Cross-sector competition in telecommunications: An empirical analysis of diversification activities

Cross-sector competition in the information and communications technology sectors (ICT sectors) constitutes a key strategic challenge for telecommunications companies. Due to increasing convergence, value creation is resulting in a greater degree of interaction. The diversification potential of telecommunications businesses is therefore changing with respect to associated ICT sectors, such as hardware, software and media. The article analyses cross-sector competition in the telecommunications industry on the basis of the diversification activities of ICT companies. A concentration of competitive interdependence in the ICT sectors is demonstrated using a cluster analysis of 34,142 companies. The cross-sector activities of telecommunications companies are investigated using contingency and dependency analyses, and the diversification- related competition in the telecommunications sector is also analysed. With regard to the telecommunications sector, particularly high level cross-sector competition with the media industry is identified, as well as strong diversification activities in the software sector. The results are used to derive the potentials and risks that have a significant bearing on the structure of the cross-sector competitive environment of telecommunications companies. © Gabler Verlag 2011.