Converging Themes: Networks, International Performance and the Telecoms Sector

Abstract

The concept of the global factory sees the multinational enterprise (MNE) becoming much more like differentiated networks (Buckley and Ghauri, 2004). MNEs choose location and ownership policies so as to maximize profits, and this does not always involve internalizing their activities (Buckley, 2010). This is evident in the global telecommunications industry, where firms operating in the fast-changing telecommunications network environment need to build a large user base of new activities and businesses as quickly as possible to create or to sustain competitive advantages. Subcontracting and outsourcing have been associated with the decentralization of the organization to a new organizational form, often conceptualized as the network enterprise (Castells, 1998). The managed services model — which covers the end-to-end technology stack from network infrastructure right through to business applications — has developed significantly over the last 15 years in response to this trend in outsourcing, with the market in Ireland alone valued at €765 million in 2008 (Corrigan, 2008). Managed services have emerged in response to demand from businesses that increasingly recognize that outsourcing non-core business and IT activities enables them to focus on their strategic activities and on their customers, helping to keep costs low and stay ahead of the competition. Critical to this view of the global factory and regional business networks is the role played by small firms (Rugman and D’Cruz, 2000). These small firms, or high-technology SMEs (HTSMEs), are an integral part of the regional business networks, as they are suppliers, customers and, in some cases, competitors of MNEs.