The effects of asset-light strategy on competitive advantage in the telephone communications industry

This study investigates how asset-light operations generate competitive advantage in the telephone communications industry. Competitive advantage is defined as the ability of a firm to generate returns above its synthetic normal return. Three regression models are developed to describe the relationships between asset-light operations and competitive advantage. This empirical study provides several insights: (1) Asset-light operations significantly contribute to competitive advantage in the telephone communications industry, but this effect is more critical in the wireless communications industry than among landline-based firms. (2) Firms with more light assets tend to have a lower book value of tangible resources. (3) Firms involving R&D and emphasising asset-light operations focus more on operational cost reduction than efficient management of their fixed assets. The last result indicates that telephone communications companies have been competing in 'light' operating assets rather than 'light' fixed assets.