{"title":"Market Structure, Profitability and Regulation of Telecommunication Industry in India","authors":"Madhuri Saripalle, Surabhi Somya","doi":"10.1177/09721509241232198","DOIUrl":null,"url":null,"abstract":"The telecom industry in India has witnessed exponential growth in the past decade; however, its profitability has been on the decline post 2008. This study analyzes the determinants of profitability of the industry during 2010–2022 using the conventional structure-conduct-performance paradigm. We estimate a dynamic panel data model to understand the role of endogeneity and profit persistence in the industry. Our findings are contrary to what the theory predicts and highlight the importance of the regulatory and institutional framework of the industry. Results suggest that there is profit persistence in the industry. The study finds that among conduct variables, export intensity has a positive impact while selling intensity has a negative impact on profitability. While size is not significant, concentration has a negative impact on profitability. Import has a negative impact on profitability. These results suggest that as the telecom industry transitioned from a monopoly to an oligopolistic market with players competing in different domains and services, selling and advertisement intensity has diminishing returns to profitability while export intensity emerges as an important driver of profitability. Results also suggest the importance of the production-linked incentive scheme encouraging exports and the need for regulating concentration and encouraging import substitution.","PeriodicalId":47569,"journal":{"name":"Global Business Review","volume":"23 1","pages":""},"PeriodicalIF":2.3000,"publicationDate":"2024-03-04","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":"0","resultStr":null,"platform":"Semanticscholar","paperid":null,"PeriodicalName":"Global Business Review","FirstCategoryId":"1085","ListUrlMain":"https://doi.org/10.1177/09721509241232198","RegionNum":0,"RegionCategory":null,"ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":null,"EPubDate":"","PubModel":"","JCR":"Q3","JCRName":"BUSINESS","Score":null,"Total":0}
引用次数: 0
Abstract
The telecom industry in India has witnessed exponential growth in the past decade; however, its profitability has been on the decline post 2008. This study analyzes the determinants of profitability of the industry during 2010–2022 using the conventional structure-conduct-performance paradigm. We estimate a dynamic panel data model to understand the role of endogeneity and profit persistence in the industry. Our findings are contrary to what the theory predicts and highlight the importance of the regulatory and institutional framework of the industry. Results suggest that there is profit persistence in the industry. The study finds that among conduct variables, export intensity has a positive impact while selling intensity has a negative impact on profitability. While size is not significant, concentration has a negative impact on profitability. Import has a negative impact on profitability. These results suggest that as the telecom industry transitioned from a monopoly to an oligopolistic market with players competing in different domains and services, selling and advertisement intensity has diminishing returns to profitability while export intensity emerges as an important driver of profitability. Results also suggest the importance of the production-linked incentive scheme encouraging exports and the need for regulating concentration and encouraging import substitution.
期刊介绍:
Global Business Review is designed to be a forum for the wider dissemination of current management and business practice and research drawn from around the globe but with an emphasis on Asian and Indian perspectives. An important feature is its cross-cultural and comparative approach. Multidisciplinary in nature and with a strong practical orientation, this refereed journal publishes surveys relating to and report significant developments in management practice drawn from business/commerce, the public and the private sector, and non-profit organisations. The journal also publishes articles which provide practical insights on doing business in India/Asia from local and global and macro and micro perspectives.