Delegation with Technology Migration: An Empirical Analysis of Mobile Virtual Network Operators

37 Pages Posted: 6 Apr 2020

See all articles by Fan Zou

Fan Zou

University of South Carolina - Darla Moore School of Business

Yan Dong

University of South Carolina - Darla Moore School of Business

Kejia Hu

Vanderbilt University - Operations Management

Sriram Venkataraman

University of South Carolina

Date Written: March 25, 2020

Abstract

This study examines the impact of mobile virtual network operators (MVNOs) on the performance of mobile network operators (MNOs) in the presence of overlapping generations of wireless mobile technologies (2G and 3G). MVNOs distribute MNOs’ mobile services to customers without owning any spectrum or network infrastructures. Some MVNOs are wholly owned by MNOs with a revenue-sharing mechanism (branded MVNOs), while others operate through wholesale agreements with MNOs (third-party MVNOs). By focusing on the impact of MVNOs on MNOs’ performance, we investigate governance issues, e.g., delegation vs. ownership, in supply chains with overlapping generations of technologies. Using proprietary data, we design a quasi-experiment to analyze branded and third-party MVNOs. First, we use a sliding window adjusted difference-in-differences model as an exploratory analysis. Next, in the main analysis, we employ dynamic propensity score matching, which allows us to explore the variation of the impact over time. We find that branded and third-party MVNO launches both increase an MNO's 2G market share, whereas its 3G market share increases only with a third-party MVNO launch. In addition, the positive effects diminish over time for branded MVNOs, but strengthen for third-party MVNOs. These results suggest that, when launching MVNOs, managers should decide on supply chain governance based on technologies and market maturity. If the focus is to quickly seize the market share with new mobile technologies, branded MVNOs are preferred. On the other hand, if the focus is to expand in a lower-end, mature market, delegating to third-party MVNOs may be more effective.

Keywords: Delegation, Mobile Network Technology, Mobile Virtual Network Operators, Dynamic Propensity Score Matching

Suggested Citation

Zou, Fan and Dong, Yan and Hu, Kejia and Venkataraman, Sriram, Delegation with Technology Migration: An Empirical Analysis of Mobile Virtual Network Operators (March 25, 2020). Available at SSRN: https://ssrn.com/abstract=3560728 or http://dx.doi.org/10.2139/ssrn.3560728

Fan Zou (Contact Author)

University of South Carolina - Darla Moore School of Business ( email )

1014 Greene St
Columbia, SC 29208
United States

Yan Dong

University of South Carolina - Darla Moore School of Business ( email )

1705 College St
Francis M. Hipp Building
Columbia, SC 29208
United States

Kejia Hu

Vanderbilt University - Operations Management ( email )

Nashville, TN 37203
United States

Sriram Venkataraman

University of South Carolina ( email )

701 Main Street
Columbia, SC 29208
United States

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