Determinants of mobile network operators' choice of cross-border entry modes

This study provides empirical findings on determinants of mobile network operators’ (MNO) choices of cross-border entry modes. Arguments mainly from transaction cost theory are used to derive hypotheses and research questions on factors explaining entry mode selection decisions between (1) minority versus majority equity share purchases, and (2) engagements in established operations versus greenfield start-ups. A sample of 111 announcements of strategic international expansion moves conducted by 27 mobile network operators and integrated telecom service corporations in the period from 1989 to 2004 is used to test the study hypotheses. Logistic regression analyses with two binary cross-border expansion mode choice variables as dependent criteria suggest that MNO internationalization entry mode choices were substantially influenced by cultural distance between home and host countries, country risk, demand potential, and competitive intensity in foreign markets. These country and market specific proxies for transaction cost and expansion risk driving factors are complemented by indicators of (1) the embeddedness of entry events into overall internationalization patterns of MNO and of (2) the MNO engagement timing in a foreign market. The latter is captured by entry rank and timing with regard to the closeness of the focal entry date to that of the launch date of the first digital commercial mobile service offer in a country market. Geographic proximity and economy size, as well as the control variables company size, foreign sales share, separate capital market listing, relative investment size, and actual completion of an announced expansion move did not significantly affect MNOs’ choice of cross-border entry mode.