7.2.3.2 Analysis of responses to IQ 1 1:
How are Malaysian telecommunications firms financing their international ventures?
Adequate capital for funding overseas ventures is a key factor for successful international
ventures. Firms should have access to the capital required to buy up equity stakes in the
target country, promote the brand name and conduct operations. They should also have the
required funds for investments in research and development for product offerings and
services that meet consumer demands in new overseas markets.
All participants concurred that access to capital was not an issue for Malaysian
telecommunications firms as firms were generally cash-rich or had attracted sufficient
194
investments to venture overseas. However, few have selected to do so. A few commented
that “firms like Axiata and Time dotCom have Government backing and are supported by
Khazanah”. However, some of the view that with declining ARPU’s firms were
challenged to remain profitable. Furthermore, several operators were entering into
infrastructure deals and joint ventures, particularly with regard to LTE deployment.
Furthermore, one participant commented “Market structure and the role of foreign
investment will be important in the future. Additional funds to support new advancements
may be challenging as a result of diminishing foreign participation”.
How effective are Malaysian telecommunications brands for competing overseas?
All participants stated that brand advantage was useful when venturing overseas, namely
for building effective relationships and trust with network partners. However, brand
recognition was not considered to be a key success factor as firms operated under different
brands in different countries. A pertinent example stated was Axiata which operates under
several brands in various countries. However, it underwent a rebranding exercise in 2008
and all its subsidiaries are now prefixed with Axiata. Maxis also uses its local partners
brands in India and Indonesia, namely Aircel and Indosat.
Differing perspectives were offered on the importance of branding and the brand promise,
brand equity and awareness. While the majority agreed that brand reputation was critical
for building network relationships as it implied trust, the responses on the importance of
delivering the brand promise were varied. Nonetheless, all agreed on the importance of
having a customer-focused philosophy to address the challenges of “churn” and customer
loyalty. A few held the view that more needs to be done to understand consumer buying
behaviour and market opportunities.
195
How important is psychic distance to Malaysian telco firms venturing overseas?
Most participants outlined that this was only a recent phenomenon in the Malaysian
context. Majority stated that early international ventures, namely TM, were opportunity
led, generally originating from Government trade missions.
Firms which had entered international ventures highlighted “Our focus remains on the
region and we place emphasis on psychic distance as we have better cultural affinity.
However, industry experts stated that Asian countries were so different that challenges still
existed.
How innovative are Malaysian telecommunications firms’ products and services?
Industry players are faced with challenges of innovation, increased investment in R&D,
shortened product life cycle times and time to market, whilst attempting to differentiate
(EY 2010; IBM 2010). Several participants were of the view that Malaysia's telecom
companies are followers not innovators, hence will have disadvantages in introducing new
innovative products/services. Malaysian telecommunications firms need to do more for
offering innovative products and services. One participant stated that “innovation should
be left to the equipment suppliers and handset manufacturers”, whilst others stated that
R&D should be left to the vendors. However, the majority of the participants did agree that
more firms needed to undertake “consumer research” to enable them to be more
innovative in their services and product offerings.
Furthermore one participant commented “Local firms lack cohesive marketing and
product development of a regional synergistic rollout”. While another participant believed
that “An open market and adequate support from the Government can spur innovation and
lower the access cost for consumers”. Operators require knowledge in balancing price vs.
innovation and making services profitable for them while making them affordable for
customers. While Malaysia launched the National Innovation Framework in 2010,
196
participants were of the view that there is a strong need for telecommunications companies
in Malaysia to conduct research to enable them to come up with innovative products and
offering like those in other countries like Korea. A few participants also took the position
that markets needed to be researched more thoroughly and due diligence should be
undertaken before entry consideration.
How adequate are the structures and resources to address the challenges that Malaysian
Telco’s face in international ventures?
Human resources are a source of competitive advantage and are critical for a firm to
compete in the new economy (Abang 2009). To address the challenges that Malaysian
several factors need to be considered. These include effective leadership, knowledge
management, adopting strategic global outlook to identify new products and markets,
hiring knowledge workers and creating an appropriate organisational culture and
introducing professional management structures (Tan 2008). However, several participants
were of the view that Malaysian telco firms lacked the competence and capacity to reach
global markets. A participant commented “More funding needs to be provided for
research and development particularly with respect to the development of new and
enhance worker/management competencies in the workforce”.
In line with David (2005), most participants believed that managers required strategic
capabilities to identify new opportunities and adapt to the competitive landscape to deliver
results on a global basis. Furthermore, a firm’s knowledge mainly resides in its human
capital and education and training is required to increase capabilities of employees in
Malaysia. Several participants were of the view that the greatest concern was whether
Malaysian telcos have distinctive competencies to venture and succeed in global markets
and a few believed that favouring Bumiputeras in line with the NEP was detrimental to
the growth of the industry.
197
7.2.3.7 Findings on Research Question 3
The analysis of the responses to all the six interview questions revealed common themes
and these were the basis for the following findings:
Malaysian telecommunications firms face several challenges in international markets.
Consequently, the ability to overcome these challenges impacts the success of these
ventures. While successful international market penetration is dependent on capital, an
equally pressing issue is regulatory compliance. Regulatory changes generates uncertainty
and increases the risks associated with operating in foreign markets.
Capable leadership is necessary to overcome the several challenges that Malaysian
telecommunications firms face in their international operations. Leaders are effective when
they have the competencies to understand diverse cultures and have the attributes to build
strong personal relationships based on trust and commitment in their business networks.
Furthermore, while some firms are keen to explore growth opportunities in overseas
markets, it is perceived that they are restricted by their competencies. Financial challenges
appear not to be a hindrance for the Malaysian telecommunications sector.
Changing consumer behaviour and technological advances are also challenges. These
require Malaysian telecommunications firms to offer more innovative products and
services to keep abreast of consumer demand. Successful international ventures require
Malaysian telecommunications firms to have leaders who are able to recruit knowledge
based staff with competencies to successfully discharge their functions in markets with
different business cultures, structures and consumer preferences.
Firms which have
entered international markets have overcome some of these challenges through employing
leaders with international exposure. Consequently, their management decisions benefit
from a global strategic outlook. First, operators have invested in technology and network
infrastructure to meet consumer demand and leverage on technological advances and
partnerships. Second, Malaysian telecommunications firms have focused on the region
where they have cultural affinity. Third, operators are undertaking aggressive marketing
and promotion. Fourth, a few firms have invested in research and loyalty programmes to
understand their customers better. Fifth, several are embarking on infrastructure sharing
for cost reduction.
198
However, operators continue to face pressure on tariffs and operating margins. Maxis is
focused on innovation as reflected by the CEO “In line with the growing demand for data
and mobile Internet, we will continue to offer innovative products, bring in the latest
devices to the market, make smartphones adoption affordable and provide exciting
content, applications, Internet and bundle plans. Retention and customer loyalty
programmes will continue to be enhanced to reward our loyal customers with offers that
provide strong value propositions” (The Sun, 30 August 2012).While it was reported that
Axiata missed all of its headlines KPI’s in 2011 including revenue (KPI: 10% growth;
actual: 5.3%) and EBITDA (KPI: 10.3%; actual: 1%) due partly to foreign exchange losses
and changes in revenue mix along with its challenges in its Indonesian operations
(Business Times, 16 May 2012), the CEO of Axiata stated “The group has seen an
excellent first half with strong growth in all financial metrics. Moving into the second half
of the year we are pleased to note that we are very much on track to meet headline key
performance indicators (KPIs)”. This has been as a result of “strong performance across
major operating companies”. Time dotCom acquired three firms to expand its wholesale
and data centre business across the region. Of significance is that both Axiata and Time
dotCom are owned by Khazanah, the Malaysian Governments investment firm.
DiGi, part of Telenor, reported an increase of 37% in its net profit in Q2 2012 which rose
to RM324.2m from RM236.3m. The CEO commented that DiGi had embarked on a
business transformation initiative. “Apart from modernising our network, we have also
refreshed our retail presence with the introduction of the new DiGi Store Express concept
and an online store. We believe these efforts will significantly enhance the customer
experience across touch points, and enable better access to mobile Internet for more
customers.” (The Sun, 24 July 2012).
firms that are internationalising face significant challenges Accordingly, on the basis of
these views, the interview participants accepted Proposition 3.
How adequate are the Government’s policies and initiatives for supporting the
internationalisation efforts of Malaysian telecommunications firms?
199
The interview participants offered useful views on the three interview questions that were
related to this research question and these are restated below
IQ 16: What
are
the
Government’s
initiatives
and
policies
for
encouraging
telecommunications firms to enter international markets?
IQ 17: What is your view on the regulatory authority and its regulatory policies?
IQ 18: What are your thoughts on improving the regulatory environment?
7.2.4.1 Analysis of responses to IQ16:
What are the Government’s initiatives and policies for encouraging telecommunications
firms to enter international markets?
The role of the Malaysian Government, both home and host, is important for achieving
success in overseas ventures. However, “these policies are failing to support the sector”
and there are few incentives for firms venturing into international markets. Accordingly,
firms had to rely on their own relationships to explore new markets as reflected by the
comment, “we have utilised our own contacts and built relationships with overseas
partners; we could not rely on the Malaysian Government”. Another participant
highlighted “while we had Government assistance in the early days, we were forced to
review our initial international ventures and have had to subsequently retract from some
of the markets we initially entered as they were not commercially viable. Our focus is now
on the region”.
Several participants generally agreed that there were incentives for firms to venture into
international markets. However, some commented that they were not available to all. This
was reflected by the comment “more needs to be done to educate the market on
availability of funds, which should not be restricted to Bumiputeras”. Another industry
expert stated “Government incentives and policies to support regional expansion seem to
be absent”.
200
Participants were also of the view that Government agencies lacked meritocracy and
transparency, “the Government needs to be transparent with incentives and support the
sector. How can you award licences to individuals who have little knowledge of our
industry, particularly when spectrum is limited”. Furthermore, another participant
highlighted “An open market and support from the Government can support innovation”.
A noteworthy point is that majority of the participants highlighted the need for funding and
transparency to support Malaysian telecommunications firms to compete in international
markets.
Significantly, the views of participants are supported by Salazar (2007) who argues that
that development and improvement of the telecommunications sector in Malaysia has been
hindered by the conflict of the Government striving to achieve the goals of the NEP.
Patronage has been provided to rent seekers to create a ‘Bumiputera business class’ along
with a few politically connected businessmen in the form or Malays being granted senior
posts in telecommunications firms along with selected firms or ‘trustee institutions’ being
awarded contracts for turnkey projects. This is further reflected by the recent award of the
nine LTE licences, particularly where Puncak Semangat Sdn. Bhd., owned by the
prominent businessman, Tan Sri Syed Mokhtar, a newcomer to the scene being awarded
the biggest bite of 30MHz as compared to the 20MHz block allocated to the seven named
firms. (The Star, 6 December 6 2011).
What is your view on the regulatory authority and how effective are their policies?
Several participants stated that the principles underpinning the regulatory policies were
good. However, implementation modalities and the role of the regulatory body requires
review. Furthermore, the body should be independent of the Government. One participant
quoted, “The regulatory body fails to protect consumers and telecommunications firms’
alike when compromised. This extends to issuance of licensing and penalties”. The reasons
stated include the regulatory authority lacked independence and suffers ongoing
interference from the Government. Another industry participant pointed out that “it needs
to play a more active role by undertaking market research to identify foreign market
openings and to provide updated statistics”.
201
What more could be done to improve regulation?
The participants were generally of the view that the enabling regulatory legislation
required reform to fully cater to the rapidly changing telecommunication landscape. They
also considered it timely to review the functions and responsibilities of the regulatory
bodies
and suggested that more attention be given to introducing measures to improve
service standards and consumer protection. A few participants were of the view that
Government support on a bilateral level was critical for success, citing policy changes by
the Indian Government as an example. One commented “Malaysian needs to open up its
market and not just support bumiputera companies like TM if Malaysian telcos are to
succeed in the global marketplace”. Significantly, several participants commented that the
Government needs to better understand the consequences of telecommunications firms not
performing and the implications for global commerce.
7.2.4.4 Findings on Research Question 4
The analysis of the personal interviews revealed that Malaysian telecommunications firms
benefit from several policies, however, the adequacy and relevance of these policies is in
question. The pertinent policies failing the sector include:
(i). Regulatory Policies: The regulatory authority appears to be non-independent and
passive and overall it is viewed that much more could be done to improve regulation of the
sector in Malaysia with further support for firms penetrating international markets.
Domestically, licences are issued to politically connected businessmen and rent-seekers.
(ii). The NEP: Income distribution via rent seeking and transfer of licences for market
entry to support the goals of the NEP, specifically, to create a bumiputera business class
was prevalent in the 1990’s. However, the overcrowded, highly competitive market
resulted in local firms without capabilities having to be bailed out, resulting in
consolidation of the sector (Salazar 2007). Today, market entry is still reliant on political
connections as reflected by the case of issuance of the nine LTE licences in 2011.
202
(iii). Bi-lateral Trade Agreements: The industry can benefit from further Government to
Government relationships. Bilateral trade agreements can support and facilitate market
entry for Malaysian telecommunications firms.
(iv). Market Structure: The Government needs to present an open market structure
supporting a competitive environment.
(v). Funding: Several participants highlighted the need for funding to be made available to
all firms, not just bumiputera firms. Funding is required for Research; training and
development to support knowledgeable resources and marketing.
In line with Wong (2012), while the Malaysian Government has good policy intentions in
formulating support measures to promote the competitive positioning of all Malaysian
service industries, its activities were viewed as being unfocused, diffused and ineffective.
Majority of the interview participants were of the view that the Government’s policies and
initiatives for supporting the internationalisation efforts of Malaysian telecommunications
firms were inadequate. Accordingly, on the basis of these views, the interview participants
rejected Proposition 4.
7.3. Coding for Content Analysis
This Section describes the analysis of the qualitative data collated through the 20 semistructured interviews through content analysis. The researcher adopted an inductive
approach to uncover themes and patterns important to a social reality (Neuman 2006).
“Inductive analysis means that the patterns, themes, and categories of analysis come from
the data; they emerge out of the data rather than being imposed on them prior to data
collection and analysis” (Patton 1980, p. 306). The aim was to identify consistencies and
meanings emerging from the data (Patton 2002). Analysis was conducted using open
coding where preliminary codes were assigned. These open codes were then categorised
into similar groups as shown in Table 7.3. The interview transcripts served as the primary
source of data for the content analysis. Guided by Rogers (1990), the codes and categories
203
were verified by an independent party to check for relevance, comprehensiveness and
appropriateness.
Table 7.3: Coding Process
Respondent Micro Codes
Global market trends
Strategic direction
Product strategy
Operation strategy
Marketing strategy
Network relationships
Selected markets regionally
Market selection
JV’s and Alliances
Trust
Domestic competition
Emerging markets
Dynamic market
Compete globally
Positioning
Strategic outlook
Cultural diversity
Leadership
International exposure
Global thinking
Learning
Government assistance
Capabilities
Technology - NGN
Knowledge economy
Risk management
Innovation
Branding
TM failures
Bumiputera policies
Standards - ITU
Transparency
Brain Drain
Market liberalisation
Frequency
12
11
15
12
10
20
12
18
9
16
16
20
14
8
8
14
6
7
13
10
13
8
19
14
16
17
6
18
4
15
14
9
20
19
8
Respondent Macro Codes
Strategy
Sustainable Competitive Advantage
Organisation Capability
Government and Regulation
204
7.4. Refining the Theoretical Model
The pertinent literature to this research was reviewed in Chapter 2, and the analysis of the
data led to the selection of the network model, shown in figure 2.7 as the preferred model
for this research.
As discussed in Section 7.1, an important aim of this Chapter was to refine the selected
theoretical model on the basis of the views expressed by the interview participants as
presented in the earlier sections of this Chapter. The key outcomes and the factors that
impact on the theoretical model are as follows.
The findings of the personal interviews revealed that:
i)
Malaysian telecommunications firms with international operations are guided by
strategies. However, poor strategic planning can prove to be a costly exercise as
evidenced by the losses incurred by TM when they ventured into African countries.
Market selection was based on Government to Government relationships and time
of entry was based on leveraging the south-south corporation. The importance of
market assessment and sustainable relationships impacts successful international
market penetration. A more recent example is that of Maxis and Axiata and
difficulties they have faced in the Indonesian market. Etisalat cited differences
with their local partner Axiata in the market and subsequently withdrew. Maxis
faced ongoing challenges Axis in Indonesia. Viewed in this context, sound and
effective internationalisation strategies are necessary for successful international
market penetration.
ii)
The global telecommunications market is undergoing dynamic change. The key
emerging trends include convergence, challenges in managing consumer
expectations; security; entry of non-traditional industry players; emerging
technologies, cloud computing, challenges to monetise content and regulatory
changes.
These
dynamic
changes
are
impacting
on
the
Malaysian
telecommunication sector with global market liberalisation being a pull factor for
Malaysian firms to venture abroad. The push factor is growing competition in the
domestic market.
205
iii)
Internationalising Malaysian telecommunications firms face several challenges.
These include acquiring knowledgeable resources; appropriate business models;
knowledge about foreign markets; developing sustainable relationships; keeping
pace with technological innovations; securing licences; developing branding and
effective marketing to meet changing consumer demands.
iv)
Government support, as reflected by policies and incentives, are important for
assisting Malaysian telecommunications firms with their internationalisation
efforts.
On the basis of these findings, there are additional four key variables that impact on the
theoretical model. These are (i) Strategies (ii) Challenges (iii) Dynamic Market Landscape
and (iv) The Role of Government. The theoretical model was accordingly amended to take
account of these four identified variables and the refined model is shown as Figure 7.2.
Figure 7.2: Refined Theoretical Model
Strategic
Considera
tions
Industry
Character
istics
Strategy
Dynamic
Market
Landscape
Domestic
Operators
Internal
Factors
Host/
Home
Country
Challenges
Government
Market
Knowledge
Market Structure
Leadership
Market Selection
Psychic Distance
Relationships,
Trust
Customers,
Network
externalities
Position
FME Mode
Global Strategic
Outlook
FME: Equity,
Non-equity, JV
Network partner
Selection, Risk
Financial Strength
Leadership, Trust
Relationships,
Knowledgeable
Resources
Culture
Information
Sharing
Trust
Organisation
Capabilities
Commitment
Leadership
Brand
Socialisation
INTERNATIONAL
EXTENSION
Extension of
exchange
relationships to
include foreign
markets
INTERNATIONAL
PENETRATION
Developing
positions and
increasing
resource
commitments to
existing
networks for
market
penetration
International
Operators
INTERNATIONAL
INTEGRATION
Integration of
networks that the
company is a
member of
indifferent
locations
Represents new relevant factors
206
7.5 Crafting The Propositions
Cooper and Schindler (1998) define a proposition as a statement about concepts that may
be judged true or false if it refers to observable phenomena. Research propositions are
concerned with relationships between concepts (Maxfield & Babbie 2001; Zikmund 2003).
They are testable and are evaluated against empirical evidence or data (Neuman 2006).
Guided by these authorities, the four questions identified in Chapter 5 were translated into
corresponding propositions for empirical testing in the second and descriptive stage of this
research. These are:
P1: The dynamic changes in the global telecommunications industry have a strong
influence on the competitive strategies of Malaysian telecommunications firms.
P2: Malaysian telecommunications firms have appropriate strategies for successfully
P3: Malaysian telecommunications firms that are internationalising their operations face
significant challenges.
P4: The Malaysian Government is fully supportive of the efforts of the Malaysian
telecommunications firms that are internationalising their operations.
7.6 Chapter Summary
This Chapter presented and analysis and findings of the primary qualitative data. It
presented the results of the personal interviews with respect to each research question. This
was followed by refining the theoretical model. The propositions were then developed for
the testing of the refined model during the descriptive stage of the research. The next
Chapter presents the analysis of the quantitative data for the descriptive and confirmatory
stages of this research.
207
Chapter 8 - Data Analysis Quantitative
8.1 Introduction
The earlier Chapter presented the analysis of the qualitative data. This Chapter discusses
the descriptive and the confirmatory stage of this research.
It has seven (7) Sections as shown in Figure 8.1. Section 8.1, provides an introduction and
overview of the chapter. Section 8.2 presents the descriptive analysis of the web survey
responses. The Chapter then proceeds to the confirmatory stage with Section 8.3
discussing the reliability of the sample data and the variables. Section 8.4 details the
findings of CFA of the hypotheses and outlines how these were validated and tested.
Section 8.5 presents the generated SEM model detailing the fundamental findings central
to the model. Section 6.6 triangulates the findings with the personal interviews and the
literature review before concluding with Section 8.7.
Figure 8.1: Structure of Chapter Eight
8.1: Introduction
8.2: Descriptive Analysis of the Web Survey
8.3: Reliability of the Sample Data and Variables
8.4: Confirmatory Factor Analysis
8.5: Generated SEM Model
8.6: Triangulation
8.7: Chapter Summary and Conclusions
208
8.2 Descriptive Analysis of the Web Survey Respon ses
The responses from the participants of the Web Survey provided rich perspectives on the
research propositions. They also provided valuable and useful insights into the research
problem. The analysis process involved the determination of i) the Combined Survey
Responses and ii) the Combined Mean Responses by Groups for each of the four
propositions.
8.2.1 Profile and Composition of the Web Survey Respondents
The web survey generated 205 responses as shown in Table 8.1. Over 70% of the
respondents were male, and less that 30% were female which is reflective of the industry
in Malaysia which is dominated by males. The majority of the respondents were between
the ages of 41-50. The age distribution was as follows: 9.3% were between the ages of 2030. 27.8% were between the ages of 31-40. 32.2% were between the ages of 41-50 while
the above 50 group constituted 30% of participants. This is reflective of the industry and
the nature of the topic which requires an understanding of strategy and internationalisation.
The profile also indicated that the respondents are experienced professionals who are in the
mid-late stages of their career development. All respondents declared an understanding of
the subject.
As stated in Section 6.5.1.9 and shown in Table 8.1, it is significant that more than half of
the 205 respondents were in Group B which comprised the management of the
telecommunications firms. Another 55 were from Group C comprising the knowledgeable
experts and academia. The participants of both these two groups accounted for 77.9% of
the total web survey participants. The research acknowledges that this could have resulted
in skewed responses.
209
Table 8.1: Profile of the Web Survey Respondents
VALID
GENDER
Male
Female
Total
VALID
AGE
20-30
31-40
41-50
Above 50
Total
VALID
BACK
GROUND
Operations
Management
Industry
Experts
Government
Total
VALID
UNDER
STOOD
Yes
Total
FREQUENCY
PERCENT
149
56
205
FREQUENCY
72.7
27.3
100.0
PERCENT
19
57
66
63
205
FREQUENCY
9.3
27.8
32.2
30.7
100.0
PERCENT
VALID %
72.7
27.3
100.0
VALID %
9.3
27.8
32.2
30.1
100.0
VALID %
CUMULATIVE %
72.7
100.0
N/A
CUMULATIVE %
9.3
37.1
69.3
100.0
N/A
CUMULATIVE %
30
105
55
14.6
51.2
26.8
14.6
51.2
26.8
14.6
65.9
92.7
15
205
7.3
100.0
7.3
100.0
100.0
N/A
FREQUENCY
PERCENT
205
205
100.0
100.0
VALID %
100.0
100.0
CUMULATIVE %
100.0
N/A
Source: Based on the web survey for this Research
The profile also indicated that the respondents are experienced professionals who are in the
mid-late stages of their career development. All respondents declared an understanding of
the subject.
8.2.2 Statement 1: On “Positioning”
Malaysian telecommunications firms are well positioned to achieve sustainable
competitive advantage in the highly competitive global telecommunications sector.
Table 8.2 shows the case summary of the responses to this Statement. The Total mean of
3.11 indicates moderate acceptance of the Statement. The range of support varied with the
highest being registered by the management group at 3.47 as compared to 3.05 for the
210
Industry Experts Group. However, the relatively high Standard Deviation of 1.001 reflects
the varying opinions between the Groups.
Table 8.2: Case Summary for Statement 1 on “Positioning”
GROUP TYPE
A
OPERATIONS
B
MANAGEMENT
C
INDUSTRY EXPERTS
D
GOVERNMENT
TOTAL
N
MEAN
MEDIAN
STANDARD
DEVIATION
30
3.30
4.00
.877
105
3.04
3.00
1.046
55
3.05
3.00
.970
15
3.47
4.00
.990
205
3.11
3.00
1.001
Source: Developed from the Survey Data
Sustainable competitive advantage refers to situation when “a company achieves
sustainable competitive advantage when an attractive number of buyers prefer its products
or services over the offerings of competitors and when the basis for this preference is
durable.” (Thompson, Strickland & Gamble, 2005, p.7). Several factors contribute to the
achievement of sustainable competitive advantage. These include knowledgeable resources
in line with Grant (1991), RBV view of the firm, Culture (Hexter, Stoin & Phillips 2010),
intellectual capital linked to the firms knowledge management processes (Drucker 1993).
The Cross tabulation of survey responses to this statement is shown in Table 8.3. It reveals
that a total of 48.7% agreed with this Statement. However, Management and Industry
Expert Groups presented divided views. While 22.4% of the Management Group agreed
on the Statement, 19.5% disagreed. This suggests that the respondents from the firms are
unclear on their positioning or their strategic capabilities. Alternatively, respondents may
have been of the view that positioning for competitive advantage in the home market was
essential to the core strategy considering few operators have ventured into overseas
markets. Furthermore, 5.9% of the Management Group either remained neutral on this
Statement. This could also reflect that they are of the view that more could be done to
achieve SCA. Of significance is that 77 respondents, 37.5%, were of the view that
Malaysian telecommunications firms were not well positioned to successfully compete in
the global environment. This percentage is significant to support the limited number of
211
telecommunications firms venturing overseas. While Malaysian FDI outflows are
increasing, few telecommunications firms are penetrating international markets.
Significantly, 11.2% of the Industry Experts supported the Statement with 9.8%
disagreeing with the statement. The participants in the Operations and Government Groups
generally agreed with the Statement. The variation could also be indicative of individuals
understanding of competitive advantage.
Table 8.3: Cross Tabulation of Survey Responses to Statement 1 on “Positioning”
GROUP
TYPE
A
OPERATIONS
STATISTICS
COUNT
% within Group Type
% within Statement 1
% of Total
B
MANAGEMENT
COUNT
% within Group Type
% of Total
C
INDUSTRY
EXPERTS
COUNT
% within Group Type
% of Total
D
GOVERNMENT
COUNT
% within Group Type
% of Total
TOTAL
% WITHIN
STATEMENT
COUNT
% within Group Type
% of Total
STATEMENT 1: POSITIONING
STRONGLY
DISAGREE
NEUTRAL
DISAGREE
– NO
OPINION
AGREE
STRONGLY
AGREE
TOTAL %
WITHIN
GROUP
TYPE
0
8
5
17
0
30
0.0%
0.0%
0.0%
26.7%
11.1%
3.9.%
16.6.%
24.1%
2.4%
56.7%
17.9%
8.3%
0.0%
0.0%
0.0%
100.0%
14.6%
14.6%
4
3.8%
80.0%
2.0%
40
38.1%
55.6%
19.5%
12
11.4%
42.9%
5.9%
46
43.8%
48.4%
22.4%
3
2.9%
60.0%
1.5%
105
100.0%
51.2%
51.2%
1
1.8%
20.0%
0.5%
20
36.4%
27.8%
9.8%
10
18.2%
35.7%
4.9%
23
41.2%
24.2%
11.2%
1
1.8%
20.0%
0.5%
55
100.0%
26.8%
26.8%
0
0.0%
0.0%
0.0%
4
26.7%
5.6%
2.9%
1
6.7%
3.6%
1.0%
9
60.0%
9.5%
10.2%
1
6.7%
20%
0.5%
15
100.0%
7.3%
7.3%
5
2.4%
100.0%
2.4%
72
35.1%
100.0%
35.1%
28
13.7%
100.0%
13.7%
95
46.3%
100.0%
46.3%
5
2.4%
100.0%
2.4%
205
100.0%
100.0%
100.0%
212
Table 8.4: Weighted Average - Positioning
1
2
3
4
5
TOT
WA
a'
0
16
15
68
0
99
3.3
b'
4
80
36
184
15
319
3.038095
c'
1
40
30
92
5
168
3.054545
d'
0
8
3
36
5
52
3.466667
3.214827
The most support for this statement was from the Government Group, followed by
Operations staff and then the Industry Experts and Management. Accordingly Government
are of the view that Malaysian telecommunications firms are positioned to achieve
Sustainable competitive advantage in the global competitive landscape.
Outcome: Figure 8.2 presents the combined responses to Statement 1. It shows that there
were mixed views on this Statement.
Figure 8.2: Combined Responses to Statement 1 on “Positioning”
37.50%
48.70%
Disagree
Neutral – No Opinion
13.70%
Agree
8.2.3 Statement 2: On “Capability”
Malaysian telecommunications firms have the strategic capabilities to accommodate the
changes in the global telecommunications industry.
213
Table 8.5 shows the case summary of the responses to Statement 2. The Total mean of
3.25 implies moderate acceptance of the Statement. The Government Group indicated the
highest support registering 3.73, while the least support was registered by Industry Experts
at 3.09. There were mixed views within the groups as reflected by the Standard Deviation
of 1.021.
Table 8.5: Case Summary for Statement 2 on “Capability”
GROUP TYPE
A
OPERATIONS
B
MANAGEMENT
C
INDUSTRY EXPERTS
D
GOVERNMENT
TOTAL
N
MEAN
MEDIAN
STANDARD
DEVIATION
30
3.43
4.00
.935
105
3.22
4.00
1.074
55
3.09
3.00
.908
15
3.73
4.00
1.100
205
3.25
4.00
1.021
A leader with a global strategic outlook is able to use the innate strengths of the firm to
compete effectively in the new economy by adapting to the external environment (David
2005). The Cross tabulation of Survey Responses to this Statement is shown in Table 8.5.
Just over half, or 52.6%, of the total respondents generally agreed with this Statement and
were of the view that Malaysian telecommunications firms have the strategic capabilities
to accommodate the changes in the global telecommunications industry. This is reflective
of firms following trends towards mobility, convergence, infrastructure upgrading and
sharing to address the consumer demand for data and speed in the Malaysian market.
However, a third, or 64 respondents, disagreed with this Statement. While there were
mixed views within the Management and Industry Expert Groups, the Statement was
generally supported.
214
Table 8.6: Cross Tabulation of Survey Responses to Statement 2 on “Capability”
STATEMENT 2: CAPABILITY
STRONGLY
DISAGREE
NEUTRAL
DISAGREE
– NO
OPINION
STATISTICS
GROUP
TYPE
A
COUNT
% within Group Type
OPERATIONS
% of Total
B
COUNT
MANAGEMENT
% within Group Type
% of Total
C
COUNT
% within Group Type
INDUSTRY
EXPERTS
% of Total
D
COUNT
GOVERNMENT
% within Group Type
% of Total
COUNT
TOTAL
% WITHIN
STATEMENT
% within Group Type
% of Total
AGREE
STRONGLY
AGREE
TOTAL %
WITHIN
GROUP
TYPE
1
6
2
21
0
30
3.3%
20.0%
0.5%
20.0%
10.2%
2.9%
6.7%
6.1%
1.0%
70.0%
22.1%
10.2%
0.0%
0.0%
0.0%
100.0%
14.6%
14.6%
4
3.8%
80.0%
2.0%
31
29.5%
52.5%
15.1%
16
15.2%
48.5%
7.8%
46
43.8%
48.4%
22.4%
8
7.6%
61.5%
3.9%
105
100.0%
51.2%
51.2%
0
0.0%
0.0%
0.0%
19
34.5%
32.2%
9.3%
13
23.6%
39.4%
6.3%
22
40.0%
23.2%
10.7%
1
1.8%
7.7%
0.5%
55
100.0%
26.8%
26.8%
0
0.0%
0.0%
0.0%
3
20.0%
5.1%
1.5%
2
13.3%
6.1%
1.0%
6
40.0%
6.3%
2.9%
4
26.7%
30.8%
2.0%
15
100.0%
7.3%
7.3%
5
2.4%
100.0%
2.4%
59
28.8%
100.0%
28.8%
33
16.1%
100.0%
16.1%
95
46.3%
100.0%
46.3%
13
6.3%
100.0%
6.3%
205
100.0%
100.0%
100.0%
Table 8.7: Weighted Average – Capability
1
2
3
4
5
TOT
WA
a'
1
12
6
84
0
103
3.433333
b'
4
62
48
184
40
338
3.219048
c'
0
38
39
88
5
170
3.090909
d'
0
6
6
24
20
56
3.733333
3.369156
215
This outlined the strongest support from Group D, Government. They are of the view that
Malaysian telecommunications firms have the strategic capabilities to accommodate
changes in the global telecommunications market. This is followed by the operations
group, Management and Industry experts.
Outcome: Figure 8.3 presents the combined responses to Statement 2. It shows that just
over half, 52.6%, of all the Survey participants agreed that Malaysian telecommunications
firms have the capabilities to accommodate the changes in the global telecommunications
industry.
Accordingly, the Researcher concluded that the participants supported this
Statement.
Figure 8.3: Combined Responses to Statement 2 on “Capability”
31.20%
52.60%
16.10%
Disagree
Agree
216
8.2.4 Statement 3: On “Strategic Intent”
The intense competition in a saturated domestic market compels Malaysian
telecommunications firms to venture into overseas markets.
The case summary of the responses to Statement 3 are shown in Table 8.8. The Total mean
of 3.77 indicates modest acceptance of the Statement. The Industry Experts, with a score
of 3.85 were the most supportive while the Operations Group were the least supportive
with a mean of 3.60.
Table 8.8: Case Summary for Statement 3 on “Strategic Intent”
GROUP TYPE
A
OPERATIONS
B
MANAGEMENT
C
INDUSTRY EXPERTS
D
GOVERNMENT
TOTAL
N
MEAN
MEDIAN
STANDARD
DEVIATION
30
3.60
4.00
.894
105
3.78
4.00
1.047
55
3.85
4.00
.911
15
3.73
4.00
1.163
205
3.77
4.00
.996
A push factor for internationalisation is the intense competition in the Malaysian market
resulting in pressure on operating margins (Shankar et al 2010). Additionally, the issuance
of LTE licences to 9 players is likely to further intensify domestic competition and lead to
Malaysian telecommunications players venturing abroad. While the cross-tabulation of the
Responses to Statement 3 indicates that almost three-quarters of the participants within all
Groups supported the
Statement with 22% strongly agreeing that the competitive
landscape in Malaysia is compelling firms to venture overseas, few firms have ventured
abroad. The strongest support was from the Management and Industry Experts with only
32 respondents disagreeing with the Statement. These views were representative across all
four groups. Accordingly, while it is acknowledged that the limited domestic market size
is a push factor, few firms are internationalising.
217
Table 8.9: Cross Tabulation of Survey Responses to Statement 3 on “Strategic
Intent”
STATEMENT 3: STRATEGIC INTENT
STATISTICS
GROUP
TYPE
A
STRONGLY
DISAGREE
DISAGREE
0
COUNT
% within Group Type
OPERATIONS
% of Total
B
COUNT
MANAGEMENT
% within Group Type
% of Total
C
COUNT
% within Group Type
INDUSTRY
EXPERTS
% of Total
D
COUNT
GOVERNMENT
% within Group Type
% of Total
COUNT
TOTAL
% WITHIN
STATEMENT
% within Group Type
% of Total
NEUTRAL
– NO
OPINION
AGREE
STRONGLY
AGREE
TOTAL %
5
5
17
3
30
0.0%
0.0%
0.0%
16.7%
17.2%
2.4%
16.7%
20.0%
2.4%
56.7%
16.5%
8.3%
10.0%
6.7%
1.5%
100.0%
14.6%
14.6%
2
1.9%
66.7%
1.0%
17
16.2%
58.6%
8.3%
8
7.6%
32.0%
3.9%
53
50.5%
51.5%
25.9%
25
23.8%
55.6%
12.2%
105
100.0%
51.2%
51.2%
1
1.8%
33.3%
0.5%
4
7.3%
13.8%
2.0%
9
16.4%
36.0%
4.4%
29
52.7%
28.2%
14.1%
12
21.8%
26.7%
5.9%
55
100.0%
26.8%
26.8%
0
0.0%
0.0%
0.0%
3
20.0%
10.3%
1.5%
3
20.0%
12.0%
1.5%
4
26.7%
3.9%
2.0%
5
33.3%
11.1%
2.4%
15
100.0%
7.3%
7.3%
3
1.5%
100.0%
1.5%
29
14.1%
100.0%
14.1%
25
12.2%
100.0%
12.2%
103
50.2%
100.0%
50.2%
45
22.0%
100.0%
22.0%
205
100.0%
100.0%
100.0%
WITHIN
GROUP
TYPE
Table 8.10: Weighted Average – Strategic Intent
1
2
3
4
5
TOT
WA
a'
0
10
15
68
15
108
3.6
b'
2
34
24
220
125
405
3.857143
c'
1
8
27
116
60
212
3.854545
d'
0
6
9
16
25
56
3.733333
3.761255
218
This outlined the strongest support from Groups B and C. Industry players consider the
intense competition in the domestic market to be a push factor for venturing into overseas
markets. The Government is also supportive of this statement while the operations group
is the least supportive. This implies that the operations group remain focused on
operational matters or may not have the strategic capabilities to understand the push
factors.
Outcome: Figure 8.4 shows support for this Statement that the competitive landscape in
Malaysia compels firms to venture overseas.
Figure 8.4: Combined Responses to Statement 3 on “Strategic Intent”
14.60%
12.20%
72.20%
Disagree
Agree
8.2.5 Statement 4: On “Customer -Orientation”
Malaysian telecommunications firms are meeting the challenges presented by changing
consumer demands in the global marketplace by providing new products and services.
Table 8.11 shows the case summary of the responses to Statement 4. The Total Mean of
3.32 indicates moderate acceptance of the Statement. The Government Representatives
registered the highest Mean of 3.93 compared to the Management Group with a Mean of
3.25. The Government Group also recorded a low Standard Deviation of 0.799 suggesting
that the Group generally agreed that Malaysian telecommunications firms are meeting
customer demands. The notable high Standard Deviation amongst the other Groups infers
mixed views on this Statement.
219
Table 8.11: Case Summary for Statement 4 on “Customer Orientation”
GROUP TYPE
A
OPERATIONS
B
MANAGEMENT
C
INDUSTRY EXPERTS
D
GOVERNMENT
TOTAL
N
MEAN
MEDIAN
STANDARD
DEVIATION
30
3.30
4.00
1.088
105
3.25
4.00
1.099
55
3.29
3.00
1.012
15
3.93
4.00
.799
205
3.32
4.00
1.063
The statement was generally supported and this is reflected by operators statements to
commit to customer needs. Celcom have dedicated a research lab to consumer research
and Maxis is focused on innovation as reflected by the CEO “In line with the growing
demand for data and mobile Internet, we will continue to offer innovative products, bring
in the latest devices to the market, make smartphones adoption affordable and provide
exciting content, applications, Internet and bundle plans. Retention and customer loyalty
programmes will continue to be enhanced to reward our loyal customers with offers that
provide strong value propositions” (The Sun, 30 August 2012).
Furthermore, DiGi’s has embarked on a business transformation initiative. “Apart from
modernising our network, we have also refreshed our retail presence with the introduction
of the new DiGi Store Express concept and an online store. We believe these efforts will
significantly enhance the customer experience across touch-points, and enable better
access to mobile Internet for more customers.” (The Sun, 24 July 2012).
It is also likely that participants as consumers have the latest gadgets. However, it is
pertinent that nearly a third of the participants disagreed with this Statement, mostly from
the Operations Group and 17% of total respondents maintained a neutral stance.
Significantly, the majority of participants from the Government Group supported this
Statement.
220
The spread of responses is shown in Table 8.12. The responses suggest that just over half
of the respondents, or 54.7%, supported the Statement that Malaysian telecommunications
firms and provide new products and services to meet consumer needs.
Table 8.12: Cross Tabulation of Survey Responses to Statement 4 on “Customer
Orientation”
STATEMENT 4: CUSTOMER ORIENTATION
GROUP
TYPE
A
OPERATIONS
STATISTICS
COUNT
% within Group Type
% of Total
B
MANAGEMENT
COUNT
% within Group Type
% of Total
C
INDUSTRY
EXPERTS
COUNT
% within Group Type
% of Total
D
GOVERNMENT
COUNT
% within Group Type
% of Total
TOTAL
% WITHIN
STATEMENT
COUNT
% within Group Type
% of Total
STRONGLY
DISAGREE
DISAGREE
NEUTRAL
– NO
OPINION
AGREE
STRONGLY
AGREE
TOTAL %
0
11
2
14
3
30
0.0%
0.0%
0.0%
36.7%
22.0%
5.4%
6.7%
5.7%
1.0%
46.7%
15.1%
6.8%
10.0%
15.8%
1.5%
100.0%
14.6%
14.6%
7
6.7%
87.5%
3.4%
24
22.9%
48.0%
11.7%
18
17.1%
51.4%
8.8%
48
45.7%
51.6%
23.4%
8
7.6%
42.1%
3.9%
105
100.0%
51.2%
51.2%
1
1.8%
12.5%
0.5%
14
25.5%
28.0%
6.8%
13
23.6%
37.1%
6.3%
22
40.0%
23.7%
10.7%
5
9.1%
26.3%
2.4%
55
100.0%
26.8%
26.8%
0
0.0%
0.0%
0.0%
1
6.7%
2.0%
0.5%
2
13.3%
5.7%
1.0%
9
60.0%
9.7%
4.4%
3
20.0%
15.8%
1.5%
15
100.0%
7.3%
7.3%
8
3.9%
100.0%
3.9%
50
24.4%
100.0%
24.4%
35
17.1%
100.0%
17.1%
93
45.4%
100.0%
45.4%
19
9.3%
100.0%
9.3%
205
100.0%
100.0%
100.0%
WITHIN
GROUP
TYPE
221
Table 8.13: Weighted Average – Customer Orientation
1
2
3
4
5
TOT
WA
a'
0
22
6
56
15
99
3.3
b'
7
48
54
192
40
341
3.247619
c'
1
28
39
88
25
181
3.290909
d'
0
2
6
36
15
59
3.933333
3.442965
The Government group are strongly supporting that Malaysian telecommunications firms
are meeting the challenges presented by changing consumer demands in the global
marketplace. The remaining 3 groups presented similar support.
Outcome: As shown in 8.5, this Statement was generally supported.
Figure 8.5: Responses to Statement 4 on “Customer Orientation”
28.30%
54.70%
17.10%
Disagree
Agree
8.2.6 Analysis of the Combined Survey Responses for Proposition 1
The Dynamic Changes in the global telecommunications industry strongly influence the
competitive strategies of Malaysian Telecommunications firms for sustainable competitive
advantage.
222
The combined Survey responses to Proposition 1 are shown in Figure 8.6. 60.5% of the
Survey participants agreed with Proposition 1 agreed that the dynamic changes in the
global telecommunications industry influence the strategic choices of Malaysian
telecommunications firms for sustainable competitive advantage. However, it is
noteworthy that a quarter, 25.4%, disagreed with this Proposition while 14.1% remained
neutral and offered no opinions.
Figure 8.6: Combined Responses to Proposition 1
25.40%
Disagree
60.50%
14.10%
Agree
The combined responses by Groups are depicted in Table 8.14 and Figure 8.7 respectively.
The Table indicates modest support from the Management Group while representatives
from the Industry Expert and Operations groups showed moderate support. However, the
Government Group showed strong support for this Proposition.
Table 8.14: Combined Survey Responses to Proposition 1
STATISTICS
GROUP TYPE
A
OPERATIONS
B
MANAGEMENT
C
INDUSTRY EXPERTS
D
GOVERNMENT
TOTAL
COUNT
% Within Proposition 1
COUNT
% of Total
COUNT
% of Total
COUNT
% of Total
COUNT
% of Total
DISAGREE
NEUTRAL – NO
OPINION
AGREE
TOTAL
7
2
21
30
3.4%
1.0%
10.2%
14.6%
31
14
60
105
15.1%
6.8%
29.3%
51.2%
10
13
32
55
4.9%
6.3%
15.6%
26.8%
4
0
11
15
2.0%
0.0%
5.4%
7.3%
52
25.4%
29
14.1%
124
60.5%
205
100.0%
223
Figure 8.7: Combined Responses to Proposition 1 – By Group Type
8.2.7 Testing of Proposition 1
There were divided views on how the changes to the industry have influenced the
strategies of operators for sustainable competitive advantage. The dynamic market changes
have created push and pull factors for Malaysian telecommunications firms. The push
factors include limited market size, increase in domestic competition and pressure on
operating margins. The pull factors include market liberalisation, advances in technology,
increased connectivity reduced transaction costs, economies of scale, increased revenue
from foreign markets and internationalising customers. However, only two firms have an
international presence of any significance, namely, Axiata (Formerly TM) and Maxis
(Asgari, Gurrib & Zyed 2010; Kitchen & Ahmad 2008).
However, technological advances have spurred growth in the domestic market, particularly
in the mobile and data sector. Furthermore in line with global trends, the market is
witnessing the emergence of MVNO’s and operators entering infrastructure sharing deals
as LTE paves the way for NGN (BMI 2012).
224
While FDI outflows in Malaysia are increasing as firms seek growth in regional markets
(World Bank 2011), the telecommunications sector appears to remain focused on the
domestic market. The survey participants were divided on statement 1, expressed support
for statement 2, strong support for statement 3 and moderate support for statement 4.
Accordingly, as depicted in Figure 8.10, 60.5% supported the proposition.
8.2.8 Statement 5: On “Market Selection”
Emerging countries with low penetration rates and high growth potential are the preferred
investment destinations for Malaysian telecommunications firms.
Table 8.15 shows the case summary of the responses to Statement 5. The Total Mean of
3.95 indicates modest acceptance of the Statement. The Government Representatives
registered the highest Mean of 4.07 compared to the Operations Group with a Mean of
3.83. The relatively low standard deviation of .809 implies that all groups generally agreed
that emerging markets with low penetration rates and high growth areas are preferred
destinations for Malaysian telecommunications firms.
Table 8.15: Case Summary for Statement 5 on “Market Selection”
GROUP TYPE
A
OPERATIONS
B
MANAGEMENT
C
INDUSTRY EXPERTS
D
GOVERNMENT
TOTAL
N
MEAN
MEDIAN
STANDARD
DEVIATION
30
3.83
4.00
.834
105
3.95
4.00
.813
55
3.98
4.00
.828
15
4.07
4.00
.704
205
3.95
4.00
.809
As shown in Table 8.16 the majority or 82% of the respondents, across all groups,
supported the Statement, with a quarter of them expressing strong agreement particularly
with
strong support from the Government Group.
This is reflective of Malaysian
telecommunications firms that have internationalised. Axiata has a presence in 9 countries
225
across the region and Maxis is also present in India and Indonesia along with Time
dotCom which completed three acquisitions in the regional market in 2012. In line with
Ahmad & Hashim (2007), Malaysian firms have cultural affinity with the region along
with ASEAN trade agreements.
Furthermore, emerging economies present growth
potential and this enables Malaysian firms which come from a developing nation to better
understand the needs of other developing nations. Accordingly, emerging markets with
low penetration rates are the preferred investment destination for Malaysian
telecommunication firms. The few respondents that disagreed were generally from the
Management and Industry Expert Groups.
Table 8.16: Cross Tabulation of Survey Responses to Statement 5 on “Market
Selection”
STATEMENT 5: MARKET SELECTION
GROUP
TYPE
A
OPERATIONS
STATISTICS
COUNT
% within Group Type
% of Total
B
MANAGEMENT
COUNT
% within Group Type
% of Total
C
INDUSTRY
EXPERTS
COUNT
% within Group Type
% of Total
D
GOVERNMENT
COUNT
% within Group Type
% of Total
TOTAL
% WITHIN
STATEMENT
COUNT
% within Group Type
% of Total
STRONGLY
DISAGREE
DISAGREE
NEUTRAL
– NO
OPINION
AGREE
STRONGLY
AGREE
TOTAL %
WITHIN
GROUP
TYPE
0
4
1
21
4
30
0.0%
0.0%
0.0%
13.3%
26.7%
2.0%
3.3%
4.8%
0.5%
70.0%
16.9%
10.2%
13.3%
9.1%
2.0%
100.0%
14.6%
14.6%
1
1.0%
100.0%
0.5%
7
6.7%
46.7%
3.4%
10
9.5%
47.6%
4.9%
65
61.9%
52.4%
31.7%
22
21.0%
50.0%
10.7%
105
100.0%
51.2%
51.2%
0
0.0%
0.0%
0.0%
4
7.3%
26.7%
2.0%
7
12.7%
33.3%
3.4%
30
54.5%
24.2%
14.6%
14
25.5%
31.8%
6.8%
55
100.0%
26.8%
26.8%
0
0.0%
0.0%
0.0%
0
0.0%
0.0%
0.0%
3
20.0%
14.3%
1.5%
8
53.3%
6.5%
3.9%
4
26.7%
9.1%
2.0%
15
100.0%
7.3%
7.3%
1
0.5%
100.0%
0.5%
15
7.3%
100.0%
7.3%
21
10.2%
100.0%
10.2%
124
60.5%
100.0%
60.5%
44
21.5%
100.0%
21.5%
205
100.0%
100.0%
100.0%
Source: Based on the Web Survey for this Research
226
Table 8.17: Weighted Average – Market Selection
1
2
3
4
5
TOT
WA
a'
0
8
3
84
20
115
3.833333
b'
1
14
30
260
110
415
3.952381
c'
0
8
21
120
70
219
3.981818
d'
0
0
9
32
20
61
4.066667
3.95855
The Government group are strongly supporting that emerging economies with low
penetration
rates
are
the
preferred
investments
destinations
for
Malaysian
telecommunications firms. This was followed by the Management group and the Industry
experts.
Outcome: As shown in Figure 8.8, this Statement was strongly supported.
Figure 8.8: Responses to Statement 5 on “Market Selection”
7.80%
10.20%
Disagree
82.00%
Agree
8.2.9 Statement 6: On “Global Outlook”
Malaysian telecommunications firms have the required global strategic outlook to
successfully venture into international markets.
227
The Total Mean of 3.19 as shown in Table 8.18 indicates moderate acceptance of the
Statement. The Industry Experts registered the lowest Mean of 3.13 compared to the
Government Group which recorded a Mean of 3.33. The Standard Deviation of 0.799 suggests that there are varying views within the groups with regards to Malaysian
telecommunications firms having the required global strategic outlook for successful
Table 8.18: Case Summary for Statement 4 on “Global Outlook”
GROUP TYPE
A
OPERATIONS
B
MANAGEMENT
C
INDUSTRY EXPERTS
D
GOVERNMENT
TOTAL
N
MEAN
MEDIAN
STANDARD
DEVIATION
30
3.27
4.00
.907
105
3.17
4.00
1.051
55
3.13
3.00
.924
15
3.33
4.00
.900
205
3.19
4.00
.983
Globalisation has removed trade barriers. This implies that Malaysian telecommunications
firms are open to global market forces. This requires leaders to have a global strategic
outlook with the ability to make sound management decisions, create a culture to support
innovation in the new economy and recruit and build teams with knowledge, skills and
capabilities along with being able to identify market opportunities to build intellectual
capital for competitive advantage (Wong 2011). This statement was supported by nearly
half of the respondents from all Groups. The support was largely from the Management
and Operations Groups as the statement can be perceived to be a reflection on them. In
Asian culture ‘keeping face’ is imperative. However, the Industry Experts, many who are
international had mixed views with 10.2% expressing agreement and 8.8% disagreeing.
228
Table 8.19: Cross Tabulation of Survey Responses to Statement 6 on “Global
Outlook”
STATEMENT 6: GLOBAL OUTLOOK
STRONGLY
DISAGREE
STATISTICS
GROUP
TYPE
A
COUNT
% within Group Type
OPERATIONS
% of Total
B
COUNT
MANAGEMENT
% within Group Type
% of Total
C
COUNT
% within Group Type
INDUSTRY
EXPERTS
% of Total
D
COUNT
GOVERNMENT
% within Group Type
% of Total
COUNT
TOTAL
% WITHIN
STATEMENT
% within Group Type
% of Total
DISAGREE
NEUTRAL
– NO
OPINION
AGREE
STRONGLY
AGREE
TOTAL %
WITHIN
GROUP
TYPE
0
9
4
17
0
30
0.0%
0.0%
0.0%
30.0%
15.3%
4.4%
13.3%
10.8%
2.0%
56.7%
17.5%
8.3%
0.0%
0.0%
0.0%
100.0%
14.6%
14.6%
6
5.7%
100.0%
2.9%
28
26.7%
47.5%
13.7%
17
16.2%
45.9%
8.3%
50
47.6%
51.5%
24.4%
4
3.8%
66.7%
2.0%
105
100.0%
51.2%
51.2%
0
0.0%
0.0%
0.0%
18
32.7%
30.5%
8.8%
14
25.5%
37.8%
6.8%
21
38.2%
21.6%
10.2%
2
3.6%
33.3%
1.0%
55
100.0%
26.8%
26.8%
0
0.0%
0.0%
0.0%
4
26.7%
6.8%
2.0%
2
13.3%
5.4%
1.0%
9
60.0%
9.3%
4.4%
0
0.0%
0.0%
0.0%
15
100.0%
7.3%
7.3%
6
2.9%
100.0%
2.9%
59
28.8%
100.0%
28.8%
37
18.0%
100.0%
18.0%
97
47.3%
100.0%
47.3%
6
2.9%
100.0%
2.9%
205
100.0%
100.0%
100.0%
Table 8.20: Weighted Average – Global Outlook
1
2
3
4
5
TOT
WA
a'
0
18
12
68
0
98
3.266667
b'
6
56
51
200
20
333
3.171429
c'
0
36
42
84
10
172
3.127273
d'
0
8
6
36
0
50
3.333333
3.224675
229
The Government group were the most supportive for this statement implying that they
viewed that Malaysian telecommunications firms had the required global outlook for
Malaysian telecommunications firms to penetrate international markets successfully. This
was followed by the Operations group with the management and the Industry experts
groups having similar views.
Outcome: As shown in Figure 8.9, this Statement was generally supported by the majority
of the participants.
Figure 8.9: Responses to Statement 6 on “Global Outlook”
31.70%
50.20%
18.00%
Disagree
Agree
8.2.10 Statement 7: On “Risk”
The internationalisation strategies of Malaysian telecommunications firms take full
account of the risk factors in the targeted international markets.
Table 8.21 shows the case summary for this Statement. The Total Mean of 3.16 indicates
moderate acceptance of the Statement. While respondents from the Government Group
registered a Mean of 3.67, the Operations Group recorded a Mean of 2.97. The Standard
Deviation of 0.0.894 infers that the survey participants offered varying perspectives on the
internationalisation strategies of Malaysian telecommunications firms.
230
Table 8.21: Case Summary for Statement 7 on “Risk”
GROUP TYPE
A
OPERATIONS
B
MANAGEMENT
C
INDUSTRY EXPERTS
D
GOVERNMENT
TOTAL
N
MEAN
MEDIAN
STANDARD
DEVIATION
30
2.97
3.00
.809
105
3.13
3.00
.878
55
3.16
3.00
.938
15
3.67
4.00
.900
205
3.16
3.00
.894
As shown in Table 8.22, nearly 40% of the respondents were of the view that Malaysian
telecommunications firms consider risk factors when internationalising and over a third of
the participants remained neutral on this Statement. The majority of these were from the
Management category. Industry Experts expressed mixed views on this Statement.
Malaysian telecommunications firms have to consider several risk factors in international
markets. These factors include:
Governance and CSR: Malaysian telecommunications firms need to take into
consideration international standards for transparency and good governance. Malaysian
firms are urged to commit to collaborative development of corporate governance.
Furthermore, GLC’s, TM, Axiata, Time dotCom – are required to discharge their social
obligations as required by the NEP (Abang 2009).
A financial discipline culture: Firms are required to manage risks for optimum financial
performance. Accordingly, Malaysian telecommunications firms require economic and
risk management practices to support the decision making process. (Bingham 2007),
particularly in international ventures.
Knowledgeable Resources: Knowledge based resources provide firms with competitive
advantage (Nonaka & Takeuchi 1995). However, resources require international exposure
and a global mindset to manage risk and be successful in international ventures.
Building Relationships: Entering international markets is dependent on the ability to
build relationships with host and home Governments and partners alike. Accordingly, the
231
importance of managing sustainable relationships, building trust, learning and commitment
is critical to success (Kenny 2009). This is pertinent in the case of Maxis and Axiata in
India whereby the Government withdrew 122 2G licences in 2011 (TRAI 2011).
As shown in Table 8.22 nearly 40% of the respondents were of the view that Malaysian
telecommunications firms consider risk factors when internationalising and over a third of
the participants remained neutral on this Statement. The majority of these were from the
Management category. Industry Experts expressed mixed views on this Statement. Taking
into consideration the risk factors outlined above, the mixed views may be as a result of
differing views on risk, along with limited firms having internationalised.
Table 8.22: Cross Tabulation of Survey Responses to Statement 7 on “Risk”
GROUP
TYPE
A
OPERATIONS
STATISTICS
COUNT
% within Group Type
% of Total
B
MANAGEMENT
COUNT
% within Group Type
% of Total
C
INDUSTRY
EXPERTS
COUNT
% within Group Type
% of Total
D
GOVERNMENT
COUNT
% within Group Type
% of Total
TOTAL
% WITHIN
STATEMENT
COUNT
% within Group Type
% of Total
STATEMENT 7: RISK
STRONGLY
DISAGREE
NEUTRAL
DISAGREE
– NO
OPINION
AGREE
STRONGLY
AGREE
TOTAL %
WITHIN
GROUP
TYPE
0
10
11
9
0
30
0.0%
0.0%
0.0%
33.3%
20.4%
4.9%
36.7%
15.7%
5.4%
30.0%
12.0%
4.4%
0.0%
0.0%
0.0%
100.0%
14.6%
14.6%
3
2.9%
75.0%
1.5%
24
22.9%
49.0%
11.7%
35
33.3%
50.0%
17.1%
42
40.0%
56.0%
20.5%
1
1.0%
14.3%
0.5%
105
100.0%
51.2%
51.2%
1
1.8%
25.0%
0.5%
14
25.5%
28.6%
6.8%
18
32.7%
25.7%
8.8%
19
34.5%
25.3%
9.3%
3
5.5%
42.9%
1.5%
55
100.0%
26.8%
26.8%
0
0.0%
0.0%
0.0%
1
6.7%
2.0%
0.5%
6
40.0%
8.6%
2.9%
5
33.3%
6.7%
2.4%
3
20.0%
42.9%
1.5%
15
100.0%
7.3%
7.3%
4
2.0%
100.0%
2.0%
49
23.9%
100.0%
23.9%
70
34.1%
100.0%
34.1%
75
36.6%
100.0%
36.6%
7
3.4%
100.0%
3.4%
205
100.0%
100.0%
100.0%
232
Table 8.23: Weighted Average – Risk
1
2
3
4
5
TOT
WA
a'
0
20
33
36
0
89
2.966667
b'
3
48
105
168
5
329
3.133333
c'
1
28
54
76
5
164
2.981818
d'
0
2
18
20
15
55
3.666667
3.187121
viewed that Malaysian telecommunications consider risks before entering foreign markets.
This was followed by the Operations group. The management and the Industry experts
groups having similar views and were less supportive of the risk management capabilities
of Malaysian telecommunications firms.
Outcome: As depicted in Figure 8.10, the majority of the respondents were either uncertain
or offered no opinion on whether Malaysian telecommunications firms took full account of
the risks associated with internationalisation.
Figure 8.10: Responses to Statement 7 on “Risk”
40.00%
25.90%
34.10%
Disagree
Agree
233
8.2.11 Statement 8: On “Netwo rk Relationships”
Malaysian telecommunications firms have strong external networks and effective foreign
partnerships for successfully venturing into new international markets.
Table 8.24 shows the case summary for this Statement. The Total Mean of 3.06 indicates
moderate acceptance of the Statement. In contrast to the Operations Group which showed
a Mean of 3.13, the Government Group registered a Mean of 2.93. The Standard Deviation
of 0.991 implies that the Groups had varying views on the effectiveness of external
networks and partnerships.
Table 8.24: Case Summary for Statement 8 on “Network Relationships”
GROUP TYPE
A
OPERATIONS
B
MANAGEMENT
C
INDUSTRY EXPERTS
D
GOVERNMENT
TOTAL
N
MEAN
MEDIAN
STANDARD
DEVIATION
30
3.13
3.50
1.008
105
3.07
3.00
.983
55
3.05
3.00
1.008
15
2.93
3.00
1.033
205
3.06
3.00
.991
As discussed in Section 2.37 and 2.3.7.1, networks are critical to the Malaysian
telecommunications industry. Networks and effective partnerships require trust
commitment and learning (Johanson & Valhne 2009). Table 8.25 shows the cross
tabulation of the responses to this Statement. It shows that all Groups had mixed views on
the subject of Network Relationships. This is supported by the challenges faced by Axiata
with its Indonesian partner, Etisalat and Maxis with its Indian ventures. Furthermore
UMobile also faced challenges with foreign partnerships when NTT DoCo Mo and KT
Freetel both sold their respective stakes in the local firm within 2 years of entering the
venture. Significantly, nearly 20% of all respondents adopted a neutral position on the
Statement. Again, this may be as a result of only two firms having ventured
internationally.
234
Table 8.25: Cross Tabulation of Survey Responses to Statement 8 on “Network
Relationships”
STATEMENT 8: NETWORK RELATIONSHIPS
STRONGLY
DISAGREE
STATISTICS
GROUP
TYPE
A
COUNT
% within Group Type
OPERATIONS
% of Total
B
COUNT
MANAGEMENT
% within Group Type
% of Total
C
COUNT
% within Group Type
INDUSTRY
EXPERTS
% of Total
D
COUNT
GOVERNMENT
% within Group Type
% of Total
COUNT
TOTAL
% WITHIN
STATEMENT
% within Group Type
% of Total
DISAGREE
NEUTRAL
– NO
OPINION
AGREE
STRONGLY
AGREE
TOTAL %
WITHIN
GROUP
TYPE
0
12
3
14
1
30
0.0%
0.0%
0.0%
40.0%
17.1%
5.9%
10.0%
7.5%
1.5%
46.7%
16.9%
6.8%
3.3%
16.7%
0.5%
100.0%
14.6%
14.6%
3
2.9%
50.0%
1.5%
35
33.3%
50.0%
17.1%
22
21.0%
55.0%
10.7%
42
40.0%
50.6%
20.5%
3
2.9%
50.0%
1.5%
105
100.0%
51.2%
51.2%
2
3.6%
33.3%
1.0%
18
32.7%
25.7%
8.8%
12
21.8%
30.0%
5.9%
21
38.2%
25.3%
10.2%
2
3.6%
33.3%
1.0%
55
100.0%
26.8%
26.8%
1
6.7%
16.7%
0.5%
5
33.3%
7.1%
2.4%
3
20.0%
7.5%
1.5%
6
40.0%
7.2%
2.9%
0
0.0%
0.0%
0.0%
15
100.0%
7.3%
7.3%
6
2.9%
100.0%
2.9%
70
34.1%
100.0%
34.1%
40
19.5%
100.0%
19.5%
83
40.5%
100.0%
40.5%
6
2.9%
100.0%
2.9%
205
100.0%
100.0%
100.0%
Table 8.26: Weighted Average – Network Relationships
1
2
3
4
5
TOT
WA
a'
0
24
9
56
5
94
3.133333
b'
3
30
66
168
15
282
2.685714
c'
2
36
36
84
35
193
3.509091
d'
1
10
9
24
0
44
2.933333
3.065368
235
viewed that Malaysian telecommunications firms were successful in building strong
external relationships. This was followed by the management and then the industry experts
and the operations group.
Outcome: Figure 8.11, presents the analysis for this Statement. It indicates that there the
participants were divided on the effectiveness of network relationships and partnerships
that Malaysian telecommunications firms have for venturing into international markets.
Figure 8.11: Responses to Statement 8 on “Network Relationships”
43.30%
37.00%
Disagree
19.50%
Agree
Malaysian Telecommunications firms have appropriate strategies for successfully
The combined Survey responses to Proposition 2 are shown in Figure 8.12. Proposition 2
was supported by over 60% of the Survey Participants who were of the view that
Malaysian telecommunications firms have appropriate strategies for successful
internationalisation. However, nearly a quarter of all respondents disagreed with this
Statement and 13.7% remained neutral.
236
Figure 8.12: Responses to Proposition 2
23.40%
62.90%
Disagree
13.70%
Agree
The combined responses by Groups are depicted in Table 8.27. The Table indicates modest
support from the Management and Industry Expert Groups while the Operations and
Government Industry Expert groups showed moderate support.
Table 8.27: Combined Survey Responses to Proposition 2 by Group Type
DISAGREE
NEUTRAL – NO
OPINION
AGREE
TOTAL
8
5
17
30
3.9%
2.4%
8.3%
14.6%
22
16
67
105
10.7%
7.8%
32.7%
51.2%
15
7
33
55
7.3%
3.4%
16.1%
26.8%
3
0
12
15
% of Total
1.5%
0.0%
5.9%
7.3%
COUNT
48
23.4%
28
13.7%
129
62.9%
205
100.0%
STATISTICS
GROUP TYPE
A
OPERATIONS
B
COUNT
% Within Proposition 1
COUNT
MANAGEMENT
C
INDUSTRY EXPERTS
D
GOVERNMENT
TOTAL
COUNT
% of Total
COUNT
% of Total
237
Proposition 2 was supported by over 60% of the Survey Participants who were of the view
that Malaysian telecommunications firms have appropriate strategies for successful
internationalisation. There are several factors for successful international market
penetration. The pertinent ones tested for this proposition include market selection, having
a global strategic outlook, considering risk factors in the targeted international markets,
and having strong external networks and effective foreign partnerships. A key factor to
successful international market penetration is entry mode, market selection as well as
timing of entry (Curwen & Whalley 2008).
The first statement reflected that emerging economies with low penetration rates were
preferred destinations for Malaysian telecommunications firms. This is reflected by both
Maxis and Axiata who have entered regional developing markets. Leaders with a global
outlook generally drive internationalisation. Again this is reflected by the leadership in the
Malaysian telecommunications firms that have ventured overseas. There are several risk
factors which require consideration before venturing into international markets. These
include Governance, a financial discipline culture, market knowledge and the ability to
238
build sustainable relationships. While Malaysian firms have ventured abroad, they have
faced challenges in risk mitigation as reflected by the early ventures of TM into Africa and
more recently, the Indian 2G scandal.
The survey participants strongly supported statement 5, moderate support for statement 6,
were divided on statement 7, and were divided on statement 8. Accordingly, as depicted in
Figure 8.12, 62.90% supported the proposition.
8.2.14 Statement 9: On “Leadership”
Malaysian telecommunications firms benefit from capable leadership for successfully
operating in international markets.
Table 8.28 shows the case summary of the Responses to this Statement. The overall Mean
of 3.37 and Standard Deviation of 1.009 indicates moderate acceptance of the Statement.
Table 8.28: Case Summary for Statement 9 on “Leadership”
GROUP TYPE
A
OPERATIONS
B
MANAGEMENT
C
INDUSTRY EXPERTS
D
GOVERNMENT
TOTAL
N
MEAN
MEDIAN
STANDARD
DEVIATION
30
3.20
3.50
1.064
105
3.49
4.00
1.020
55
3.25
3.00
.947
15
3.33
4.00
1.047
205
3.37
4.00
1.009
Leadership competencies are imperative to compete and grow in the new economy
(Morino 1999). Leaders require a global mindset, be able to identify new market and
business opportunities as well as make management decisions on recruiting capable
knowledgeable resource for sustainable competitive advantage. Table 8.29 shows the cross
tabulation of the responses to this Statement. It shows the general acceptance of this
Statement particularly by the Industry Experts along with Government. This suggests that
239
firms which have successful operations in overseas markets have capable leadership. This
is reflected by Axiata and Maxis, led by individuals with international exposure. However,
a quarter of the respondents disagreed and were of the view that Malaysian
telecommunications firms lack capable leadership to succeed in international markets. Of
significance is the requirement to recruit Bumiputeras in line with the NEP. Accordingly,
this may impact the leadership of firms that have the potential to internationalise, however,
have not as yet done so.
Table 8.29: Cross Tabulation of Survey Responses to Statement 9 on “Leadership”
GROUP
TYPE
A
OPERATIONS
STATISTICS
COUNT
% within Group Type
% of Total
B
MANAGEMENT
COUNT
% within Group Type
% of Total
C
INDUSTRY
EXPERTS
COUNT
% within Group Type
% of Total
D
GOVERNMENT
COUNT
% within Group Type
% of Total
TOTAL
% WITHIN
STATEMENT
COUNT
% within Group Type
% of Total
STATEMENT 9: LEADERSHIP
STRONGLY
DISAGREE
NEUTRAL
DISAGREE
– NO
OPINION
AGREE
STRONGLY
AGREE
TOTAL %
WITHIN
GROUP
TYPE
1
9
5
13
2
30
3.3%
33.3%
0.5%
30.0%
17.6%
4.4%
16.7%
13.2%
2.4%
43.3%
14.0%
6.3%
6.7%
10.0%
1.0%
100.0%
14.6%
14.6%
1
1.0%
33.3%
0.5%
24
22.9%
47.1%
11.7%
17
16.2%
44.7%
8.3%
49
46.7%
52.7%
23.9%
14
13.3%
70.0%
6.8%
105
100.0%
51.2%
51.2%
1
1.8%
33.3%
0.5%
13
23.6%
25.5%
6.3%
15
27.3%
39.5%
7.3%
23
41.8%
24.7%
11.2%
3
5.5%
15.0%
1.5%
55
100.0%
26.8%
26.8%
0
0.0%
0.0%
0.0%
5
33.3%
9.8%
2.4%
1
6.7%
2.6%
0.5%
8
53.3%
8.6%
3.9%
1
6.7%
5.0%
0.5%
15
100.0%
7.3%
7.3%
3
1.5%
100.0%
1.5%
51
24.9%
100.0%
24.9%
38
18.5%
100.0%
18.5%
93
45.4%
100.0%
45.4%
20
9.8%
100.0%
9.8%
205
100.0%
100.0%
100.0%
Source: Based on the Web Survey for this Research
240
Table 8.30: Weighted Average – Leadership
1
2
3
4
5
TOT
WA
a'
1
18
15
52
10
96
3.2
b'
1
48
51
196
70
366
3.485714
c'
1
26
45
92
15
179
3.254545
d'
0
10
3
32
5
50
3.333333
3.318398
The operations group were the most supportive for this statement implying that they
viewed leaders in the industry as being capable of operationalising successfully in
international markets. The other three groups shared similar views.
Outcome: The analysis for this Statement, depicted in Figure 8.14, indicates moderate
support for this Statement.
Figure 8.14: Responses to Statement 9 on “Leadership”
26.40%
54.90%
18.50%
Disagree
Agree
8.2.15 Statement 10: On “Insight”
Malaysian telecommunications firms are not giving adequate emphasis to research and
development for creating innovative market driven products and services.
241
The overall Mean of 3.75 as shown in Table 8.31 reflects modest support for this
Statement. All groups supported the Statement with a Mean ranging from the 3.40
registered by participants from the Government to a Mean of 3.85 by Industry Experts.
Table 8.31: Case Summary for Statement 10 on “Insight”
GROUP TYPE
A
OPERATIONS
B
MANAGEMENT
C
INDUSTRY EXPERTS
D
GOVERNMENT
TOTAL
N
MEAN
MEDIAN
STANDARD
DEVIATION
30
3.50
4.00
.900
105
3.81
4.00
.982
55
3.85
4.00
1.026
15
3.40
4.00
1.242
205
3.75
4.00
1.007
Table 8.32 shows the cross tabulation of the responses to this Statement. The analysis
revealed that 67.3% Survey Respondents supported this Statement. This suggests that
Malaysian telecommunications firms need to place more emphasis on R&D for innovation.
This is reflective of Malaysia’s investment in R&D which is far less than its regional
counterparts. While Malaysian telecommunications firms have invested in research labs
much more needs to be done to innovate.
242
Table 8.32: Cross Tabulation of Survey Responses to Statement 10 on “Insight”
STATISTICS
GROUP
TYPE
A
STATEMENT 10: INSIGHT
STRONGLY
DISAGREE
NEUTRAL
DISAGREE
– NO
OPINION
COUNT
% within Group Type
OPERATIONS
% of Total
B
COUNT
MANAGEMENT
% within Group Type
% of Total
C
COUNT
% within Group Type
INDUSTRY
EXPERTS
% of Total
D
COUNT
GOVERNMENT
% within Group Type
% of Total
COUNT
TOTAL
% WITHIN
STATEMENT
% within Group Type
% of Total
AGREE
STRONGLY
AGREE
TOTAL %
WITHIN
GROUP
TYPE
0
5
8
14
3
30
0.0%
0.0%
0.0%
16.7%
18.5%
2.4%
26.7%
21.6%
3.9%
46.7%
15.6%
6.8%
10.0%
6.2%
1.5%
100.0%
14.6%
14.6%
1
1.0%
33.3%
0.5%
13
12.4%
48.1%
6.3%
17
16.2%
45.9%
8.3%
48
45.7%
53.3%
23.4%
26
24.8%
54.2%
12.7%
105
100.0%
51.2%
51.2%
0
0.0%
0.0%
0.0%
8
14.5%
29.6%
3.9%
9
16.4%
24.3%
4.4%
21
38.2%
23.3%
10.2%
17
30.9%
35.4%
8.3%
55
100.0%
26.8%
26.8%
2
13.3%
66.7%
1.0%
1
6.7%
3.7%
0.5%
3
20.0%
8.1%
1.5%
7
46.7%
7.8%
3.4%
2
13.3%
4.2%
1.0%
15
100.0%
7.3%
7.3%
3
1.5%
100.0%
1.5%
27
13.2%
100.0%
13.2%
37
18.0%
100.0%
18.0%
90
43.9%
100.0%
43.9%
48
23.4%
100.0%
23.4%
205
100.0%
100.0%
100.0%
Table 8.33: Weighted Average – Insight
1
2
3
4
5
TOT
WA
a'
0
10
24
56
15
105
3.5
b'
1
26
51
192
130
400
3.809524
c'
0
16
27
84
85
212
3.854545
d'
2
2
9
28
10
51
3.4
3.641017
243
The industry experts and Government groups were the most supportive for this statement
implying that they more research needs to be undertaken for innovation.
Outcome: As depicted in Figure 8.15, 67.3% of Respondents agreed with this Statement
indicating strong support
Figure 8.15: Responses to Statement 10 on “Insight”
14.70%
18.00%
67.30%
Disagree
Agree
8.2.16 Statement 11: On “Trust”
Malaysian telecommunications firms benefit from reputational and brand advantage for
competing in overseas markets.
The overall Mean of 2.98 as shown in Table 8.34 indicates that this Statement was
rejected. However, the overall Standard Deviation suggests variations in the views of the
respondents. with the Government representatives expressing support.
Table 8.34: Case Summary for Statement 11 on “Trust”
GROUP TYPE
A
OPERATIONS
B
MANAGEMENT
C
INDUSTRY EXPERTS
D
GOVERNMENT
TOTAL
N
MEAN
MEDIAN
STANDARD
DEVIATION
30
2.90
2.00
1.094
105
3.00
3.00
1.092
55
2.91
3.00
.948
15
3.20
3.00
1.014
205
2.98
3.00
1.045
244
Table 8.35 shows that the respondents had mixed views on branding. While just over 40%
disagreed, fewer than 40% supported the Statement and a fifth of all participants offered
‘no opinion’. This suggests that this Statement was only partially supported. There were
divided views on brand advantage in international markets. Malaysian telecommunications
firms featured high on the list of Malaysia’s top digital brands (TNS 2009). This implies
that Malaysian telecommunications firms are emphasising on the importance of a strong
brand strategy, however, the involvement of Malaysian telecommunications firms in
external markets is through equity ownership and joint ventures with leading operators in
the external markets. This is reflected by the Maxis partnership with Aircel and in India
and Axis in Indonesia. Due to this entry mode, both Axiata and Maxis operate under the
brand names of their respective partners in the countries concerned. Axiata’s heavy
investment in rebranding the firm is reflected in its integrated marketing initiatives for
supporting its regional presence (TNS 2009).
Table 8.35: Cross Tabulation of Survey Responses to Statement 11 on “Trust”
GROUP
TYPE
A
OPERATIONS
STATISTICS
COUNT
% within Group Type
% of Total
B
MANAGEMENT
COUNT
% within Group Type
% of Total
C
INDUSTRY
EXPERTS
COUNT
% within Group Type
% of Total
D
GOVERNMENT
COUNT
% within Group Type
% of Total
TOTAL
% WITHIN
STATEMENT
COUNT
% within Group Type
% of Total
STATEMENT 11: TRUST
STRONGLY
DISAGREE
NEUTRAL
DISAGREE
– NO
OPINION
AGREE
STRONGLY
AGREE
TOTAL %
WITHIN
GROUP
TYPE
1
15
1
12
1
30
3.3%
10.0%
0.5%
50.0%
20.3%
7.3%
3.3%
2.4%
0.5%
40.0%
17.4%
5.9%
3.3%
10.0%
0.5%
100.0%
14.6%
14.6%
6
5.7%
60.0%
2.9%
37
35.2%
50.0%
18.0%
20
19.0%
47.6%
9.8%
35
33.3%
50.7%
17.1%
7
6.7%
70.0%
3.4%
105
100.0%
51.2%
51.2%
3
5.5%
30.0%
1.5%
17
30.9%
23.0%
8.3%
18
32.7%
42.9%
8.8%
16
29.1%
23.2%
7.8%
1
1.8%
10.0%
0.5%
55
100.0%
26.8%
26.8%
0
0.0%
0.0%
0.0%
5
33.3%
6.8%
2.4%
3
20.0%
7.1%
1.5%
6
40.0%
8.7%
2.9%
1
6.7%
10.0%
0.5%
15
100.0%
7.3%
7.3%
10
4.9%
100.0%
4.9%
74
36.1%
100.0%
36.1%
42
20.5%
100.0%
20.5%
69
33.7%
100.0%
33.7%
10
4.9%
100.0%
4.9%
205
100.0%
100.0%
100.0%
245
Table 8.36: Weighted Average – Trust
1
2
3
4
5
TOT
WA
a'
1
30
3
48
5
87
2.9
b'
6
74
60
140
35
315
3
c'
3
34
54
64
5
160
2.909091
d'
0
10
9
24
5
48
3.2
3.002273
The Government group were most supportive in their view of Malaysian firms being
trusted in international markets. This is followed by the operations groups with the other
two groups offering similar views.
Outcome: Accordingly, as shown in Figure 8.16, there was partial support for the
Statement.
Figure 8.16: Responses to Statement 11 on “Trust”
38.60%
41.00%
Disagree
20.50%
Agree
8.2.17 Statement 12: On “Knowledgeable Resources”
Malaysian telecommunications firms have qualified staff with demonstrated knowledge
and capabilities to effectively operate in international markets.
246
As shown in Table 8.37, The overall Mean of 2.94 and the Standard Deviation of 1.058
indicated divided responses to this Statement. The Mean of 3.27 from the Government
Group implied that the Respondents believed that Malaysian telecommunications firms
have qualified staff for their international operations. However, this was rejected by the
Industry Experts who registered a Mean of 2.7 as well as the Operations and Management
Groups.
Table 8.37: Case Summary for Statement 12 on “Knowledgeable Resources”
GROUP TYPE
A
OPERATIONS
B
MANAGEMENT
C
INDUSTRY EXPERTS
D
GOVERNMENT
TOTAL
N
MEAN
MEDIAN
STANDARD
DEVIATION
30
2.97
3.00
1.098
105
2.97
3.00
1.105
55
2.76
3.00
.881
15
3.27
4.00
1.223
205
2.94
3.00
1.058
The cross tabulation of the Survey Responses to this Statement, shown in Table 8.38, also
reveals mixed responses with 40% of the Respondents disagreeing and another 40%
expressing support. Furthermore, 22.0% of the respondents remained neutral.
Knowledgeable resources are required to build intellectual capital for competitive
advantage in a global environment. Malaysian employees are rarely empowered to express
their views and opinions openly. In accordance with Schellekens (2011) Malaysia faces a
drastic skills shortage compounded by the Brain Drain. Furthermore, there is a disparity in
requirements between university graduates and industry needs.
247
Table 8.38: Cross Tabulation of Survey Responses to Statement 12 on
“Knowledgeable Resources”
STATEMENT 12: KNOWLEDGEABLE RESOURCES
STRONGLY
DISAGREE
STATISTICS
GROUP
TYPE
A
COUNT
% within Group Type
OPERATIONS
% of Total
B
COUNT
MANAGEMENT
% within Group Type
% of Total
C
COUNT
% within Group Type
INDUSTRY
EXPERTS
% of Total
D
COUNT
GOVERNMENT
% within Group Type
% of Total
COUNT
TOTAL
% WITHIN
STATEMENT
% within Group Type
% of Total
DISAGREE
NEUTRAL
– NO
OPINION
AGREE
STRONGLY
AGREE
TOTAL %
WITHIN
GROUP
TYPE
3
8
7
11
1
30
10.0%
20.0%
1.5%
26.7%
11.8%
3.9%
23.3%
15.6%
3.4%
36.7%
15.9%
5.4%
3.3%
12.5%
0.5%
100.0%
14.6%
14.6%
9
8.6%
60.0%
4.4%
33
31.4%
48.5%
16.1%
20
19.0%
44.4%
9.8%
38
36.2%
55.1%
18.5%
5
4.8%
62.5%
2.4%
105
100.0%
51.2%
51.2%
2
3.6%
13.3%
1.0%
23
41.8%
33.8%
11.2%
16
29.1%
35.6%
7.8%
14
25.5%
20.3%
6.8%
0
0.0%
0.0%
0.0%
55
100.0%
26.8%
26.8%
1
6.7%
6.7%
0.5%
4
26.7%
5.9%
2.0%
2
13.3%
4.4%
1.0%
6
40.0%
8.7%
2.9%
2
13.3%
25.0%
1.0%
15
100.0%
7.3%
7.3%
15
7.3%
100.0%
7.3%
68
33.2%
100.0%
33.2%
45
22.0%
100.0%
22.0%
69
33.7%
100.0%
33.7%
8
3.9%
100.0%
3.9%
205
100.0%
100.0%
100.0%
Table 8.39: Weighted Average – Knowledgeable Resources
1
2
3
4
5
TOT
WA
a'
3
16
21
44
5
89
2.966667
b'
9
66
60
152
25
312
2.971429
c'
2
46
48
56
0
152
2.763636
d'
1
8
6
24
10
49
3.266667
2.9921
248
Again, the Government group were most supportive in their view of Malaysian firms
having knowledgeable resources. This is followed by the operations and management
groups, while the industry experts were in least agreement with the statement.
Outcome: As shown in Figure 8.17 there was marginal support for this Statement, with a
significant number offering ‘no opinion’. The researcher therefore concluded that the
Survey respondents were divided on this Statement.
Figure 8.17: Responses to Statement 12 on “Knowledgeable Resources”
37.60%
40.50%
Disagree
22.00%
Agree
Malaysian Telecommunications firms that are internationalising face significant
challenges.
The combined Survey responses to Proposition 3 are shown in Figure 8.18. Proposition 3
was supported by over 60% of the Survey Participants who were of the view that
Malaysian telecommunications firms that are internationalising face significant challenges.
However, nearly a quarter of all respondents disagreed with this Statement with 13.7%
remaining neutral.
249
24.90%
Disagree
61.50%
13.70%
Agree
The combined responses by Groups are depicted in Table 8.40. The Table indicates modest
support from the Management and Industry Expert Groups while the Operations,
Government and Industry groups showed moderate support.
STATISTICS
GROUP TYPE
A
OPERATIONS
B
MANAGEMENT
C
INDUSTRY EXPERTS
D
GOVERNMENT
TOTAL
COUNT
% of Total
COUNT
% of Total
COUNT
% of Total
COUNT
% of Total
COUNT
% of Total
DISAGREE
NEUTRAL – NO
OPINION
AGREE
TOTAL
9
6
15
30
4.4%
2.9%
7.3%
14.6%
24
15
66
105
11.7%
7.3%
32.2%
51.2%
15
5
35
55
7.3%
2.4%
17.1%
26.8%
3
2
10
15
1.5%
1.0%
4.9%
7.3%
51
24.9%
28
13.7%
126
61.5%
205
100.0%
250
Proposition 3 was supported by over 61.50% of the Survey Participants who were of the
view that Malaysian telecommunications that are internationalising face significant
challenges. These challenges include adequate R&D for innovation, capable staff to be
part of an international team, leadership as well as build trust through brand and reputation
management. The survey participants show moderate support for statement 9, stronger
support for statement 10, were divided on statement 11, and were divided on statement 12.
Accordingly, as depicted in Figure 8.16, 61.50% supported the proposition.
8.2.20 Statement 13: On “Government Policies”
The Malaysian Government’s policies for the telecommunications sector create a
conducive environment to enable them to be key regional players.
As shown in Table 8.41, the overall Mean of 3.00 and Standard Deviation of 1.015
indicates mixed views on this Statement. However, it was supported by the Government
representatives.
251
Table 8.41: Case Summary for Statement 13 on “Government Policies”
GROUP TYPE
A
OPERATIONS
B
MANAGEMENT
C
INDUSTRY EXPERTS
D
GOVERNMENT
TOTAL
N
MEAN
MEDIAN
STANDARD
DEVIATION
30
3.07
3.00
.980
105
2.95
3.00
1.023
55
2.93
3.00
1.016
15
3.47
4.00
.990
205
3.00
3.00
1.015
Table 8.42 shows the cross tabulation of survey responses for Statement 13. It also shows
that the respondents have mixed views on Government Policies. While 39% agreed with
this Statement, 37.1% disagreed with it and 23.9% of all participants offered ‘no opinion’.
Although two thirds of the representatives from the Government Group expressed support,
this Statement was only partially supported. There are several Government policies to
support the Telecommunications industry; however, their adequacy to support regional
growth is in question. These policies were outlined in Chapter 2. While the Malaysian
Governments penchant for ICT remains, in comparison to its counterparts, it lags in
outward FDI flows (World Bank 2011).
252
Table 8.42: Cross Tabulation of Survey Responses to Statement 13 on “Government
Policies”
STATEMENT 13: GOVERNMENT POLICIES
STRONGLY
DISAGREE
STATISTICS
GROUP
TYPE
A
COUNT
% within Group Type
OPERATIONS
% of Total
B
COUNT
MANAGEMENT
% within Group Type
% of Total
C
COUNT
% within Group Type
INDUSTRY
EXPERTS
% of Total
D
COUNT
GOVERNMENT
% within Group Type
% of Total
COUNT
TOTAL
% WITHIN
STATEMENT
% within Group Type
% of Total
DISAGREE
NEUTRAL
– NO
OPINION
AGREE
STRONGLY
AGREE
TOTAL %
WITHIN
GROUP
TYPE
2
7
8
13
0
30
6.7%
18.2%
1.0%
23.3%
10.8%
3.4%
26.7%
16.3%
3.9%
43.3%
17.8%
6.3%
0.0%
0.0%
0.0%
100.0%
14.6%
14.6%
6
5.7%
54.5%
2.9%
36
34.3%
55.4%
17.6%
23
21.9%
46.9%
11.2%
37
35.2%
50.7%
18.0%
3
2.9%
42.9%
1.5%
105
100.0%
51.2%
51.2%
3
5.5%
27.3%
1.5%
18
32.7%
27.7%
8.8%
17
30.9%
34.7%
8.3%
14
25.5%
19.2%
6.8%
3
5.5%
42.9%
1.5%
55
100.0%
26.8%
26.8%
0
0.0%
0.0%
0.0%
4
26.7%
6.2%
2.0%
1
6.7%
2.0%
0.5%
9
60.0%
12.3%
4.4%
1
6.7%
14.3%
0.5%
15
100.0%
7.3%
7.3%
11
5.4%
100.0%
5.4%
65
31.7%
100.0%
31.7%
49
23.9%
100.0%
23.9%
73
35.6%
100.0%
35.6%
7
3.4%
100.0%
3.4%
205
100.0%
100.0%
100.0%
Table 8.43: Weighted Average – Government Policies
1
2
3
4
5
TOT
WA
a'
2
14
24
52
0
92
3.066667
b'
6
72
69
148
15
310
2.952381
c'
3
36
51
56
5
151
2.745455
d'
0
8
3
36
5
52
3.466667
3.057792
253
The Government group were most supportive in their view of the policies available to
support internationalisation. This view was less supported by the other groups.
Outcome: Figure 8.20 shows that the Survey respondents were divided on this Statement.
Figure 8.20: Responses to Statement 13 on “Government Policies”
37.10%
39.00%
Disagree
23.90%
Agree
8.2.21 Statement 14: On “Government Incentives”
The Malaysian Government has adequate measures and incentives to support the growth
and development of Malaysian telecommunications firms.
As shown in Table 8.44, the analysis of the data revealed an overall Mean of 2.92 and a
Standard Deviation of 1.007. While the Statement was rejected, it received support from
the Government and the Operations Group.
254
Table 8.44: Case Summary for Statement 14 on “Government Incentives”
GROUP TYPE
A
OPERATIONS
B
MANAGEMENT
C
INDUSTRY EXPERTS
D
GOVERNMENT
TOTAL
N
MEAN
MEDIAN
STANDARD
DEVIATION
30
3.00
3.00
1.017
105
2.84
3.00
1.020
55
2.95
3.00
.970
15
3.27
4.00
1.033
205
2.92
3.00
1.007
As shown in Table 8.45, the analysis of the data revealed an overall Mean of 2.92 and a
Standard Deviation of 1.007. While the Statement was rejected, it received support from
the Government and the Operations Group. While the Government has incentives and
measures to support the growth of the telecommunications sectors, much funding is tied in
red tape and preferential treatment given to Bumiputera firms in line with the NEP.
Accordingly, the sector’s growth in Malaysia has been hindered by the NEP (Salazar
2007).
255
Table 8.45: Cross Tabulation of Survey Responses to Statement 14 on “Government
Incentives”
STATEMENT 14: GOVERNMENT INCENTIVES
STRONGLY
DISAGREE
STATISTICS
GROUP
TYPE
A
COUNT
% within Group Type
OPERATIONS
% of Total
B
COUNT
MANAGEMENT
% within Group Type
% of Total
C
COUNT
% within Group Type
INDUSTRY
EXPERTS
% of Total
D
COUNT
GOVERNMENT
% within Group Type
% of Total
COUNT
TOTAL
% WITHIN
STATEMENT
% within Group Type
% of Total
DISAGREE
NEUTRAL
– NO
OPINION
AGREE
STRONGLY
AGREE
TOTAL %
WITHIN
GROUP
TYPE
2
9
6
13
0
30
6.7%
15.4%
1.0%
30.0%
13.8%
4.4%
20.0%
10.0%
2.9%
43.3%
22.0%
6.3%
0.0%
0.0%
0.0%
100.0%
14.6%
14.6%
7
6.7%
53.8%
3.4%
39
37.1%
60.0%
19.0%
27
25.7%
45.0%
13.2%
28
26.7%
47.5%
13.7%
4
3.8%
50.0%
2.0%
105
100.0%
51.2%
51.2%
4
7.3%
30.8%
2.0%
12
21.8%
18.5%
5.9%
25
45.5%
41.7%
12.2%
11
20.0%
18.6%
5.4%
3
5.5%
37.5%
1.5%
55
100.0%
26.8%
26.8%
0
0.0%
0.0%
0.0%
5
33.3%
7.7%
2.4%
2
13.3%
3.3%
1.0%
7
46.7%
11.9%
3.4%
1
6.7%
12.5%
0.5%
15
100.0%
7.3%
7.3%
13
6.3%
100.0%
6.3%
65
31.7%
100.0%
31.7%
60
29.3%
100.0%
29.3%
59
28.8%
100.0%
28.8%
8
3.9%
100.0%
3.9%
205
100.0%
100.0%
100.0%
Table 8.46: Weighted Average – Government Incentives
1
2
3
4
5
TOT
WA
a'
2
18
18
52
0
90
3
b'
7
78
81
112
20
298
2.838095
c'
4
24
75
44
15
162
2.945455
d'
0
10
6
28
5
49
3.266667
3.012554
256
The Government group were most supportive in their view that adequate incentives are
available to support internationalisation. This view was less supported by the other groups.
Outcome: The analysis of the data revealed that the Survey respondents remain divided on
this Statement
Figure 8.21: Responses to Statement 14 on “Government Incentives”
32.70%
38.00%
Disagree
29.30%
Agree
8.2.22 Statement 15: On “Government ’s Role”
Malaysian Government agencies can play a more proactive role for supporting the
internationalisation efforts of Malaysian telecommunications firms.
As shown in Table 8.47, the overall Mean of 4.01 indicates strong support for this
Statement. The low Standard Deviation of 0.786 suggests there was little variation
amongst the groups. The strongest support came from the Management Group with a
Mean of 4.10.
All groups were therefore of the view that Malaysian Government
Agencies can play a more active role in supporting the internationalisation efforts of
257
Table 8.47: Case Summary for Statement 15 on “Government’s Role”
GROUP TYPE
A
OPERATIONS
B
MANAGEMENT
C
INDUSTRY EXPERTS
D
GOVERNMENT
TOTAL
N
MEAN
MEDIAN
STANDARD
DEVIATION
30
3.77
4.00
.817
105
4.10
4.00
.808
55
3.95
4.00
.678
15
4.07
4.00
.884
205
4.01
4.00
.786
Over 80% of respondents supported this Statement as shown in Table 8.48. This shows
that more can be done by the Government to support Malaysian telecommunications firms
venturing overseas. Home and Host Governments are critical to the telecommunications
industry. While FDI outflows are on the increase, this is not reflective of the
telecommunications industry where only a few firms have internationalised. Accordingly,
the Government can support the growth of the industry with G2G relationships and bilateral trade agreements.
258
Table 8.48: Cross Tabulation of Survey Responses to Statement 15 on “Government’s
Role”
STATEMENT 15: GOVERNMENTS ROLE
STRONGLY
DISAGREE
STATISTICS
GROUP
TYPE
A
COUNT
OPERATIONS
% within Group Type
% of Total
B
COUNT
MANAGEMENT
% within Group Type
% of Total
C
COUNT
% within Group Type
INDUSTRY
EXPERTS
% of Total
D
COUNT
GOVERNMENT
% within Group Type
% of Total
TOTAL
% WITHIN
STATEMENT
COUNT
% within Group Type
% of Total
DISAGREE
NEUTRAL
– NO
OPINION
AGREE
STRONGLY
AGREE
TOTAL %
WITHIN
GROUP
TYPE
0
3
5
18
4
30
0.0%
0.0%
0.0%
10.0%
30.0%
1.5%
16.7%
19.2%
2.4%
60.0%
15.4%
8.8%
13.3%
7.8%
2.0%
100.0%
14.6%
14.6%
1
1.0%
100.0%
0.5%
3
2.9%
30.0%
1.5%
14
13.3%
53.8%
6.8%
53
50.5%
45.3%
25.9%
34
32.4%
66.7%
16.6%
105
100.0%
51.2%
51.2%
0
0.0%
0.0%
0.0%
3
5.5%
30.0%
1.5%
5
9.1%
19.2%
2.4%
39
70.9%
33.3%
19.0%
8
14.5%
15.7%
3.9%
55
100.0%
26.8%
26.8%
0
0.0%
0.0%
0.0%
1
6.7%
10.0%
0.5%
2
13.3%
7.7%
1.0%
7
46.7%
6.0%
3.4%
5
33.3%
9.8%
2.4%
15
100.0%
7.3%
7.3%
1
0.5%
100.0%
0.5%
10
4.9%
100.0%
4.9%
26
12.7%
100.0%
12.7%
117
57.1%
100.0%
57.1%
51
24.9%
100.0%
24.9%
205
100.0%
100.0%
100.0%
Table 8.49: Weighted Average – Governments Role
1
2
3
4
5
TOT
WA
a'
0
6
15
72
20
113
3.766667
b'
1
6
42
212
170
431
4.104762
c'
0
6
15
156
40
217
3.945455
d'
0
2
6
28
25
61
4.066667
3.970887
259
All groups agreed that the Government can play a more active role in Malaysian firms
internationalisation efforts. The most support is from Government and operations groups.
Outcome: This Statement was strongly supported.
Figure 8.22: Responses to Statement 15 on “Governments Role”
5.40%
12.70%
Disagree
82.00%
Agree
8.2.23 Statement 16: On “Independent Regulation”
The Malaysian Government has a strong administrative machinery to enhance the
competitive positioning of Malaysian telecommunications firms that are competing in the
global arena.
As shown in Table 8.50, the overall Mean of 2.58 reflected the rejection of this Statement.
Furthermore, The low Standard Deviation of 0.995 suggests there was little variation
amongst the groups,
Apart from the representatives
in the Government Group, the
responses imply that the Malaysian Government does not have a strong administrative
machinery to enhance the competitive positioning of Malaysian telecommunications firms
in the global arena.
260
Table 8.50: Case Summary for Statement 16 on “Independent Regulation”
GROUP TYPE
A
OPERATIONS
B
MANAGEMENT
C
INDUSTRY EXPERTS
D
GOVERNMENT
TOTAL
N
MEAN
MEDIAN
STANDARD
DEVIATION
30
2.60
2.50
.968
105
2.51
2.00
.982
55
2.53
2.00
.959
15
3.13
3.00
1.187
205
2.58
2.00
.995
Table 8.51 shows the cross tabulation of responses. Over half of the Survey participants
disagreed with this Statement. This implies that it is perceived that the regulatory authority
could do more to support the industry in Malaysia. A fifth of respondents remained neutral
on the statement while 20% supported the Statement. The regulatory authority in Malaysia
was one of the most advanced in the world as it was the first to address convergence in
1998. However, ongoing interference from Government to support the goals of the NEP
has resulted in a regulatory body with a perception of being bureaucratic, outdated policies
and ineffective in its role as a regulator.
261
Table 8.51: Cross Tabulation of Survey Responses to Statement 16 on “Independent
Regulation”
STATEMENT 16: INDEPENDENT REGULATION
STATISTICS
GROUP
TYPE
A
STRONGLY
DISAGREE
DISAGREE
3
COUNT
% within Group Type
OPERATIONS
% of Total
B
COUNT
MANAGEMENT
% within Group Type
% of Total
C
COUNT
% within Group Type
INDUSTRY
EXPERTS
% of Total
D
COUNT
GOVERNMENT
% within Group Type
% of Total
TOTAL
% WITHIN
STATEMENT
COUNT
% within Group Type
% of Total
NEUTRAL
– NO
OPINION
AGREE
STRONGLY
AGREE
TOTAL %
12
10
4
1
30
10.0%
13.6%
1.5%
40.0%
13.2%
5.9%
33.3%
20.0%
4.9%
13.3%
11.1%
2.0%
3.3%
16.7%
0.5%
100.0%
14.6%
14.6%
12
11.4%
54.5%
5.9%
50
47.6%
54.9%
24.4%
22
21.0%
44.0%
10.7%
19
18.1%
52.8%
9.3%
2
1.9%
33.3%
1.0%
105
100.0%
51.2%
51.2%
6
10.9%
27.3%
2.9%
25
45.5%
27.5%
12.2%
14
25.5%
28.0%
6.8%
9
16.4%
25.0%
4.4%
1
1.8%
16.7%
0.5%
55
100.0%
26.8%
26.8%
1
6.7%
4.5%
0.5%
4
26.7%
4.4%
2.0%
4
26.7%
8.0%
2.0%
4
26.7%
11.1%
2.0%
2
13.3%
33.3%
1.0%
15
100.0%
7.3%
7.3%
22
10.7%
100.0%
10.7%
91
44.4%
100.0%
44.4%
50
24.4%
100.0%
24.4%
36
17.6%
100.0%
17.6%
6
2.9%
100.0%
2.9%
205
100.0%
100.0%
100.0%
WITHIN
GROUP
TYPE
Table 8.52: Weighted Average – Independent Regulation
1
2
3
4
5
TOT
WA
a'
3
24
30
16
5
78
2.6
b'
12
100
66
76
10
264
2.514286
c'
6
50
42
36
5
139
2.527273
d'
1
8
12
16
10
47
3.133333
2.693723
262
The Government supported this statement, however, the other groups were less supportive.
Outcome: Overall, this statement is rejected as shown in Figure 8.23.
Figure 8.23: Responses to Statement 16 on “Independent Regulation”
20.50%
Disagree
24.40%
55.20%
Agree
The Malaysian Government is fully supportive of the efforts of the Malaysian
Telecommunications sector to internationalise their operations.
The combined Survey responses to Proposition 4 are shown in Figure 8.24. As it was
supported by just over half of the survey participants, it indicates that the Malaysian
Government is fully supportive of the efforts of the Malaysian telecommunications firms
to internationalise their operations. It is however significant that 38% of all respondents
disagreed with this Statement, with another 10% remaining neutral.
263
38.00%
Disagree
51.70%
10.20%
Agree
The combined responses by Groups are depicted in Table 8.53. The Table indicates there
was moderate support from all groups except representatives from the Government Group
who showed modest support.
STATISTICS
GROUP TYPE
A
OPERATIONS
B
MANAGEMENT
C
INDUSTRY EXPERTS
D
GOVERNMENT
TOTAL
COUNT
% of Total
COUNT
% of Total
COUNT
% of Total
COUNT
% of Total
COUNT
% of Total
DISAGREE
NEUTRAL – NO
OPINION
AGREE
TOTAL
11
4
15
30
5.4%
2.0%
7.3%
14.6%
41
8
56
105
20.0%
3.9%
27.3%
51.2%
22
8
25
55
10.7%
3.9%
12.2%
26.8%
4
1
10
15
2.0%
0.5%
4.9%
7.3%
78
38.0%
21
10.2%
106
51.7%
205
100.0%
264
Majority of participants rejected that “The Malaysian Government has a strong
administrative machinery to enhance the competitive positioning of Malaysian
telecommunications firms that are competing in the global arena”.
In line with Wong (2011), while the Malaysian Government has good policy intentions in
formulating support measures to promote the competitive positioning of all Malaysian
service industries, its activities were viewed as being unfocused, diffused and ineffective.
The pertinent policies failing the sector include:
(i). Regulatory Policies: The regulatory authority appears to be non-independent and
passive and overall it is viewed that much more could be done to improve regulation of the
sector in Malaysia to support internationalisation.
(ii). The NEP still impacts the sector as reflected by the case of issuance of the nine LTE
licences in 2011.
265
(iii). Bi-lateral Trade Agreements can support and facilitate market entry for Malaysian
(iv). Market Structure: The Government needs to present an open market structure
supporting a competitive environment.
(v). Funding: For Research; training and development to support knowledgeable resources
and marketing.
The survey participants were divided on statement 13 and 14, strongly supported statement
15, and rejected statement 16. Accordingly, as depicted in Figure 8.25, minimal support
for the proposition.
266
8.2.26 Summary of the Survey Responses
A summary of the Survey Responses to each statement is shown in Table 8.54.
Table 8.54: Summary of Survey Responses
#
Construct
Tested
Response
Outcome
1
Malaysian telecommunications firms are well positioned
to achieve sustainable competitive advantage in the
highly competitive global telecommunications sector.
Malaysian telecommunications firms have the strategic
capabilities to accommodate the changes in the global
telecommunications industry.
The intense competition in a saturated domestic market
compels Malaysian telecommunications firms to venture
into overseas markets.
Malaysian telecommunications firms are meeting the
challenges presented by changing consumer demands in
the global marketplace by providing new products and
services.
PROPOSITION 1
Emerging countries with low penetration rates and high
growth potential are the preferred investment destinations
for Malaysian telecommunications firms.
Malaysian telecommunications firms have the required
global strategic outlook to successfully venture into
telecommunications firms take full account of the risk
factors in the targeted international markets.
Positioning
48.7% Agreed
13.7% Neutral
37.5.% Disagreed
52.6% Agreed
16.1% Neutral
31.2% Disagreed
72.2% Agreed
12.2% Neutral
14.6% Disagreed
54.7% Agreed
17.1% Neutral
28.3% Disagreed
Divided
82.0% Agreed
10.2% Neutral
7.8% Disagreed
50.2% Agreed
18.0% Neutral
31.7% Disagreed
40% Agreed
34.1% Neutral
25.9% Disagreed
Strong Support
Malaysian telecommunications firms have strong external
networks and effective foreign partnerships for
successfully venturing into new international markets.
Network
Relationships
43.4% Agreed
19.5% No Opinion
37% Disagreed
Mixed Views
Leadership
54.9% Agreed
18.5% Neutral
26.4% Disagreed
67.4% Agreed
18.0% Neutral
14.7% Disagree
38.6% Agreed
20.5% Neutral
41% Disagreed
Moderate Support
2
3
4
5
6
7
8
9
10
11
PROPOSITION 2
Malaysian telecommunications firms are not giving
adequate emphasis to research and development for
creating innovative market driven products and services.
overseas markets.
Capability
Strategic Intent
Customer
Orientation
Market Selection
Global Outlook
Risk
Insight
Trust
Moderate Support
Modest Support
Moderate Support
Mixed Views
Mixed Views
Modest Support
Divided
12
Malaysian telecommunications firms have qualified staff
with demonstrated knowledge and capabilities to
effectively operate in international markets.
PROPOSITION 3
Knowledgeable
Human
Resources
37.6% Agreed
22.0% Neutral
40.5% Disagreed
Divided
13
environment to enable them to become key regional
players.
The Malaysian Government has adequate measures and
incentives to support the growth and development of
proactive role for supporting the internationalisation
efforts of Malaysian telecommunications firms.
The Malaysian Government has a strong administrative
machinery to enhance the competitive positioning of
Malaysian telecommunications firms that are competing
in the global arena.
PROPOSITION 4
Policies
39% Agreed
23.9% Neutral
37.1% Disagreed
Divided
Incentives
32.7% Agreed
29.3% Neutral
38% Disagreed
82% Agreed
12.7% Neutral
5.4% Disagreed
20.5% Agree
24.4% Neutral
55.10% Disagreed
Divided
14
15
16
Role
Independent
Regulation
Modest
Support
–
Strong
Rejected
267
The next section discusses the Confirmatory stage of this research. It begins with
reliability testing using Cronbachs Alpha. It then adopts a three-stage SEM approach. The
first stage, uses CFA to test and refine the factors. The second is a measurement model
which tests the relationships among the variables. The third is a structural model which
assesses the relationships and the level of influence of the variables in the model.
8.3 Triangulation of the Findings
To strengthen the validity of the findings in this mixed methods approach, the findings of
the content analysis of the personal interviews were triangulated against the web survey
responses. As shown in Table 8.55 below, the researcher explored the alignment in
opinions of the web survey participants with the interview participants. The final column
presents the triangulated responses in terms of concurrence and divergence.

The analysis revealed that the respondents from the web survey and with the interview
participants adopted common positions in respect of 13 scripted web statements. They
had divergent views on the remaining three statements as follows.

The web survey participants were of the view that Malaysian telecommunications
firms have the strategic capabilities to accommodate the changes in the global
telecommunications industry. The interview respondents had an opposing view.

Although the web survey participants were of the view that Malaysian
telecommunications firms are meeting the challenges presented by consumer demand
in the global marketplace, the interview participants had contrary views.
There was also a deviation of views of Statement 10. The interview participants and the
web survey participants had differing views on the emphasis given by Malaysian
telecommunications firms to research and development for creating innovative market
driven products and services and were unable to agree on this point.
Significantly, the participants in the web survey and in the interviews jointly disagreed and
rejected statements 7-8, statements 11-14 and statement 16. This implies that
268

there were divided views in propositions 2 and 3 and

they rejected proposition 4 which stated that The Malaysian Government is fully
supportive of the efforts of the Malaysian telecommunications sector to
internationalise their operations
269
Table 8.55: Triangulation of the Findings:
Proposition
Interview
Web
Survey
Triangulated
Findings
The
dynamic
changes in the global
telecommunications
industry have a
strong influence on
the
competitive
strategies
of
Malaysian
telecommunications
firms
1
Disagreed
Disagreed
Concurred
Disagreed
Agreed
Divergent
Agreed
Agreed
Concurred
Disagreed
Agreed
Divergent
Agreed
Agreed
Concurred
Agreed
Agreed
Concurred
Disagreed
Disagreed
Concurred
Disagreed
Disagreed
Concurred
Agreed
Agreed
Concurred
Disagreed
Agreed
Divergent
Disagreed
Disagreed
Concurred
Disagreed
Disagreed
Concurred
Disagreed
Disagreed
Concurred
Disagreed
Disagreed
Concurred
Agreed
Agreed
Concurred
Disagreed
Disagreed
Concurred
2
3
4
Malaysian
telecommunications
firms have
appropriate strategies
for successfully
internationalising
their operations
5
6
7
8
Malaysian
telecommunications
firms that are
internationalising
their operations face
significant
challenges.
9
10
11
12
The Malaysian
Government is fully
supportive of the
efforts of the
Malaysian
telecommunications
sector to
internationalise their
operations
13
14
15
16
Malaysian telecommunications firms are well
positioned to achieve sustainable competitive
advantage in the highly competitive global
strategic capabilities to accommodate the changes
in the global telecommunications industry.
The intense competition in a saturated domestic
market compels Malaysian telecommunications
firms to venture into overseas markets.
Malaysian telecommunications firms are meeting
the challenges presented by changing consumer
demands in the global marketplace by providing
new products and services
Emerging countries with low penetration rates and
high growth potential are the preferred investment
destinations for Malaysian telecommunications
firms.
required global strategic outlook to successfully
venture into international markets.
telecommunications firms take full account of the
risk factors in the targeted international markets.
Malaysian telecommunications firms have strong
external networks and effective foreign
partnerships for successfully venturing into new
international markets
Malaysian telecommunications firms are not
giving adequate emphasis to research and
development for creating innovative market driven
products and services.
overseas markets.
Malaysian telecommunications firms have
qualified staff with demonstrated knowledge and
capabilities to effectively operate in international
markets.
environment to enable them to become key
regional players.
The Malaysian Government has adequate
measures and incentives to support the growth and
development of Malaysian telecommunications
firms.
proactive
role
for
supporting
the
efforts
of
Malaysian
The Malaysian Government has a strong
administrative machinery to enhance the
competitive
positioning
of
Malaysian
telecommunications firms that are competing in
the global arena.
270
8.4 Reliability of the Sample Data and the Variables
This Section addresses the reliability of the data and the variables. The reliability of valid
measures is dependent on internal consistency and dimensionality of measurement scales.
By establishing reliability and validity of measures the researcher minimises errors.
The statistical reliability of the measures was assessed by testing internal consistency and
reliability of the measurement scale before subjecting the items to validation analysis. The
constructs for this study were defined in Section 6.5.1 Cronbach’s alpha was used to
estimate the reliability of the measures (Cronbach 1951). Cronbach’s Alpha coefficient
measures the correlation of scale items and the strength of relationships between one item
and others in the scale (Kenny 2009). There are differing schools of thought on Cronbach’s
Alpha coefficient output. While Hair et al (2006) consider alpha values > 0.6 acceptable,
Nunnally, (1978) consider > 0.7 to be adequate and Bryman and Bell (2003) consider 0.80
being ‘acceptable’ and 0.90 is considered ‘excellent’ (Bentler & Chou 1987).
Table 8.56 below shows the alpha values for the constructs defined in this study. These
are, Dynamic Market Landscape, Strategy, Challenges and Government. All constructs
had values of over 0.7 and therefore all constructs were considered to be internally
consistent and reliable.
Table 8.56: Additional Comments provided by Web Survey Participants
VARIABLE TYPE
INDEPENDENT
OUTCOME
INDEPENDENT
MODERATING
VARIABLE NAME
CRONBACH’S ALPHA
DYNAMIC MARKET
LANDSCAPE
STRATEGY
CHALLENGES
GOVERNMENT
.852
.771
.849
.873
271
8.4.1 Reliability of “Dynamic Market Landscape”
Table 8.57: Reliability Measure For “Dynamic Market Landscape” Variable
CASE
PROCESSING
SUMMARY
Valid
Excluded (a)
Total
N
%
205
0
205
100.0
0
100.0
(a) Listwise deletion based on all variables in the procedure
RELIABILITY
STATISTICS
ITEM
STATISTICS
ITEM TOTAL
STATISTICS
CRONBACH’S
ALPHA
N OF ITEMS
.852
4
ITEM
MEAN
STANDARD
DEVIATION
N
Positioning
Capability
Strategic Intent
Customer
Orientation
3.88
3.77
3.81
3.76
.808
.841
.862
.867
205
205
205
205
ITEM
SCALE MEAN
IF ITEM
DELETED
SCALE
VARIANCE IF
ITEM DELETED
CORRECTED
ITEM – TOTAL
CORRELATION
CRONBACH’S
ALPHA IF ITEM
DELETED
Positioning
Capability
Strategic Intent
Customer
Orientation
11.34
11.45
11.41
11.46
4.795
4.778
4.646
4.456
.696
.660
.679
.739
.811
.826
.818
.792
272
8.4.2 Reliability of “Strategy”
Table 8.58: Reliability Measure For “Strategy” Variable
CASE
PROCESSING
SUMMARY
Valid
Excluded (a)
Total
N
%
205
0
205
100.0
0
100.0
RELIABILITY
STATISTICS
ITEM
STATISTICS
ITEM TOTAL
STATISTICS
CRONBACH’S
ALPHA
N OF ITEMS
.849
4
ITEM
MEAN
STANDARD
DEVIATION
N
Market
Selection
Global Strategic
Outlook
Risk Factors
Network
Relationships
3.96
.859
205
3.94
.823
205
3.91
3.95
.878
.856
205
205
ITEM
SCALE MEAN
IF ITEM
DELETED
SCALE
VARIANCE IF
ITEM DELETED
CORRECTED
ITEM – TOTAL
CORRELATION
CRONBACH’S
ALPHA IF ITEM
DELETED
Market
Selection
Global Strategic
Outlook
Risk Factors
Network
Relationships
11.80
4.742
.684
.810
11.81
4.877
.684
.810
11.84
11.80
4.750
4.631
.658
.726
.822
.792
273
8.4.3 Reliability of “Challenges”
Table 8.59: Reliability Measure For “Challenges” Variable
CASE
PROCESSING
SUMMARY
Valid
Excluded (a)
Total
N
%
205
0
205
100.0
0
100.0
RELIABILITY
STATISTICS
ITEM
STATISTICS
ITEM TOTAL
STATISTICS
CRONBACH’S
ALPHA
N OF ITEMS
.771
4
ITEM
MEAN
STANDARD
DEVIATION
N
Leadership
Insight
Trust
Knowledgeable
Resources
3.87
3.92
3.85
3.83
1.061
1.050
1.075
1.076
205
205
205
205
ITEM
SCALE MEAN
IF ITEM
DELETED
SCALE
VARIANCE IF
ITEM DELETED
CORRECTED
ITEM – TOTAL
CORRELATION
CRONBACH’S
ALPHA IF ITEM
DELETED
Leadership
Insight
Trust
Knowledgeable
Resources
11.61
11.56
11.62
11.64
6.514
6.523
6.549
6.495
.579
.587
.557
.568
.714
.709
.725
.719
274
8.4.4 Reliability of “Government”
Table 8.60: Reliability Measure For “Government” Variable
CASE
PROCESSING
SUMMARY
Valid
Excluded (a)
Total
N
%
205
0
205
100.0
0
100.0
RELIABILITY
STATISTICS
ITEM
STATISTICS
ITEM TOTAL
STATISTICS
CRONBACH’S
ALPHA
N OF ITEMS
.873
4
ITEM
MEAN
STANDARD
DEVIATION
N
Policies
Incentives
Governments
Role
Independent
Regulation
3.90
3.95
3.93
.843
.898
.934
205
205
205
3.94
.886
205
ITEM
SCALE MEAN
IF ITEM
DELETED
SCALE
VARIANCE IF
ITEM DELETED
CORRECTED
ITEM – TOTAL
CORRELATION
CRONBACH’S
ALPHA IF ITEM
DELETED
Policies
Incentives
Governments
Role
Independent
Regulation
11.81
11.76
11.78
5.606
5.408
5.388
.720
.712
.676
.841
.843
.859
11.77
5.148
.810
.804
275
8.5 Confirmatory Factor Analysis of Propositions
Confirmatory factor analysis (CFA) is used to test and refine measures by testing the unidimensionality of each factor. It measures the relationships of indicators (observed
variables) to factors (latent variables). Latent variables may be correlated or be constrained
to 0 covariance (orthogonal factors).
In CFA, the analysis is based on error terms of the observed variables. It focuses on the
consistency of the hypothesised factor structure with the correlation among the variables. It
evaluates constructs and convergent validity of the measures. The CFA approach restricts
which indicator will be loaded on which factor. It also specifies which factors will be
correlated (Kenny 2009). In a one factor standard model where each factor has three or
more indicators, each indicator is specified to load only one factor and all factors are
allowed to correlate with each other. Error terms are specified to be uncorrelated. (Hair et
al. 2010). A multi-factor model involves each factor having two or more indicators.
The traditional chi-square measure is unsuitable for small sample sizes as it may not yield
a valid test of model fit (Bentler 1990). Accordingly, in addition to the chi-square,
multiple measures were used to assess goodness of fit between the data and the model
interrelations (Kline 2005). As discussed in Section 6.6.3, these additional measures were
the CFI, p Value, GFI and RMSEA. These were then used to assess the CFA on each
factor. The actual factor loadings were taken into consideration, rather than assuming that
each item is equally weighted in the composite load determination. These are discussed
next.
276
8.5.1 CFA on Proposition 1: “Dynamic Market Landscape”
The result of the estimation of the CFA on Dynamic Market Landscape is shown in Table
8.61.
Table 8.61: Goodness of Fit of Dynamic Market Landscape
DYNAMIC
MARKET
LANDSCAPE
CONSTRUCTS (N=4)
STANDARDISED
REGRESSION
WEIGHT
Positioning
Capability
Strategic Intent
Customer
Orientation
0.77
0.72
0.75
0.83
MODEL FIT INDICATOR
CMIN (x2)
DF
CMIN/DF
P VALUE
0.779
2
0.389
0.677
GFI
RMSEA
0.998
0.000
The model fit indices showed that all items were loaded on their specified constructs and
that the data fit of the measurement and the model are valid. Guided by Hair et al, (2006),
this is supported by the chi-square/df = 0.389; P = 0.677; GFI = 0.995 and RMSEA =
0.000.
The CFA of Dynamic Market Landscape was then conducted on the four items as shown
in Figure 8.26. The validity of the items as the factor loading, as demonstrated by the P
Value exceeded 0.5, therefore the data fitted the model.
Figure 8.26: CFA on Dynamic Market Landscape: Proposition 1
Standardized estimates
Chi-Square : .779
DF
:2
Ratio
: .389
P Value
: .677
GFI
: .998
RMSEA
: .000
Positioning
e5
Capability
e6
Strategic
Intent
e7
Customer
Orientation
e8
.77
.72
Dynamic Market
Landscape
.75
.83
277
8.5.2 CFA on Proposition 2: “Strategy”
The result of the estimation of the CFA on Strategy is shown in Table 8.62.
Table 8.62: Goodness of Fit of Strategy
STRATEGY
CONSTRUCTS (N=4)
STANDARDISED
REGRESSION
WEIGHT
MODEL FIT INDICATOR
Market
Selection
Global Strategic
Outlook
Risk Factors
Network
Relationships
0.76
CMIN (x2)
4.384
0.76
DF
2
0.73
0.81
CMIN/DF
P VALUE
2.192
0.112
GFI
RMSEA
0.989
0.076
The model fit indices showed that all items loaded on their specified constructs and that
the data fit of the measurement and the model are valid. Guided by Hair et al, (2006), this
is supported by the chi-square/df = 2.192; P = 0.112; GFI = 0.989 and RMSEA = 0.076.
The CFA of Strategy was then conducted on the four items as shown in Figure 8.27. The
validity of the items as the factor loading, as demonstrated by the P Value exceeded 0.5,
therefore the data fitted the model.
Figure 8.27: CFA on Strategy: Proposition 2
Chi-Square : 4.384
DF
:2
Ratio
: 2.192
P Value
: .112
GFI
: .989
RMSEA
: .076
.76
.76
Strategies
Market
Selection
e13
Global
Outlook
e14
Risk
e15
Network
Relationship
e16
.73
.81
278
8.5.3 CFA on Proposition 3: “Challenges”
The result of the estimation of the CFA on Challenges is shown in Table 8.63.
Table 8.63: Goodness of Fit of Challenges
CHALLENGES
CONSTRUCTS (N=4)
STANDARDISED
REGRESSION
WEIGHT
Leadership
Insight
Trust
Knowledgeable
Resources
0.67
0.65
0.70
0.69
MODEL FIT INDICATOR
CMIN (x2)
DF
CMIN/DF
P VALUE
0.471
2
0.236
0.79
GFI
RMSEA
0.999
0.000
The CFA of Challenges was then conducted on the four items as shown in Figure 8.28.
The validity of the items as the factor loading, as demonstrated by the P Value exceeded
0.5, therefore the data fitted the model.
Figure 8.28: CFA on Challenges: Proposition 3
e12
e11
Knowledgeable
Resources
.67
.65
Trust
.70
e10
Insight
e9
Leadership
.69
Challenges
Chi-Square : .471
DF
:2
Ratio
: .236
P Value
: .790
GFI
: .999
RMSEA
: .000
279
8.5.4 CFA on Proposition 4: “Government”
The result of the estimation of the CFA on Government is shown in Table 8.64.
Table 8.64: Goodness of Fit of Government
GOVERNMENT
CONSTRUCTS (N=4)
STANDARDISED
REGRESSION
WEIGHT
MODEL FIT INDICATOR
Policies
Incentives
Governments
Role
Independent
Regulation
0.90
0.73
0.77
CMIN (x2)
DF
CMIN/DF
1.108
2
0.554
0.79
P VALUE
0.575
GFI
RMSEA
0.997
0.000
The CFA of Government was then conducted on the four items as shown in Figure 8.29.
The validity of the items as the factor loading, as demonstrated by the P Value exceeded
0.5, therefore the data fitted the model.
Figure 8.29: CFA on Government: Proposition 4
e4
e3
Independent
Regulation
.90
Government
Role
.73
.77
e2
Incentives
e1
Policies
.79
Government
Chi-Square : 1.108
DF
:2
Ratio
: .554
P Value
: .575
GFI
: .997
RMSEA
: .000
280
8.6 Generated SEM Models
The second stage of the analysis was conducted with a structural equation model (SEM) as
it increases reliability and validity by providing the ability to analyse the relationships
between observed and latent variables. Regression may be preferred to structural equation
modelling when there are substantial departures from the SEM assumptions of multivariate
normality of the indicators and/or small sample sizes, and when measurement error is less
of a concern because the measures have high reliability (Jaccard & Wan 1996). The model
in this research was based on a complete path model as all the variables are measured by
multiple indicators (Hair et al. 2010). These have associated error terms in addition to the
residual error factor associated with the latent dependent variable. The Summary of the
Goodness of fit indices of the variables, as shown in Table 8.65 below, indicates that the
items were valid and reliable.
Table 8.65: Summary of Goodness of Fit indices of Variables
GOODNESS OF FIT
RATIO
P VALUE
(CMIN/DF)
VARIABLE
CHI-SQUARE
CMIN2
DF
Dynamic
Market
Landscape
Strategy
Challenges
Government
0.779
2
0.389
4.383
0.471
1.108
2
2
2
2.192
0.236
0.554
GFI
RMSEA
0.677
0.998
0.000
0.112
0.79
0.575
0.989
0.999
0.997
0.076
0.000
0.000
A generated model was extracted after the CFA order analysis in which all the constructs
were measured and accepted as a good model fit.
As shown the constructs, that emerged from the exploratory stage of this study for each of
the four variables of Dynamic Market Landscape, Challenges, Strategy and Government.
The four constructs for each of these four variables are shown in Table 8.66. as follows:
281
Table 8.66: Summary of Variables and Constructs
Variable
Constructs
Dynamic Market Landscape

Positioning

Capability

Strategic Intent

Customer Orientation

Market Selection

Global Outlook

Risk

Network Relationships

Knowledgeable Resources

Trust

Insight

Leadership

Independent Regulation

Government Role

Incentives

Policies
Strategy
Challenges
Government
As shown in Figure 8.30. The SEM model is presented in a diagram in which the measured
variables, indicators, are in rectangles and the factors, latent variables are in ellipses and
residual terms are circles. The lines connecting these depict causal relationships. A single
arrowhead represents unidirectional causation, from a latent variable to its indicators and a
double headed arrow represent correlations between indicators or exogenous latents. Path
coefficient values are placed on the arrows from latent to indicators, or from one latent to
another, or from an error term to an indicator or from a residual term to a latent (Bryne
2010). A sample covariance matrix is calculated from the path coefficients using the
multiplication rule in path analysis: the effect size of a path is the product of its path
coefficients. The multiplication rule for any given model generates the implied matrix,
from which the actual covariance matrix is subtracted, yielding the residual matrix (Hair et
282
al, 1998). The smaller the value in the residual matrix, the better fitting the model. The
hypothesised model is shown in Figure 8.30.
Figure 8.30: Generated SEM Model
e5
e6
e7
.59
.52
Positioning
.56
.72
.75
.70
Customer
Orientation
Strategic
Intent
Capability
.77
e8
.83
Dynamic Market
Landscape
.22
.80
e4
Independent
Regulation
e3
Government
Role
.52
.53
.89
.43
.73
.60
Incentives
.63
e1
Strategies
.79
.72
Global
Outlook
.67
.76
Policies
.31
Challenges
.67
Market
Selection
.71
.54
Government
.77
e2
R01
.64
.45
.68
.71
.41
.50
.47
Knowledgeable
Resources
Trust
Insight
Leadership
e12
e11
e10
e9
e13
.50
e14
.45
e15
Risk
.58
Network
Relationship
e16
Chi-Square : 294.785
DF
: 101
Ratio
: 2.919
P Value
: .000
GFI
: .851
RMSEA
: .097
Figure 8.30 shows that the preliminary conclusions that can be drawn from this model
indicate that the Dynamic Market Landscape, Government and Challenges are predictors
on Strategy. The generated model confirmed the influence of Government (Factor Loading
= 0.54) as being greater than Dynamic Market Landscape (Factor Loading = 0.22) and
Challenges (Factor Loading = 0.31). The results of the overall fit are shown in Table 8.67
below.
283
Table 8.67: Goodness of Fit of Generated Model
Generated
Model
CHI-SQUARE
CMIN2
DF
294.785
101
GOODNESS OF FIT
RATIO
P VALUE
(CMIN/DF)
2.919
0.000
GFI
RMSEA
0.851
0.097
A good model fit should result in the following values: P>0.05; GFI>0.90 and
RMSEA<0.08. Accordingly, the values in the generated model indicated a poor model fit.
While the model confirmed the influence of the three predictors on Strategy, it is based on
linear relationships and does not consider the interrelationships between the variables. The
generated model was tested again for the goodness of fit. This resulted in a re-specified
model which is discussed next.
8.6.1 Re-specified Model
The Re-specified model as shown in Figure 8.31 links the observed variables to the latent
variables. . The analysis of the data for each of the regression weights, and each construct
resulted in a P value of 0.000 which indicates that all the items were significant.
Additionally, the factor loading for each construct was >0.5 indicating convergent validity.
The data also revealed a correlation among the variables. The highest correlation is
between Challenges and Government which is estimated at 0.81, followed by Government
and Strategy estimated at 0.73 with the lowest correlation between Dynamic Market
Landscape and Strategy, estimated at 0.56. The variances explains the interaction among
the four variables and how well they fit to explain the propositions. The data revealed that
the highest variance was indicated by the Government Variable at 61.7% with Challenges
at 53.1% followed by Strategy at 47.6% with Dynamic Market Landscape registering a
variance of 38.1%.
284
Figure 8.31: Re-specified Model
e5
e6
e7
e8
Positioning
Capability
Strategic
Intent
Customer
Orientation
.71
.77
.78
.82
Dynamic Market
Landscape
e20
.59
Policies
.81
e19
.76
Incentives
Government
.72
e18
Government
Role
e17
Independent
Regulation
.89
.63
.81
e12
Knowledgeable
Resources
e11
Trust
e10
Insight
e9
Leadership
.66
.56
Chi-Square : 94.898
DF
: 98
Ratio
: .968
P Value
: .570
GFI
: .946
RMSEA
: .000
.73
.65
Challenges
.70
.69
.70
Strategy
.77
.76
.72
.81
Market
Selection
Global
Outlook
Risk
Network
Relationship
e16
e15
e14
e13
Therefore, with the P value of 0.000 indicates that all items are significant and the data fits
the model as shown in Table 8.68 below.
Table 8.68: Goodness of Fit of Re-specified Model
CHI-
DF
RATIO
(CMIN/DF)
P VALUE
98
0.968
0.570
SQUARE
CMIN2
Generated
Model
94.898
GOODNESS OF FIT
GFI
AGFI
0.946
0.925
NFI
RMSEA
0.945
0.000
285
Accordingly, the values in the Measurement model indicate convergent validity of the
model. All scores fell within the acceptable parameter of 0.7 and the P value is above 0.05
(Hair et al, 2010; Bryne 2010). The loadings of the measurements and GFI’s confirmed
the interaction among predictors on the outcome variable. The research succeeded in
supporting the fundamental findings of Challenges and Dynamic Market Landscape with
Government being a moderating factor on Internationalisation Strategy.
Hypothesis 1
The Dynamic Market Landscape influences Internationalisation strategy.
Hypothesis 2
Internationalisation Strategy is influenced by the Dynamic Market Landscape, the ability
to overcome Challenges.
Hypothesis 3
Challenges impact the
successful
international
market
penetration of Malaysian
Hypothesis 4
The Government plays a moderating role in the international market penetration of
8.7 Chapter Summary and Conclusions
This Chapter analysed the primary data from the web survey. It discussed the findings
from the descriptive and confirmatory stages. The quantitative data from the Web Survey
were tested for reliability and internal consistency using Cronbach’s Alpha. The data was
found to be reliable and was used in the confirmatory stage.
The confirmatory stage commenced with the use of multiple measures to test the goodness
of fit between the data and the model interrelations for each factor. CFA was conducted for
286
each of the four propositions, each respective variable and its component constructs. The
data fitted the model and the variables were confirmed as being relevant and valid for
testing in SEM. SEM created a Generated Model of Dynamic Market Landscape,
Challenges as predictors on Strategy and confirmed the influence of Government as a
moderating factor on Internationalisation Strategy.
287
Chapter 9 - Research Conclusions and
Implications
9.1 Introduction
This research investigated the critical issues for successful international market penetration
by the Malaysian telecommunications firms.
Chapter One introduced the research topic. It also laid the foundation for this research.
Chapter Two reviewed the literature pertinent to the research topic. These Chapter
focused on the theoretical foundation and explored the background theories of
Chapter Three reviewed the literature pertinent to the Global Telecommunications
industry.
Chapter Four reviewed the focus theory of the Malaysian telecommunications sector.
Chapter Five analysed the data that emerged from the literature review and identified a
theoretical model for this research. The analysis revealed several gaps in the existing body
of knowledge and these were the basis for the development of four research questions.
Chapter Six presented the methodology for this study. It justified the adoption of a mixed
methodology using qualitative and quantitative approaches. It also discussed the adoption
of a three-stage study
comprising an exploratory stage, a descriptive stage and a
confirmatory stage.
Chapter Seven analysed the qualitative data from the personal interviews and refined the
preliminary theoretical model. The chapter concluded with the crafting of the research
propositions for the testing of the refined theoretical model.
288
Chapter Eight analysed the quantitative data from the web survey for the descriptive and
confirmatory stages of the research. The findings permitted the testing of the refined
model.
This final Chapter, Chapter Nine, with seven sections presents the research conclusions
and implications.
Figure 9.1: Structure of Chapter Nine
9.1: Introduction
9.2: Conclusions on Research Propositions
9.3: Conclusions about the Research Problem
9.4: Theory Development
9.5: Implications for Policy and Practice
9.6: Limitations
9.7: Implications for Further Research
9.8: Summary and Conclusions
It has seven (7) Sections as shown in Figure 9.1. Section 9.1, provides an introduction and
overview of the chapter. Section 9.2 presents the conclusion on the research propositions.
The Chapter then proceeds to present the conclusions on the research problem. with
Section 9.3 discussing the reliability of the sample data and the variables. Section 9.4 sets
out the contribution of the research to new theory development and Section 9.5 discusses
the implications for policy and practice. Section 9.6 sets out the limitations of this
research. Section 9.7 discusses the opportunity for further research and Section 9.8
presents the summary and conclusions.
289
9.2
Conclusions on the Research Propositions
This Section presents the conclusions from the analysis of the secondary and primary data
relating to each of the four research propositions. This was the first step for addressing the
research problems which is detailed in the next section.
9.2.1 Conclusion s on Research Proposition 1
This Section summarises the findings on Research Proposition 1 which was stated as
“The dynamic changes in the global telecommunications industry have a strong influence
on the competitive strategies of Malaysian telecommunications firms”
The discussion takes into account the findings emerging from the analysis of the secondary
data in Chapter 5, the analysis of the data from the personal interviews, presented in
Chapter 7 and the analysis of the quantitative data from the web survey which was
discussed in Chapter 8.
Literature Review:
The literature review revealed that the telecommunications industry is undergoing
transformation with technological advances and market liberalisation generating intense
competition. telecommunications firms are compelled to review their strategies and
business models to address the issues of convergence, regulatory developments, changing
consumer demands and business transformation. (Laanti 2009; Ure 2009; Bain &
Company 2010; ITU 2012). The dynamic market landscape has also resulted in changing
consumer demands, shortening product life cycles, and consequently, increasing the
financial resource requirements for research and development to create new products and
services (Jacobs 2007; Mathews 2010; IBM 2011 Deloitte 2012).
The industry continues to witness mergers and acquisitions as firms strive to achieve
sustainable growth and explore international markets. The Malaysian telecommunications
landscape is dominated by pre-paid subscribers, largely from Generation Y who are
demanding data, content and value added services. The small market size, structural,
290
cyclical and institutional factors now compel Malaysian firms to actively internationalise
(Shankar 2006; Salazar 2007; Curwen & Whalley 2008; Asgari, Gurrib & Ahmad 2010;
BMI 2012). This challenging environment is eroding future earnings prospects and serving
as the push factor for telecommunications firms to seek new external markets for corporate
growth and sustainability
However, as discussed in Chapter 5, the available literature was silent on three important
research issues
i.
whether Malaysian telecommunications firms that venture abroad are well
positioned to achieve sustainable competitive advantage in a rapidly changing and
liberalising global landscape in which there are a greater number of competitors
(Salazar 2007).
ii.
the
push
factors
that
compel
Malaysian
telecommunications
firms
to
internationalise. These factors include intense domestic competition in a saturated
Malaysian domestic market that is leading to price wars and declining revenues
(Salazar 2007; Shankar et al 2010).
iii.
the responses by Malaysian telecommunications firms to meeting changing
consumer demands which are now underpinned by data, speed and ubiquitous
connectivity (BMI 2012; Deloitte 2012) are providing new products and services
to meet changing consumer demands in the global marketplace.
These research gaps were addressed by the collection and analysis of the primary data
from the personal interviews and the web survey.
Personal Interviews:
The analysis of the responses to the issues that related to this Research Proposition
revealed that:
i)
The global telecommunications market is undergoing dramatic changes fueled by
market liberalisation, mergers and acquisitions, technological advances and
291
increasing consumer demands for next generation networks which focus on both
voice services and data. The “fixed players were in survival mode” as the mobile
was dominating the sector. However, “voice revenue in the medium term was
declining and data was the future”.
ii)
The dynamic changes in the global market are impacting on the Malaysian
telecommunications sector. Global market liberalisation and growing competition
in the domestic market are compelling the major Malaysian players to venture
abroad for long term growth and sustainability. “The Malaysian market is
saturated and for Malaysian telecoms firms to sustain their growth thee is a need
for them to internationalise”
iii)
The
interview
participants
had
mixed
views
on
whether
Malaysian
telecommunication firms have the required strategic capabilities for successful
internationalisation. Some other participants cited the example of TM entering
several countries in Africa for political reasons under government-to-government
arrangements rather than for increasing revenues through strategic investments.
Accordingly, TM and subsequently Axiata incurred heavy losses which
necessitated its withdrawal from the African market and Iran. The interview
respondents were also divided on whether the firms were customer orientated for
long term sustainability. “If Malaysian firms had the capabilities then more firms
would have been successful in international ventures”.
iv)
Malaysian telecommunications firms have to develop their knowledge base and
competencies in order to better position themselves to successfully venture into
foreign markets. This is also dependent on building and delivering the brand
promise and having access to adequate capital to finance their overseas ventures.
292
Web Survey:
As discussed in Section 8.2.21, the participants in the web survey expressed agreement to
all the four statements.
Table 9.1: Research Proposition 1 Response Pattern
Issues
Dynamic Changes in the
Global Telecommunications
Landscape
Malaysian Telecommunication
Firms have Strategic
Capabilities
Saturated Malaysian Domestic
Market is a Push Factor for
Firms are Customer Orientated
for Long Term Sustainability
Literature
Review
Known
Personal Interviews
Web Survey
Disagreed
Mixed Views
Silent
Disagreed
Mixed Views
Silent
Agreed
Agreed
Silent
Disagreed
Disagreed
Conclusion:
The response patterns to Research Proposition 1 from the perspectives of the literature
review, the personal interviews and the web survey are shown in Table 9.1. Based on
these, it can be concluded that “The dynamic changes in the global telecommunications
industry have a strong influence on the competitive strategies of Malaysian
telecommunications firms”. However, as voiced by interview participants, only two
Malaysian telecommunications firms have ventured overseas, This suggests that although,
well-intentioned, current efforts to adopt a market-orientated approach are not being
realised.
“Malaysian telecommunications have appropriate strategies for successfully
internationalising their operations”
293
The discussion takes into account the findings emerging from the analysis of the secondary
data in Chapter 5, the analysis of the data from the personal interviews which was
presented in Chapter 7 and the analysis of the quantitative data from the web survey which
was discussed in Chapter 8.
Literature Review:
The review discussed several theories and models relating to the internationalisation
strategies of telecommunications firms. These included the economic and process based
theories. While recent theories have incorporated the field of strategic management with
internationalisation (Kenny 2009; Laanti 2009; Mathews 2010), the internationalisation
strategies of telecommunications firms are variable (Curwen & Whalley 2008). The
network theory (Johanson & Mattsson 1988) was considered appropriate for this research
as it proposes that when a firm enters a foreign market, it entails international extension
penetration or international integration and coordination of networks (Johanson & Mattson
1988). Foreign market selection and timing of market entry are also important for firms.
(Evans & Mavondo 2002; Johanson & Vahlne 1977).
TM, the first Malaysian telecommunications firms that ventured abroad initially moved
into regional markets through the joint venture entry mode into Sri Lanka in 1994,
Bangladesh in 1995, Thailand 1997, and Cambodia in 1998, as these were psychically
close. The relative proximity and in most cases a cultural affinity provided comfort
(Ahmad & Hashim 2008).
However, there were gaps in the literature on whether the Malaysian telecommunication
firms:
i.
had appropriate market selection strategies for venturing abroad.
ii.
have a strategic global outlook for successful international ventures.
iii.
take full account of the risk factors when deciding on market selection and entry
mode.
iv.
have developed strong external networks and effective foreign partnerships for
successfully venturing into international markets.
294
These research gaps were addressed by the collection and analysis of the primary data
from the personal interviews and the web survey.
The analysis of the issues that related to this Proposition revealed common themes which
led to the following findings.

Internationalisation strategies of “Malaysian telecommunication firms were
motivated by opportunities emerging from the South-South Corporation and
bilateral trade relations rather than on strategic considerations. The absence of
sound strategies based on appropriate entry modes and timing of entry has resulted
in failure. This is reflected by TM’s entry and subsequent withdrawal from its
African operations as well as Axiata’s; the exit by Maxis from its Indonesian
operations and the withdrawal and the challenges faced by Axiata in India. These
cited examples reflect the need for Malaysian telecommunications firms to adopt
appropriate, strategic approaches to achieve sustainable long term growth.

Malaysian telecommunications firms that have entered international markets have
adopted varied strategies. However, they did not appear to have taken full account
of all risks factors in their internationalisation strategies as evidenced by the
difficulties faced by Maxis in India and in Indonesia.

Malaysian telecommunication firms have to review their product strategies in
international markets and emphasise on innovation to address the challenges of
convergence. Furthermore, product reviews and price regulations impact decisions
on timing and market entry as well as revenues and therefore the pace of
innovation (Bourreau & Dogan 2007).

Market selection is supported by psychic distance “for cultural reasons, and also
because of proximity advantages”. However, firms also have to consider foreign
ownership regulation and suitable network partners. Effective leadership is also
critical for creating and maintaining successful network relationships. “Leaders
295
with a global outlook seem to be able to guide their respective firms to compete
successfully”
Web Survey:
As discussed in Section 8.2.21, the web participants had mixed views on the four
statements that related to this Proposition. Statements 5 was strongly supported and there
were mixed views on statement 6 which had the themes of market selection and global
outlook respectively. As they disagreed with Statements 7 and 8, it can be concluded that
the internationalisation strategies of Malaysian telecommunications firms did not fully
address risk factors and the importance of effective network relationships.
Conclusion:
review, the personal interviews and the web survey are shown in Table 9.2. Significantly,
the interview participants disagreed on whether Malaysian telecommunications firms took
full account of all risks factors in their internationalisation strategies. The Web Survey
participants also had mixed views on the statements related to this Proposition. It can be
concluded that there was mixed support for Proposition 2. This is reflected by only two
firms entering achieving some success in international markets.
Issues
prefer emerging countries as
investment destinations.
have appropriate strategies for
successful international ventures.
take full account of all risk factors in
their targeted international markets.
have strong external networks for
Literature
Review
Inadequate
Personal Interviews
Web Survey
Agreed
Agreed
Silent
Agreed
Agreed
Silent
Disagreed
Disagreed
Silent
Mixed
Disagreed
296
“Malaysian telecommunications firms that are internationalising their operations face
significant challenges”
The discussion takes into account the findings of the literature review in Chapter 3, the
analysis of the data from the personal interviews which was presented in Chapter 5 and the
analysis of the quantitative data from the web survey which was discussed in Chapter 6.
Literature Review:
As detailed in Chapter 3, the literature revealed “that many telecoms companies are
confronting the dual challenges of a maturing industry and an increasingly ‘tech savvy’
consumer base. (Ure & Lovelock, 2009, p.3). They also have to address the challenges of
effective leadership, global mindsets, access to financial resources; network externalities;
network relationships; knowledge about markets; knowledgeable resources to operate in
international markets, regulatory changes, the ability to understand diversifying cultures
and investments in R&D for new products and services to meet customer preferences
(Curwen & Whalley 2008; Abang 2009; Laanti 2009; Hansen 2010; Khoo 2011; MCE
2011).
However, there were limited literature on the challenges faced by Malaysian
telecommunications firms venturing abroad. The resulting research gaps were addressed
by the collection and analysis of the primary data from the personal interviews and the
Web Surveys.
The analysis of the responses to the issues that related to this Proposition revealed
common themes and these led to the following findings:
i.
Malaysian telecommunications firms that have entered international markets face
several challenges. A significant one is effective leadership with international
297
experience to address the critical issues that impact on successful international
market penetration.
ii.
Reputational advantage and brand development are important success factors when
competing in overseas market. However, Malaysian telecommunications firms
have yet to develop their brand names in international market.
iii.
a firm’s success in international ventures includes the rapid pace of technological
development and evolving consumer demands. Convergence is presenting
challenges and requires financial commitments for R&D and marketing. Therefore,
firms need to engage with partners who employ a customer-orientated philosophy
to deliver the brand promise and are committed to ongoing technological
advancement.
iv.
Successful
international
market
penetration
also
hinges
on
Malaysian
telecommunications firms having capable staff who have the ability to manage
diverse cultures and build effective relationships. They should also have a global
outlook for establishing effective network partnerships where knowledge,
information and resources can be shared. “it is an individual’s integrity that we
rely on”.
Web Survey:
As discussed in Section 8.2.21,
the web survey participants generally agreed with
Statements 9 and 10 which indicates that Malaysian telecommunications firms have
capable leadership and give adequate emphasis to research and development. However,
they were not supportive of Statements 11 and 12 which related to Malaysian
telecommunications firms having reputational advantage and qualified staff.
Conclusion:
the interview participants were of the view that Malaysian telecommunications firms
298
provide inadequate emphasis to research and development and do face challenges in
international markets. Furthermore, they do not benefit from brand advantage and qualified
staff for competing effectively in overseas market.
Factor analysis of the constructs of Knowledgeable Resources, Trust, Insight and
Leadership, which together establish the variable Challenges, confirms that the constructs
of this variable influence successful international market penetration. Therefore, the
likelihood of achieving success in international markets will be greatly increased if these
challenges are addressed.
Since the web survey participants also had mixed views on the statements related to this
Proposition, it can be concluded that there was moderate support for Proposition 3.
Issues
have capable leadership for
give adequate emphasis to research
and development.
have reputational and brand
advantage for competing in overseas
markets.
have qualified staff for international
markets.
Literature
Review
Silent
Personal Interviews
Web Survey
Agreed
Agreed
Silent
Disagreed
Agreed
Silent
Disagreed
Disagreed
Silent
Disagreed
Disagreed
“The Malaysian Government is fully supportive of the efforts of the Malaysian
telecommunications sector to internationalise their operations.”
299
The discussion takes into account the findings emerging from the literature review in
Chapter 5, the analysis of the data from the personal interviews which was presented in
Chapter 7 and the analysis of the quantitative data from the web survey which was
discussed in Chapter 8.
Literature Review:
The Malaysian Government recognises the strategic importance of the telecommunications
sector which benefit from neo – liberal reform and technological advances (Ure 2000;
Salazar 2007). The General Framework for Interconnection and Access (GFIA) in 1996 is
aimed at providing efficient services at low prices (Ure 2000). The Framework provides
for the operational guidelines and principles for the interconnection between Malaysian
telecommunication networks with the benefit of externality. The National IT Agenda
(1996) and the National Telecommunication Policy (1994 - 2020) create a well regulated,
open and competitive telecommunication market (Poh 2007; NTIC 2010).
Despite the laudable aims of the Government’s policy and initiatives, the benefits were
eroded by the new economic policy and the privatisation policy, which as discussed in
Section 4.2, were directed at ensuring that the Malay community dominated the
telecommunications sector (Kitchen & Ahmad 2008). Furthermore, political liberalisation
appeared to be a driver for the liberalisation of the industry in which rent seekers played
central roles (Salazar 2007).
However, the literature was relatively silent on the effectiveness of
Government’s policies to support
the Malaysian
the internationalisation efforts of Malaysian
telecommunications firms. These gaps in the literature were addressed by the collection
and analysis of the primary data from the personal interviews and the web survey.
The analysis of the responses to the issues related to this proposition revealed common
themes and these led to the following findings:
300
i.
The telecommunications sector is viewed as an important sector by the Malaysian
Government for export earnings and socio-economic development. However, the
Government has to play a proactive role and establish an institutional setup that is
suited to support Malaysian telecommunications firms with their international
ventures.
ii.
The Government has policies and several incentives to support the sector.
However, they are perceived to be discriminatory ““more needs to be done to
educate the market on availability of funds, which should not be restricted to
Bumiputeras”. While Malaysia was perceived to be innovative in its regulatory
policies in the late 1990’s the country has since lagged in its implementation of
independent regulation, consumer protection and transparent licensing.
Web Survey:
As discussed in Section 8.2.21, the web survey participants generally disagreed with two
of the four statements related to this Proposition. Although they expressed some support
for the Statement that the Government had the administrative machinery to support the
efforts of the sector, it can be concluded that the Malaysian Government’s policies were
inadequate to support the internationalisation efforts of Malaysian telecommunications
firms.
Conclusion:
the interview participants were not supportive of all the four statements that related to this
Proposition. Although the Web Survey participants had mixed views, it can be concluded
that this Proposition was rejected. Factor analysis of the constructs of Independent
Regulation, Governments Role, Incentives and Policies which together establish the
variable Government confirms that this variable acts as a moderating variable influencing
Malaysian telecommunications firms success in international markets. Therefore,
internationalisation efforts can be greatly increased by Government incentives or policies
301
as well as Governments role in supporting Malaysian firms venturing overseas to be
reviewed.
Issues
The Malaysian Government has
supportive policies for
The Malaysian Government has
adequate measures and incentives to
support the growth of Malaysian
The Malaysian Government plays a
proactive role for supporting the
internationalisation efforts of
firms.
The Malaysian Government has a
strong administrative machinery to
assist Malaysian telecommunications
firms in their international ventures.
Literature
Review
Silent
Personal Interviews
Web Survey
Disagreed
Disagreed
Silent
Disagreed
Disagreed
Silent
Agreed
Agreed
Known
Disagreed
Agreed
9.2.5 Summary
This Section examined the findings of the data analysis that were discussed in chapters 5,
7 and 8 and presented the conclusions on each of the four propositions. These were based
on the views expressed by the participants in the personal interviews and the findings that
emerged from the web survey during the descriptive stage of the research.
The next Section draws conclusions developed during the research.
9.3
Conclusions About The Research Problem
This Section discusses the findings emerging from the research on to the Research
Problem which was developed in Chapter 5 and stated as ‘Addressing the critical issues
for successful international market penetration by the Malaysian telecommunications
firms. ’
302
The literature review in Chapter Two identified the key research issues and the pertinent
theories that underpinned the parent and immediate disciplines of the research. The
findings of earlier scholarship and related research revealed that:

The Malaysian Government recognises the strategic importance of the
telecommunication sector as evidenced by the reforms that were made (Ure 2009,
MCMC 2011; Pyramid 2011).

The domestic market is reaching saturation and the Malaysian telecommunications
firms face the challenges of increased competition, price wars and declining
revenues. These compel them to seek new external markets for growth and
sustainability (Salazar 2007; Curwen & Whalley 2008).

The lowering or the removal of the barriers of the entry, resulting from Malaysia’s
participation in the WTO, ASEAN and bilateral free trade agreements have also
encouraged Malaysian telecommunication firms to venture abroad (Salazar 2007).

The critical success factors for successful international market penetration require
Government support and policies which addresses the challenges faced by
Malaysian telecommunications firms internationalisation. These should support all
firms instead of a selected well connected Bumiputeras (Salazar 2007).

The ability of leaders to overcome challenges as well as respond to the dynamic
market landscape are critical to successful international market penetration by
303
Table 9.5: Summary of Research Propositions Conclusions
Research Proposition
Summary Conclusion
Research Proposition 1
The dynamic changes in the global
telecommunications industry have a strong
influence on the competitive strategies of
Supported. Moderate
While it is perceived that many firms are
aware
of
the
external
dynamic
environment, few firms have the strategic
capabilities to translate the impact of the
external environment into competitive
advantage.
Malaysian telecommunications firms have
appropriate strategies for successfully
Supported. Moderate
Malaysian telecommunications firms that
have internationalised have appropriate
strategies.
However,
only
two
telecommunications
firms
have
internationalised
their
operations
successfully. Firms fail to adequately
address the risk factors including market
selection, timing of entry and the ability to
build sustainable relationships.
Malaysian telecommunications firms that
are internationalising their operations face
significant challenges
Supported.
Malaysian
telecommunications
firms
internationalising their face significant
challenges in international markets. These
include leadership and the ability to
compete in global markets.
The Malaysian Government is fully
supportive of the efforts of Malaysian
telecommunications firms that are
Not Supported.
The Government has several policies to
support international trade and the
telecommunications sector. However, these
are perceived to be discriminatory and
Government efforts do not address the
challenges
faced
by
Malaysian
telecommunications firms in international
markets.
304
Notwithstanding, the existing body of knowledge was relatively silent on several key
issues that influence the successful internationalisation of Malaysian telecommunications
firms. The resulting research gaps were presented in Table 5.1 and are summarised as
follows.
i) The competitive positioning of Malaysian telecommunication firms under the
WTO and the adequacy of national legislation.
ii) The competencies, expertise and strengths of Malaysian telecommunication firms
for operating successfully in global markets.
iii) The Malaysian Government support policies for the export of telecommunications
services.
iv) The strategies adopted by
Malaysian telecommunication firms for venturing
abroad.
305
Table 9.6: Findings on Research Gaps
Research Issues
Prior Literature
Research Gaps
Findings
Inadequate
Yes
Yes
Inadequate
Yes
Yes
Inadequate
Yes
Yes
Inadequate
Yes
Yes
Malaysian Economic Policies
Adequate
Internationalisation Theories
Adequate
Trends in the Global
Telecommunication Industry
Adequate
The Malaysian
Telecommunication Industry
Adequate
Competitive positioning of
Firms under WTO

National legislation

Competences, expertise
and strengths to compete
in world markets

Industry preparedness for
The Malaysian Government’s
support policies and
programmes for the export of
telecommunication services
Adequate
Adequacy of Malaysian
Government support policies
and programmes for
Telecommunication exports.
Inadequate
Yes
Yes
Inadequate
Yes
Yes

Effective Policy frameworks

International promotion
Inadequate
Yes
Yes

Support schemes
Inadequate
Yes
Yes
Appropriate strategies for
venturing abroad
Inadequate
Yes
Yes

Strategy adoption for SCA
Inadequate
Yes
Yes

Competent staff with global
mindsets
Inadequate
Yes
Yes

Effective leadership
Inadequate
Yes
Yes
306
The research gaps led to the development of the Research Propositions that were tested
during the descriptive stage by this research. Qualitative and quantitative data were
collected through personal interviews and a web survey. The analysis of the literature
review as well as the qualitative and quantifiable primary research data, yielded
comprehensive and useful insights on the research gaps as set out in Table 9.5. These
underline the relevance of the Research Problem.
9.3.1 Summary
This Section summarised the findings of this research and matched them with the gaps in
the existing literature. The research findings enabled the research gaps to be bridged and
permitted the reaffirmation of the relevance of the Research Problem. The next Section
discusses the implications of this research on theory development.
9.4
Contribution and Theory Development
There have been several studies on internationalisation of telecommunications firms,
however, much of this previous work has been focused on perspectives of established
MNCs from developed economies. This study focused on addressing the critical success
factors that impact successful international market penetration. Accordingly, this research
has implications for Malaysian telecommunications firms seeking growth in international
markets.
As discussed in Section 6.2.2, this research adopted a mixed methodology. The qualitative
and exploratory stage was dominant since the research relied heavily on the secondary data
from the literature review and the primary data from the personal interviews. Accordingly,
this research fits into the interpretive paradigm and provides useful insights for theory
building (Perry 1995).
The literature review identified the pertinent theories, as listed below, for the
internationalisation of Malaysian telecommunications firms.
i) The resource based view.
307
ii) Stage models of internationalisation.
iii) Network approaches to internationalisation.
iv) The flagship firms.
v) The strategic states model.
The network approach which proposes a more behaviourial approach to the
internationalisation of a firm was considered to be appropriate for this study. This is
discussed in Section 2.7.3.1 and depicted in Figure 2.7.
A key objective of the first and exploratory stage of the study, was to refine the network
model on the basis of the views expressed by the participants of the personal interviews.
The findings revealed that the network model warranted amendment to take account of
four important factors. These were strategy, challenges, the dynamic market landscape and
the role of Government. These factors were incorporated into the preliminary theoretical
model and the outcome was a refined network model which was shown in Figure 7.2.
The refined model was then tested by a web survey during the descriptive stage of the
research. As discussed in Section 6.6.3, the third and confirmatory stage of this research
involved the generation of an SEM model, shown in Figure 8.31 which was based on the
four variables of Strategy, Challenges, the Dynamic Market Landscape and the role of
Government. The research identified the Dynamic Market Landscape, Government and
Challenges are predictors on Strategy. The generated model also confirmed the influence
of Government being greater than the Dynamic Market Landscape and Challenges. The
relationships between these variables in the context of the network model that was
identified as being most appropriate for this research were examined and the findings, as
shown in Figure 9.2, revealed that:
i.
“Strategy” is the dependent variable and central to the successful adoption and use
of the network model for Malaysian telecommunications firms venturing into
overseas markets.
308
ii.
“Dynamic Market Landscape” is an independent variable with a positive and a high
direct significant influence on Strategy, the dependent variable.
iii.
“Challenges” is the second independent variable. It also has a positive influence
and direct influence on Strategy.
iv.
“Government” is the moderating variable and the role of Government leads to the
“dynamic market landscape” having a higher influence on strategies as compared
to “challenges”.
Figure 9.2: Relationship between the additional variables to the Network Model
generated by the SEM Model
Challenges
Knowledgeable
Resources
Trust
Strategy
Insight
Leadership
Government
Policies
Market
Selection
Global Outlook
Incentives
Domestic
Operations
Risk
International
Operations
Role
Network
Relationships
Dynamic Market
Landscape
Independent
Regulation
Positioning
Capability
Strategic Intent
Customer
Orientation
Independent variables
Moderating variables
Dependent variable
309
The specific contribution of this research extended the literature by identifying a more
precise understanding of the critical issues and complex inter-relationships impacting
internationalisation of Malaysian telecommunications firms. This allows recommendations
to be made for addressing the critical issues for successful internationalisation by
Malaysian telecommunications firms and the Malaysian Government.
A generalised contribution of this research is a modified network model for
internationalisation defining the attributes that require consideration to meet the dynamic
market landscape and address the challenges for successful internationalisation. The
constructs identified are empirically supported and provide a deeper understanding of the
inter-relationships. The evidence supported Government as a moderating variable.
9.5 Implications for Policy and Practice
As stated in Section 1.4, this research was justified on the grounds that the findings could

offer recommendations for improving the policies and programs of the
Malaysian Government for supporting the internationalisation efforts of
Malaysian telecommunications firms It highlights the need for good business
practices that meet international expectations.

lead to recommendations on appropriate corporate strategies for successful
Accordingly, this Section offers recommendations based on the findings of the research, to
support the efforts of the Malaysian telecommunications firms to successfully compete in
international markets. As these recommendations are for consideration by the government
policy makers and Malaysian telecommunications firms, this Section has two parts. The
first relates to public policies and the second, offers recommendations for consideration by
the Malaysian telecommunications firms.
310
9.5.1 Implications for Policy
The research findings revealed that the Malaysian Government has to provide effective
policy support for Malaysian telecommunications firms that are export ready or already
operating in overseas markets. In this regard, six areas merit critical review.
i) Supporting Malaysian telecommunications firms with their internationalisation
efforts.
ii) Addressing the human capital needs of Malaysian telecommunications firms.
iii) Encouraging the development of an R&D culture for new products and service
offerings to meet changing customer preferences.
i) Supporting Malaysian telecommunications firms with their internationalization
efforts
The Malaysian Government recognises the strategic importance of the telecommunication
sector for the country’s social and economic development (Ure 2000). Several reforms
have been undertaken over the past two decades which are aimed at encouraging
competition and improved quality of services at reasonable cost (Salazar 2007; Sivalingam
2007).
The findings of the literature review and primary data analysis revealed that the domestic
market is reaching saturation and the resulting challenging environment is eroding future
earnings prospects. This requires firms to move into new external markets for corporate
growth
and
sustainability.
However,
the
dynamic
changes
in
the
global
telecommunications industry also create challenges for Malaysian telecommunications
firms. They have to contend with the issues of convergence, regulatory developments,
changing consumer demands and business transformation. Accordingly, this Section offers
recommendations on a prioritised basis on the findings of the research. The aim is to
support the efforts of the Malaysian telecommunications firms to successfully compete in
international markets. As these recommendations are for consideration by the Government
policy makers and Malaysian telecommunications firms, this Section has two parts. The
311
first relates to public policies and the second, offers recommendations for consideration by
the Malaysian telecommunications firms.

formulate and implement measures that are specifically designed to encourage
telecommunications firms to devise appropriate strategies for successful international
market penetration.

support the international operations of Malaysian telecommunications through the
Malaysian External Trade Development Corporation (MATRADE), the Government
agency responsible for export promotion.

work closely with the Malaysian telecommunications firms to inform them of the
opportunities for overseas investments with the implementation of WTO, the ASEAN
Free Trade Area and bilateral free trade agreements.
.
ii) Addressing the human capital needs of Malaysian telecommunications firms
As discussed in Sections 2.6.1 and 2.6.4, gaining competitive advantage is dependent on
the firms’ ability to attract a quality workforce categorised by intelligence, motivation,
creativity, commitment, analytical abilities and computer skills (Johansson & Larson,
2000). Malaysian telecommunications firms entering foreign markets must be knowledge
based (Gibbons et al, 1994; Ellis & Pecotich 2001). Specialised technical and professional
knowledge along with the ability to analyse and respond to market and customer needs are
critical to compete in the global arena (Homann, Koslowski & Luetge 2007).
However, Malaysia faces a shortage of knowledgeable and skilled resources (Khoo 2011;
Wahab 2011). In order to address the situation, the Government has to

give priority attention to human capital development to overcome the shortage of
knowledge workers.

align the industrial training system with the public training institutions with the aim
of making the training programmes and content more global market driven.
312

review
foreign
labour
hiring
policies
in
order
to
give
Malaysian
telecommunications firms more latitude to recruit talented and experienced
expatriate staff to assist them with their internationalisation efforts.
iii) Encouraging the development of an R&D culture for new products and service
offerings to meet changing customer preferences.
Growing consumer demands for more choices of products and services have triggered
growth of social media channels, smart phones, SMS and Multimedia Messaging Service
(MMS). Telecommunications operators and related industry players therefore have to
offer new products and services to maintain customer loyalty. They also have to unlock
customer value through the delivery of innovative, multi-media rich services (EY 2010;
Bain & Company 2010; MCMC 2010).
New products and services however, require increased investments in R&D (Laanti 2009;
EY 2010; IBM 2010). The research findings indicated that Malaysian industry generally
lacks a research culture. This is also reflected by Malaysia having only a limited number of
researchers and spending only 0.64% of the annual GDP or MYR3.9 billion on research.
Malaysia needs to increase the R&D expenditure to 2.5% of GDP to meet the international
recommendations for sustainable technological innovation (The Star, 9 April, 2010).
In order to improve the situation, it is suggested that the Government

expand its support for the R&D activities undertaken by Malaysian
telecommunications firms through financial incentives and tax relief for R&D
expenditure.

encourage Malaysian telecommunications firms to engage closely with national
research institutions on their research endeavours for creating customer orientated
products and services.

encourage university linkages with the Malaysian telecommunications industry to
foster greater collaboration on R&D activities.
313
9.5.1.1 Recommended Policy Changes for the Successful
Internationalis ation of Malaysian Telecomm unications Firms
The earlier Section offered suggestions for consideration by the pertinent Malaysian
Agencies in respect of (i) Malaysian telecommunications firms overcoming the challenges
that impact upon their internationalisation efforts. (ii). Human capital developing and (iii)
fostering an R&D culture for new telecommunications products and services.
The findings of this research also point to a continuing need for the Government to
critically review the implementation aspects of the National Telecommunications Policy
(NTP) which was directed at reforming the telecommunications sector. As discussed in
Section 4.4, the benefits of are largely offset by the NEP and the Privatisation Policy
which were introduced to accelerate Bumiputera participation in the economy through
preferential treatment in in all aspects of business and industry. As these included the
issuance of new licences or permits in the telecommunications sector, it has created ‘rentseekers’ and hindered competition and growth (Salazar 2007; East Analytical Unit 1995).
Since Malaysian Telecommunications firms have to remain competitive in a dynamic and
challenging international marketplace, it is recommended that the Malaysia Government
critically review existing policies in order to create a more level playing field for all
The findings also revealed that the WTO Basic Telecommunications Agreement has
accelerated the pace of liberalisation in the global telecommunications market. However,
the Malaysian Government has yet to commit itself fully to the sections of the agreement
relating to the unbundling of the local loop. As a consequence TM continues to hold a
monopoly of the national network and is in a position to determine pricing and quality of
service.
9.5.2 Implications for the Malaysian Telecommunications Firms
The findings of the literature review, the personal interviews and the web survey revealed
dynamic changes in the global telecommunications industry. The domestic industry is also
314
undergoing much change with the emergence of new players, regulatory developments and
changing consumer demands (Bain & Co, 2010; Laanti 2009; Ure 2009). Industry players
are under pressure to meet on going demands for data, speed and ubiquitous connectivity.
Furthermore, low switching cost creates the challenge of creating customer loyalty
(Matthews 2010; Deloitte 2012). The small market size, structural, cyclical and
institutional factors now compel Malaysian firms to actively internationalise (Curwen &
Whalley 2008; Shankar 2006). Viewed in this context, the findings suggest that Malaysian
telecommunications firms:
i)

benefit from effective leadership

adopt a strategic global outlook

hire staff with international business skills

develop strong external business networks
Effective Leadership
As discussed in Sections 2.6.1 and 5.2.2.3, effective leadership is important for shaping
and executing company strategies (Curwen & Whalley 2004). Strong leadership with a
global mind set are intrinsic for a firm to be successful. Success in the dynamic global
telecommunications landscape requires Malaysian leaders who are knowledgeable, agile
and able to adapt to the changing environment (Bhagat 2007; Carayol 2009). They should
also have the ability to identify opportunities for overseas investment, determine timing of
entry, the market entry mode, manage risk, communicate effectively, build a customer
orientated culture (Stoian & Rialp-Craido 2010). However, notwithstanding exposure to
diversity, cultural integration and often international education, there is a shortage of
Malaysian leaders with global mindsets (World Bank 2011). Furthermore, leadership
positions, in line with the New Economic Policy that favours Bumiputeras has often
resulted in leadership positions being based on quota system and not competencies.
In order to improve the situation, the findings of this research suggest that the Malaysian
telecommunications firms that venture abroad should:
315

engage leaders, regardless of country of origin, with a demonstrated competence to
understand different value systems, physical issues,
address risks as well as be
sensitive to cultural differences.

be led by leaders with global mindsets which includes a positive attitude to global
business, local and international developments as well as an understanding of
organisational standards and processes.

appoint CEOs with the necessary professional and personal attributes to lead large
corporations. Such appointments must be on the basis of merit through an open
international recruitment system devoid of political influence and nepotism.
The fundamental nature of competition in many of the world’s industries is changing
(Tapscott 2001). due to the continuous globalisation of the world’s markets. This has
changed the telecommunications landscape (Contractor & Lorange 2002; Sanchez-Lorda
2008; Accenture 2010; McKinsey 2012). The dynamic situation points to the need for a
global management team with a global vision, culture and the skills to formulate
appropriate global strategies for obtaining best cost and market advantage (Lussier, Baeder
& Corman 1994).
Accordingly, it is suggested that the Malaysian telecommunications firms:

hire management teams with a global vision and culture with an ability to select
country targets strategically rather than opportunistically.

design global products that take consumer differences into account and develop global
brands.
i)
adopt a strategic global outlook
The fundamental nature of competition in many of the world’s industries is changing
(Tapscott 2001). This is due to the continuous globalisation of the world’s markets fuelled
by the WTO. The outcome is increased competition with telecommunications operators
having to contend with the challenges of convergence, regulatory developments. Changing
316
consumer demands and business transformation. Industry players are also under pressure
to meet consumer demands for data, speed and connectivity in order to maintain customer
loyalty.
These dynamic changes in the global telecommunications industry which have to be
addressed by Malaysian telecommunications firms. (Contractor & Lorange 2002; SanchezLorda 2008; Accenture 2010; McKinsey 2010). The situation points to the need for a
global management team with a global vision, culture and the skills to formulate
appropriate global strategies for obtaining best cost and market advantage (Lussier, Baeder
& Corman 1994). The team should also have competencies to identify opportunities for
growth and profitability with market potential as well as to review their value chains due to
new market entrants, infrastructure and equipment suppliers, MVNO’s and media players
Accordingly, it is suggested that the Malaysian telecommunications firms hire
management teams with:

a global vision and culture with an ability to select country targets strategically
rather than opportunistically.

demonstrated competencies to closely monitor changing consumer needs and to
unlock customer value through the design and delivery of innovative global
products and innovative multimedia rich services
iii)
knowledge based professional management structures
Knowledge is a key for business and corporate success (Nonaka & Teece 2001; Stehr
2005). Gaining global competitive advantage is dependent on the firms’ ability to attract a
quality workforce categorised by intelligence, motivation, creativity, commitment,
analytical abilities and computer skills (Johansson & Larsson 2000). This also underlines
the importance of developing managers who are capable of formulating and managing
strategy the division, national and international level (Curwen & Whalley 2004).
It is necessary for Malaysian telecommunications firms entering foreign markets to be
knowledge based (Gibbons et al 1994; Ellis & Pecotich 2001). These have to be
317
underpinned by flexible, professional management structures, policies, procedures and
processes that enhance competitive positioning (Tan 2008; David, 2005 cited in Abang
2009).
Accordingly, it is suggested that Malaysian telecommunications firms:

establish organisational management structures with specialised technical and
professional knowledge that are able to analyse and respond to market and customer
needs in the global arena.

map their knowledge resources and capabilities against their strategic opportunities and
threats for determining what knowledge should be developed or acquired.
iv)
develop strong external business networks
The network approach involves interactions and relationships between firms in the
internationalisation process (Foster & Karin 2002; Johanson & Vahlne 1990). The
assumption of the network model is that an individual firm is dependent on skills and
resources from another firm, and firms are motivated to engage and establish partners in
their networks to gain access to required resources through exchange relationships
(Whalley 2001).
The participants in the web survey and the personal interviews were of the view that
network relationships are critical for venturing abroad. They also considered it important
to work with partners with similar values and who are keen to build long term relationships
on the basis of trust and commitment.
Accordingly, it is suggested that Malaysian telecommunications firms:

emphasise on social interactions and personal contacts for developing significant cross
country networks based on integrity and trust in order to build long term sustainable
partnerships.
318

utilise networks for gaining access to physical infrastructure in the target overseas
markets and use the network relationships to expand the customer base.
9.6 Limitations
Some limitations associated with this research were identified in Chapter 1. During the
course of this research, four other significant limitations became apparent.
First, the use of a mixture of judgment and quota sampling for the selection of the
participants for the personal interviews and the web survey. As discussed in Chapter 6, this
was considered necessary because of cost constraints.
The use of quota sampling could
also have resulted in “researcher bias” and eroded the trustworthiness of the research.
Second, the sensitive and confidential nature of some of the questions that were posed to
the participants in the personal interview and the web survey. This may have constrained
some of the participants to express their candid views.
Third, the staff of the telecommunications firms that participated in the personal interviews
occupied senior management positions. However, their views may not necessarily be fully
reflective of the positions taken by their organisations.
Fourth, the draft thesis was completed in March 2012. It was therefore not possible for the
researcher to take full account of the developments in the dynamic telecommunications
sector after that date.
9.7 Implications for Further Research
This research was aimed at “Addressing the critical issues for successful international
market penetration by Malaysian telecommunications firms ”. It presented a preparadigmatic body of knowledge that required inductive theory building. Furthermore, this
research was largely exploratory and preliminary in nature and this provides opportunities
for further research on areas related to the internationalisation of telecommunications
firms. This final Section of the thesis outlines two suggestions for further research.
319
The first is a follow up study with a larger survey sample size to confirm the validity of the
SEM Model that was generated during the quantitative and confirmatory stage of this
research. This was discussed in Section 7.4. The findings could provide more insights on
the relationship between the identified additional variables relating to the relevance of the
network model for the successful internationalisation of Malaysian telecommunications
firms.
The second is a replication of the study in neighbouring countries where
telecommunications firms are important drivers of economic growth. The findings could
contribute to the scholarship on the internationalisation of telecommunications firms from
a regional perspective.
9.8 Summary and Conclusions
This final Chapter summarised the conclusions based on the research findings for each of
the four Research Propositions and the Research Problem, reaffirming that
internationalisation is a complex process, particularly in emerging markets. It reaffirms
that
the
Malaysian
Government
recognises
the
strategic
importance
of
the
telecommunications sector for the country’s social and economic development (Ure 2000).
The study revealed and discussed the support for 3 of the 4 propositions and confirmed
that network relationships are critical to succeeding in foreign markets. It then discussed
the implications of the findings and their contributions to theory development.
Recommendations were also offered for consideration by Government policy makers and
the senior management of Malaysian telecommunications firms. The role of Government
continues to be a critical factor in the internationalisation process, both host and home
markets. The Chapter then discussed the limitations that emerged during the course of the
research and outlined the opportunities for further research.
320
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359
APPENDIX 1: Interview Invitation
Email Invitation:
Dear Ms. Krishna,
I am writing with reference to my Doctoral thesis and would be very grateful for your kind
assistance and participation. I am conducting research as part of my Doctor of Business
Administration (DBA) degree at Southern Cross University, Australia. My thesis is
investigating the strategic issues that impact the successful internationalisation of
Krishna from <Company X> kindly provided me with your details and has suggested that
your knowledge and expertise will greatly assist me with my doctoral research.
Accordingly, I am writing to request a meeting as part of this study and would very much
welcome and appreciate your participation
My research aims to assess how the emerging trends in the global telecommunications
sector influence strategies of Malaysian telco firms. It also aims to identify the challenges
faced as they internationalise. The findings of this research, including knowledge collated
from the interviews, and a questionnaire, will offer recommendations for Malaysian
telecommunications industry as well as Government. All matters discussed will remain
confidential.
I would be very grateful if you would be kind enough to spare an hour of your time to meet
with me to discuss the topic and some specific propositions and that I am investigating.
In the meantime, should you require any further information or have any queries, please
feel free to contact me on +6012 232 0823.
I look forward to hearing from you soon.
Yours Respectfully
Amita Krishna.
360
APPENDIX 2: Interview Guide
Code #
Date
Name of Firm
Contact Name
Position
Contact Details
Section Key Points
Some Questions
Introduction
 Overview, Ethics and Confidentiality
A
Introduction and  Determining why Malaysian telecommunications firms venture
B
objectives




C
D
1
Experience, prior
knowledge and
perspectives on
the research topic
4 Questions
pertaining to the 4
research
propositions
The Dynamic
Market
Landscape


Outlined below





2
Strategy




3
Challenges
into overseas markets
The influence of the dynamic marketplace on their competitive
strategies
How they internationalise
The challenges they face in international markets
What are the key factors that need to be addressed for successful
international market penetration
Governments Role
Views and perspectives on the internationalisation of Malaysian








What are your views on the current state of the global market and
emerging trends?
How do you believe these influence the Malaysian market
Do you consider it necessary for Malaysian Telcos to venture
abroad? If so, what are the push/pull factors for them to do so?
How important is international market selection?
What strategies do Malaysian Telco firms employ for
What are your views on the strategies adopted by Malaysian
Telcos that seek to enter international markets.
Do these strategies take into consideration, product, operations
and marketing strategies? If so, please describe.
How important is it have strong leadership and a Global Mindset
What benefits do you believe can be gleaned benefit from
establishing network relationships .
How important is a. Trust b. Commitment c. Learning?
The role of knowledge and how easy is it to transfer?
How adequate are the structures, resources to address the
challenges that Malaysian Telcos face in international ventures?
How are Malaysian Telco firms financing their international
ventures?
How would you describe the leadership
How important is trust in building network relationships
How innovative are Malaysian telco firms products and services?
How important is psychic distance to Malaysian telco firms
venturing overseas?
361
4
Government
E
Additional
information
issues

and
What sort of incentives are available for the sector in both
domestic and international markets?
 What is your view on the regulatory authority and how effective
are regulatory policies?
 What’s your view on Host Governments
 What more could be done to improve regulation?
Would you like to share any other comments or issues that you feel
are pertinent to the successful international market penetration of
Malaysian Telco Firms?
362
APPENDIX 3: Web Survey Invitation to Participate
Email Invitation to Participate in Web Survey:
Dear Ms.Krishna,
My name is Amita Krishna and I am conducting research as part of my Doctor of
Business Administration (DBA) degree at Southern Cross University. I am
investigating the strategic issues that impact the successful international market
penetration of Malaysian telecommunications firms.
Accordingly, I would be very grateful if you would be kind enough to participate in a
Questionnaire survey on this subject. Participants include individuals from Malaysian
telecommunications firms and organisations in related industries, Government
Agencies, Academics and industry experts.
My research aims to assess how the emerging trends in the global telecommunications
sector influence strategies of the Malaysian telecommunications players and identify
the challenges faced by Malaysian telco firms as they internationalise. The global
economic landscape has intensified competitive pressures and with changing
consumer
demands
and
emerging
technology
advances,
Malaysian
telecommunications firms are required to strategise for growth and sustainability.
They are also rethinking their business models to secure new sources of revenues
whilst managing customer demands. This includes the need to venture into overseas
markets.
The findings of this research, including knowledge collated from this questionnaire,
will offer recommendations for Malaysian telecommunications to be better equipped to
successfully compete in the global economy.
The survey should take no more than 20 minutes of your time and consists of 16 core
questions which are presented as statements relating the the issues in this research.
Your input will be anonymous and confidential. This research has been approved by
the Human Research Ethics Committee at Southern Cross University. The approval
number is ECN-10-122.
I would appreciate your response within Two (2) Weeks of this invitation. The survey
will be closed on 18 July 2011.
Should you require any further information or have any queries, please feel free to
contact me directly at [email protected].
Please click the link below to begin the survey.
http://www.zoomerang.com/Survey/WEB22CNP7BQQMF/
I would like to thank you in advance for your time and participation.
Kindest Regards
Amita.
363
APPENDIX 4: Web Survey Information Sheet
"Addressing the Strategic Issues that Impact the Successful International
Market Penetration of the Telecommunications Sector: A Malaysian
Perspective"
INFORMATION SHEET FOR THE QUESTIONNAIRE FOR THIS DOCTORAL
RESEARCH THESIS
How to answer the questionnaire:
The Questionnaire consists of 16 core questions which are presented as statements
relating to issues in this research. Please read each statement carefully and rate how
strongly you agree or disagree with each of the statements by placing a tick in the
appropriate box. The rating scale ranges from 'Strongly Disagree' to 'Strongly Agree'.
You will require no more than 20 minutes to complete all of the questions.
Please note that participation is purely voluntary and no financial remuneration or
incentive will be offered for taking part in this research.
My Responsibilities (As the Researcher)
To ensure the confidentiality of the information provided, your name and other
identifying information will not be attached to data collected. Your name and contact
details will only be used when sending the Questionnaire to you.
The research findings may be submitted for presentation at industry conferences or
publication in academic and industry journals. No personal data will be used and any
information collated will only be presented and reported as overall data.
In the final research report, the participating organisations will be referred to as cases
with numbers. The results of the research will be made available to interested parties
in a final thesis format through Southern Cross University's library. I would also be
pleased to share the findings of the research with you directly if you would be kind
enough to send me an email with the subject header "DBA Research Findings".
Your Responsibilities (As a Participant)
In the event that you feel uncomfortable participating in this research, you are free to
withdraw your consent and discontinue participation at any time without explanation.
IMPORTANT: Please note that by completing and returning the survey, you will have
been deemed to have given your consent to participate.
Enquiries:
The form is yours to keep for future reference. Please feel free to contact us should
you require any additional information or have any queries:
Researcher:
Supervisor:
Amita Krishna
Professor Dr. A. Selvanathan
email: [email protected] email: [email protected]
364
Contact No. +603 7949 1607 (Southern Cross University, Malaysian Office)
This research has been approved by the Human Research Ethics Committee at
Southern Cross University. The approval number is ECN-10-122.
If you have concerns about the ethical aspects of this research or the researchers,
please write to the following: Email: [email protected]
All information is confidential and will be handled as soon as possible.
365
APPENDIX 5: Web Survey
366
367
368
369
370
371

Addressing the critical issues for successful international market

Transcription

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