ORGANIZATIONAL FACTORS AS CORRELATES OF COMPETITIVE ADVANTAGE IN THE NIGERIAN TELECOMMUNICATION INDUSTRY

ABSTRACT

The
Global System for Mobile communication (GSM) was introduced in the Nigerian
telecommunication industry in 2001 after the industry’s deregulation in 1992.
The mobile telephone network which revolutionized the business, social and
economic lives of Nigerians also engendered competition in the industry.
Competition among the operators enabled them to deploy their organizational
factors of stakeholders, knowledge, innovation, culture and technology
management to create competitive advantage for the benefit of the
telecommunication consumers. However, the industry is challenged by volatility
of quality of service and intermittent network failures which have affected the
value of its competitive advantage. The study examined organizational factors
as correlates of competitive advantage.

The
study adopted a survey research design. Target population comprised 584 senior
and executive management staff of the selected five mobile network operators.
This population size also constituted the sample size for the study, using
total enumeration. Data were collected through the use of validated
questionnaire. The Cronbach’s Alpha coefficients for the constructs ranged from
0.709 to 0.897. The response rate was 64.49%. Data were analyzed using
descriptive and inferential statistics.

Findings
revealed that there was positive and significant effect of stakeholders
management on competitive advantage in the Nigerian telecommunication industry
(Adj R2 =0.626;

F(1,471)=509.732;
p < 0.05). Positive and significant effect of knowledge management on
competitive advantage was found in the industry (Adj R2 = 0.532; F(1,
471)= 346.11; p < 0.05).Positive and significant effect of innovation
management on competitive advantage was established in the industry (Adj R2
= 0.514; F(1, 471)= 322.734; p < 0.05).The effect of
organizational culture on competitive advantage was positive and significant in
the industry  (Adj R2 = 0.576;
F(1, 471) = 413.575; p < 0.05).There was positive and significant
effect of technology management on competitive advantage in the Nigerian telecommunication
industry (Adj R2 = 0.516; F(1, 471) = 323.411; p <
0.05).

The
study concluded that the massive revolution in the Nigerian economy by the
mobile telephone network was created by the competitive advantage driven by
organizational factors. It was recommended that the Nigerian telecommunication
industry should emphasise improvement of stakeholders’ values, knowledge,
innovation, culture and technology management as models for enhanced quality of
service and prevention of network failures. 
The industry regulator, Nigerian Communication Commission should enact
policies to regulate these organizational factors.

Keywords:     Competitive
advantage, Telecommunication industry, Stakeholders management, Knowledge
management, Innovation management, Culture management, Technology management

CHAPTER
ONE

INTRODUCTION

1.1       Background
to the Study

            According to Kazmi (2008),
organizational capability factors or capability factors (or simply
organizational factors as this thesis has chosen to call them) are the
intrinsic abilities or skills of an organization with which it deploys its competencies
to overcome its weaknesses so as to exploit the opportunities and confront the
threats in its external environment.They are viewed as skills for organizing
resources and channelling them to productive uses (Kazmi, 2008;Ekore 2014;
Ismail, Rose, Uli & Abdullahi, 2014). On the other hand, organizational
factors are the strategic strengths that are developed in various functional
units in the organization which are essential for the formulation and
implementation of strategies (Kazmi, 2008; Ekore, 2014). Resources, whether
tangible or intangible, may remain worthless without the organizational factors
to develop them(Ismail et al, 2014). Many strategists argue that organizational
factors are the result of the organization’s knowledge base which is defined as
the knowledge and skills of its staff (Ismail et al, 2014). Researchers are
interested in organizational factors for two reasons. Firstly, they would like
to know what competencies exist within the organization to exploit the
opportunities and confront the threats in its environment. Secondly, they would
like to determine what potentials would be developed in order to exploit
opportunities and overcome threats in the future.Organizational factors are
numerous and varied. They could be organizational skills, organizational
integration, product development, technological capabilities, innovation,
organizational culture, stakeholders’ management, knowledge management (Ismail
et al, 2014; Prahalad & Hamel, 1990; Stalk,Evans & Shulman,1992).

     Kazmi (2008) also argued that strategic
advantages are the results of organizational capabilities/factors.Strategic
advantages are the outcome of the activities of the organization in its bid to
generate greater economic value for its customers, the reward of which are such
financial benefits like profitability, return on investments and non-financial
advantages like market share or reputation(Kazmi, 2008; Prahalad & Hamel,
1990).Competitive advantage is the common example of strategic advantage
created by companies.A company is said to have competitive advantage if it is
able to create more economic values than its competitors in the industry
(Akinbola, Adegbuyi & Otokiti, 2014).According to Prahalad and Hamel,
(1990), the source of competitive advantage has moved from physical to
intangible intellectual and knowledge based resources.

The
challenge facing most mobile network firms today is to identify the set of
intangible market based capabilities or factors as sources for creating
competitive advantage (Akinbola, Adegbuyi & Otokiti, 2014; Akingbade,
2014).  Most of the capabilities
available to the firms are heterogenous and numerous but for a resource to have
and gain advantage, it must be valuable, rare, inimitable, and non-substitutable
(Barney, 1991). It is only when these scarce resources or capabilities are
identified and appropriate programme developed to meet the above criteria
before an organization can have competitive advantage (Akinbola, Adegbuyi &
Otokiti, 2014; Barney, 1991). There are different views about where the sources
of competitive advantage are generated from.The two common views are the
capabilities based view and the resources based view.

There
are two opinions on the capabilities based view.According to Zhang(2008), the
first is the core competence opinion postulated by Prahalad and Hamel (1990)
and the remaining one is the overall capability opinion given by Stalk,Evans
and Shulman (1992). Prahalad and Hamel (1990) cited in Zhang (2011) described
core competence as the organization’s retained knowledge, especially the
knowledge concerning how to manage the numerous types of producing skills and
how to combine the network of technologies, Zhang (2008).They highlighted three
criteria to identify corporate core competence as follows; Firstly, it must be
able to co-ordinate several products and markets. Secondly, they should
guarantee measurable advantages to the final consumers. Thirdly, they must be
extremely difficult for competitors to copy (Prahalad & Hamel, 1990). On
their part, Stalk, Evans and Shulman (1992) submitted that a successful company
should focus on its behaviours especially the organizational actions and
business systems as well strategize on improving its activities as a basic
strategic goal, Zhang (2008).  By this,
they postulated the idea of total capacity as the general skills and experience
among the employees of the organization (Zhang, 2011).

          The mobile telecommunication network
has a market share of 72% of the global telecommunication industry (GSMA,
2016). Equally, in Africa, the mobile network controls 80% share of the
telecommunication market. In Nigeria, the mobile telecommunication network has
99.74% share of the telecommunication industry.In a quest for telecommunication
services, the Federal Government of Nigeria promulgated Decree no. 75 of 1992
which deregulated the telecommunication industry and created the Nigerian
Communication Commission as the apex regulator of the industry. Before the
deregulation of the telecommunication service in 1992, Nigeria had only about
400,000 installed telephone lines and 25,000 analogue mobile lines which
translated to 0.4 lines for 100 inhabitants(Ndukwe,2003). Putting it in another
way, this amounted to a tele -density of about 250 inhabitants to one telephone
line i.e0.45% (Ndukwe, 2003; Hassan, 2011). In January 2001, Nigeria, through
the telecommunication regulatory body, Nigerian Communication Commission (NCC),conducted
the world acclaimed transparent auction of its digital mobile licenses which
were won by three service providers, namely MTN (Nigeria), Econet Wireless
(Later Vmobile, later Celtel,later Vodafone, later Zain and now Airtel) and the
national carrier, MTEL (a subsidiary of NITEL) at the cost of N285 Million each
(Ndukwe, 2003). In the year 2002, the second national carrier, Globacom was
granted an operating license while in January 2007, the Emerging Markets
Telecommunication Service (EMTS) under the brand name of Etisalat was granted a
unified access license (NCC, 2007). In 2009, another unified access license was
granted to Smile Communications.In December, 2014, the national carrier license
earlier granted to Mtel was acquired by Natcom which they (Natcom) launched as
Ntel in April, 2016. From these accounts, there are six GSM service providers
in the Nigerian telecommunication industry. They are: MTN, Globacom, Airtel,
Etisalat, Smile and Ntel.

         The Global system for mobile
communication(GSM, originally called Groupe Special Mobile) is a technology
developed by the European Telecomunication Standards Institute (ETSI) to
identify the rules or the code for second-generation (2G) digital cellular
networks which use the altered version of Time Division Multiple Access (TDMA)
deployed in mobile phones.It was first deployed in Finland in July 1991 and is
the most popular of the three digital wireless telephony technologies (TDMA,
GSM and CDMA), (Abubakar & Bello, 2013).According to Abubakar and Bello
(2013), the GSM .technology network is made of three subsystems such as a
network switching subsystem (NSS), a base station subsystem (BSS) and the
operations support subsystem (OSS).The network describes the technology of the
band system of the wireless communication( like GSM,CDMA,WAN).This technology
is made of MSC (Mobile Switching Centre) and other connected registers.The base
station system is made of  a BSC (Base
Station Controller) and many BTSes (Base Transceiver Stations).The operating
support system (OSS) coordinates the monitoring and maintenance of the
technology of the network. Users (subscribers) deploymobile devices referred as
User Equipment (UEs) such as  hand sets
to connect with the help of the network.The other connecting system between the
subscriber and the network is the BTS which is regulated by the original base
station controller through the base station control function (BCF).The BCF is
executed as a separate unit or combined in a TRX (Transceiver) as a single
entity base station.The BCF supplies an operations and maintenance (O& M)
linkage to the network management system (NMS) and coordinates  operational states of TRX as well as software
and alarm linkage.

              The mobile telecommunication
network since its deployment in Nigeria has increased the teledensity from
0.45% in 1992 to 107.87% in 2015 (NCC,2016). The subscription level also
increased from 425,000 lines 1992 to 154,529,780 GSM lines in 2016, which
represents 355% increase.  Table 1.1
shows the subscription level for GSM lines in Nigeria from 2002 to 2016

Table
1.1:  Number of Subscribers to GSM technology
in Nigeria (2002 -2017)

Years

No of
Subscribers

Teledensity

2016

154,529, 780

110.00

2015

151,017,244

107.87

2014

139,143,610

99.39

2013

127,606,629

91.15

2012

113,195,951

80.85

2011

95,886,714

68.49

2010

88,348,026

63.11

2009

74,518,264

53.23

2008

64,296,117

45.93

2007

41,975,275

29.98

2006

33,858,022

24.18

2005

19,519,154

16.27

2004

10,201,728

8.50

2003

4,021,945

3.35

2002

2,271,050

1.89

Source:
NCC 2017 Website

            It is to be noted that the
teledensity in Table 1 was computed on the basis of a population of 126 Million
for Nigeria until 2005 and from 2006, it was computed on a population of 140
million people.The penetration level from December, 2007 is based on active
subscribers while from 2002 to 2006, it was based on connected subscribers
(NCC, 2016).

The
contribution of the telecommunication industry to the Nigerian wealth basket is
tremendous.Table1. 2 shows the contribution of the telecommunication industry
to the Nigerian Gross Domestic Product (GDP).

Table1.2:The
Contribution of the telecommunication industry to the GDP of

Year

Jun.2016

2015

2014

2013

2012

2011

2010

% contribution
to GDP

9.80%

8.50

7.60

7.40

7.70

8.60

8.90

Source:
2017 NCC Website.

          The GSM technology controls the
Nigerian telecommunication industry. Table 1.3 below shows the market share of
each of the three technologies in the Nigerian telecommunication market.

Table  1. 3: Percentage Market share by Technology
as at January, 2017

Technology

Mobile
GSM

Mobile
(CDMA)

Mobile
Wireless

Fixed
Wired

VOIP

%
Market Share