Telecommunication infrastructure investments and firm performance

This research adopts Barua´s (1998) three-tier business value complementarity (BVC) model to study the performance of telephone companies (Telcos). Our study integrates constructs such as spending on telecommunication infrastructure, assets, plant investment, and operating expenses into the bottom tier of BVC. The second layer incorporates measures of operational efficiency and customer satisfaction. The top tier includes market share as a performance measure of Telco firms. Data were extracted for the year 2001 from the FCC automated reporting management information system (ARMIS) provided by the Industry Analysis Division of the Common Carrier Bureau. As intermediary constructs, operational efficiency and customer satisfaction moderate the relationships between the bottom tier variables and firm performance. Overall, our study provides support for the BVC model approach. Conclusions and implications of this research are discussed.