Regulatory Governance, Multinational Firms and Entry Strategies: the European Telecommunications Mobile Industry

Abstract: We analyze the international development of firms in regulated industries. The access to new markets involves demanding conditions in this type of industries. We analyze the impact of the regulatory governance on the entry and performance level of firms in such environment. We focus on the case of mobile telecommunications services. Presumably, the characteristics of the country, technology, institutional environment and regulatory characteristics weigh heavily on the decision of entry, but also on future firms’ profitability. The article explores the relationship between the existing national regulatory governance, competitive environment and performance of mobile network operators (MNO) in Europe. We examine explanatory variables for MNO international investment decisions, and then performance. This paper analyzes whether MNO, as entrants in the European mobile telephony industry, have an advantage vis-à-vis incumbents because they deal easier and better with the regulatory framework. We also study to what extent former historic operators as new entrants take advantage or not of their international expansion in mobile activity. We exploit a unique dataset comprising firm-level information over the 2000-2007 period. The first results indicate that the market size and geographical proximity could explain the decision of entry. The transparency and credibility of regulation also help entry into new markets.