The effects of asset-light strategy on competitive advantage in the telephone communications industry

This article examines how asset-light operations create competitive advantage in the telephone communications industry. Competitive advantage is defined as the ability of a firm to generate returns above its synthetic normal return. Three regression models are developed to describe the relationships between asset-light operations and competitive advantage. This empirical study provides several insights: (1) Asset-light operations significantly contribute to competitive advantage in the telephone communications industry, but this effect is more critical in the wireless communications industry than among landline-based firms. (2) Firms with more light assets tend to have a lower book value of tangible resources. (3) Firms involving R&D and emphasising asset-light operations focus more on operational cost reduction than efficient management of their fixed assets. The last result indicates that telephone communications companies have been competing in ‘light’ operating assets rather than ‘light’ fixed assets. Contribution This article uses non-traditional methods of research on technology and strategic management to provide depth and capture application of information technology. This paper attempts to test new models, which could offer new insights into emerging concepts for understanding digital strategies and for developing a model approach to measuring competitive advantage in digital technology research. from Eng, Teck-Yong and Luff, Paul, Editorial Report. Technology Analysis & Strategic Management, Vo. 23, No.9 (Special Issue: Competing and Developing Competitive Advantage in the Digital world), 947-950, 2011. This article was downloaded by: [Fen-may Liou] On: 14 October 2011, At: 23:20 Publisher: Routledge Informa Ltd Registered in England and Wales Registered Number: 1072954 Registered office: Mortimer House, 37-41 Mortimer Street, London W1T 3JH, UK Technology Analysis & Strategic Management Publication details, including instructions for authors and subscription information: http://www.tandfonline.com/loi/ctas20 The effects of asset-light strategy on competitive advantage in the telephone communications industry Fen-May Liou a a Department of Finance, Chihlee Institute of Technology, New Taipei City, Taiwan Available online: 14 Oct 2011 To cite this article: Fen-May Liou (2011): The effects of asset-light strategy on competitive advantage in the telephone communications industry, Technology Analysis & Strategic Management, 23:9, 951-967 To link to this article: http://dx.doi.org/10.1080/09537325.2011.616692 PLEASE SCROLL DOWN FOR ARTICLE Full terms and conditions of use: http://www.tandfonline.com/page/terms-andconditions This article may be used for research, teaching, and private study purposes. Any substantial or systematic reproduction, redistribution, reselling, loan, sub-licensing, systematic supply, or distribution in any form to anyone is expressly forbidden. The publisher does not give any warranty express or implied or make any representation that the contents will be complete or accurate or up to date. The accuracy of any instructions, formulae, and drug doses should be independently verified with primary sources. The publisher shall not be liable for any loss, actions, claims, proceedings, demand, or costs or damages whatsoever or howsoever caused arising directly or indirectly in connection with or arising out of the use of this material. Technology Analysis & Strategic Management Vol. 23, No. 9, October 2011, 951–967 The effects of asset-light strategy on competitive advantage in the telephone communications industry