Browse > Article
http://dx.doi.org/10.4218/etrij.2021-0185

The impact of 5G multi-access edge computing cooperation announcement on the telecom operators' firm value  

Nam, Sangjun (Industrial Institution Research Section, Electronics and Telecommunications Research Institute)
Publication Information
ETRI Journal / v.44, no.4, 2022 , pp. 588-598 More about this Journal
Abstract
Since multi-access edge computing (MEC) was established as a key enabler of 5G, MEC based on 5G networks (5G MEC) has been perceived as a new business opportunity for many industry players, including telecom operators. Numerous 5G MEC cooperation announcements among companies playing their respective roles in the MEC ecosystem have been recently released. However, because of cooperative and competitive relationships among key players in the MEC ecosystem and the uncertainty of 5G MEC, the announcement of 5G MEC cooperation can negatively affect the telecom operators' firm value. This study investigates the market reaction to announcements of 5G MEC cooperation for telecom operators using an event study methodology. The empirical results show that announcements of 5G MEC cooperation have a negative impact on the telecom operators' firm value. The results also show that the early deployment of 5G networks may reduce the negative impact of 5G MEC cooperation announcements by reducing uncertainty.
Keywords
5G; event study; innovation uncertainty; multi-access edge computing; strategic alliances;
Citations & Related Records
Times Cited By KSCI : 2  (Citation Analysis)
연도 인용수 순위
1 K. Campbell, J. Diffley, B. Flanagan, B. Morelli, B. O'Neil, and F. Sideco, The 5G economy: how 5G technology will contribute to the global economy, IHS Economics & IHS Technology, 2017, pp. 1-34.
2 J. Bright, Driving new business opportunities with multi-access edge computing and 5G, 2019.
3 M.-C. Park, D.-H. Yang, C. Nam, and Y.-W. Ha, Mergers and acquisitions in the telecommunications industry: myths and reality, Etri J. 24 (2002), no. 1, 56-64.   DOI
4 A. Antony Franklin and S. D. Tambe, Multi-access edge computing in cellular networks, CSI Trans. ICT 8 (2020), 85-92.   DOI
5 H. Jalonen, The uncertainty of innovation: A systematic review of the literature, J. Manag. Res. 4 (2012), no. 1. https://doi.org/10.5296/jmr.v4i1.1039   DOI
6 Ericsson, The 5G business potential, second edition, industry digitalization and the untapped opportunities for operators, 2017.
7 S. H. Chan, J. W. Kensinger, A. J. Keown, and J. D. Martin, Do strategic alliances create value? J. Finance Econ. 46 (1997), no. 2, 199-221.   DOI
8 K. S. Im, K. E. Dow, and V. Grover, A reexamination of it investment and the market value of the firm an event study methodology, Inf. Syst. Res. 12 (2001), no. 1, 103-117.   DOI
9 M. Cohen-Meidan, The effects of standardization process on competition: an event study of the standardization process in the us cable modem market, Telecommun. Policy 31 (2007), no. 10-11, 619-631.   DOI
10 B. Cuellar-Fernandez, Y. Fuertes-Callen, and J. A. LainezGadea, The impact of strategic alliances on the market value of telecommunications firms, J. High Technol. Manag. Res. 22 (2011), no. 1, 1-13.   DOI
11 M. Ivezic, Will telcos lose the edge computing battle as well? 2020, Available from: https://5g.security/5g/will-telcos-losethe-edge-computing-battle-as-well/ [last accessed May 2021].
12 J. R. Woolridge and C. C. Snow, Stock market reaction to strategic investment decisions, Strateg. Manag. J. 11 (1990), no. 5, 353-363.   DOI
13 5G Infrastructure Public Private Partnership Edge computing for 5G networks. version 1.0, 2021.
14 J. Borker, What is hyperscale? 2017, Available from: https://www.digitalrealty.com/blog/what-is-hyperscale [last accessed October 2021].
15 C. Jeon, S. H. Han, H. J. Kim, and S. Kim, The effect of government 5G policies on telecommunication operators firm value: Evidence from china, Telecommun. Policy 46 (2022), no. 2. https://doi.org/10.1016/j.telpol.2020.102040   DOI
16 Q.-V. Pham, F. Fang, V. N. Ha, M. J. Piran, M. Le, L. B. Le, W.-J. Hwang, and Z. Ding, A survey of multi-access edge computing in 5G and beyond: fundamentals, technology integration, and state-of-the-art, IEEE Access 8 (2020), 116974-117017.   DOI
17 K. Kalaignanam, V. Shankar, and R. Varadarajan, Asymmetric new product development alliances: win-win or win-lose partnerships? Manag. Sci. 53 (2007), no. 3, 357-374.   DOI
18 C. Bayona, P. Corredor, and R. Santamaria, Technological alliances and the market valuation of new economy firms, Technovation 26 (2006), no. 3, 369-383.   DOI
19 J. D. Neill, G. M. Pfeiffer, and C. E. Young-Ybarra, Technology R&D alliances and firm value, J. High Technol. Manag. Res. 12 (2001), no. 2, 227-237.   DOI
20 D. Elmuti and Y. Kathawala, An overview of strategic alliances, 2001. Management decision.
21 H. Lee, E. Cho, C. Cheong, and J. Kim, Do strategic alliances in a developing country create firm value? Evidence from Korean firms, J. Empir. Finance 20 (2013), 30-41.   DOI
22 S. Das, P. K. Sen, and S. Sengupta, Impact of strategic alliances on firm valuation, Acad. Manag. J. 41 (1998), no. 1, 27-41.   DOI
23 A. Sood and G. J. Tellis, Do innovations really pay off? Total stock market returns to innovation, Mark. Sci. 28 (2009), no. 3, 442-456.   DOI
24 I. Lee and S. B. Wyatt, The effects of international joint ventures on shareholder wealth, Finance Rev. 25 (1990), no. 4, 641-649.   DOI
25 I. Y. Chung, K. J. Koford, and I. Lee, Stock market views of corporate multinationalism: some evidence from announcements of international joint ventures, Quart. Rev. Econ. Finance 33 (1993), no. 3, 275-293.   DOI
26 C. E. Ybarra and T. A. Turk, Strategic alliances with competing firms and shareholder value, J. Manag. Mark. Res. 6 (2011), 1.
27 J. Doukas and L. Switzer, The stock market's valuation of R&D spending and market concentration, J. Econ. Bus. 44 (1992), no. 2, 95-114.   DOI
28 K. M. Kelm, V. K. Narayanan, and G. E. Pinches, Shareholder value creation during R&D innovation and commercialization stages, Acad. Manag. J. 38 (1995), no. 3, 770-786.   DOI
29 ETNO Association, The state of digital communications 2021, 2021.
30 R. Inderst and M. Peitz, Investment under uncertainty and regulation of new access networks, Inf. Econ. Policy 26 (2014), 28-41.   DOI
31 J. Koh and N. Venkatraman, Joint venture formations and stock market reactions: an assessment in the information technology sector, Acad. Manag. J. 34 (1991), no. 4, 869-892.   DOI
32 S. Campart and E. Pfister, The value of interfirm cooperation: an event study of new partnership announcements in the pharmaceutical industry, in Proc. 57th Eur. Meeting Econometric Soc. (Venice, Italy), Aug. 2002.
33 J. Brooke and B. Oliver, The source of abnormal returns from strategic alliance announcements, Pacific-Basin Finance J. 13 (2005), no. 2, 145-161.   DOI
34 A. Sorescu, N. L. Warren, and L. Ertekin, Event study methodology in the marketing literature: an overview, J. Acad. Marketing Sci. 45 (2017), no. 2, 186-207.   DOI
35 D. H. Austin, An event-study approach to measuring innovative output: the case of biotechnology, Am. Econom. Rev. 83 (1993), no. 2, 253-258.