CONVERGENCE, VALUE CHAIN GOVERNANCE, AND BUSINESS PERFORMANCE

Abstract

those are the relations between convergence and cross-industry structure, firm performance, and value chain governance. In the first study, we analyzed the convergence patterns and cross-industry network structures established on the relations between telecom, Internet, broadcasting, entertainment and cable industries. To evaluate the degree of convergence, a value chain governance model was developed and applied to about 700 companies which are doing business in Korean ICT sector. A results based on data from 1999-2005 indicate that, the degree of cross-industry convergence has been continuously increased in all seven years. The results also showed that telecom sector played the leading role in driving ICT convergence. In addition, we found Internet, terrestrial broadcasting, and entertainment industries noticeably transforming their cross-sectoral relations in accordance with the changes of their strategic necessity over this time period. In the second research, we performed regression analysis to examine the relationships between firm’s degree of convergence and the business performance of our companies during 2002-2005. In the research model, we used Tobin’s q, a financial market-based measure, as a proxy variable of firm performance and firm’s degree of convergence as an independent variable. The analytical results indicate that in the recent years, 2004 and 2005, the inclusion of the convergence index in the model increased the variance explained in Tobin’s q significantly. These results are consistent with the notion that higher degree of convergence is associated with higher market value. However, the positive effects of convergence on firm performance are only recent phenomena, and further research is needed to certify the effect of convergence strategy on performance. Finally, in light of value chain governance of converged ICT sector, the relations between value chain governance and business performance are examined. The objective is to identify which combination between value chain stages is lead to better business performance. In the research, we classify our sample companies to converged ICT value chain stages (content stage, delivery channel stage, and device/interface stage) and identify its impact on business performance through regression model. The results indicate that relations within contents stage are most significant and the relations between delivery channel and content are also have significant impact on firm performance. In this dissertation, we study the relations between industry convergence and business performance with value chain governance concept. Through a thorough analysis of these three researches, this study hopes to provide policy implications and strategic insights to regulators and managers in ICT sector.; The Information and Communication Technologies (ICT) sectors are undergoing a fundamental transformation. Determinant factors in this transformation process are deregulations and technological advancements, resulting in an important move toward business and industry convergence. Regarding the value chain perspective, industry convergence plays the most central role in the transformation of the established and new telecommunications and media industries. In spite of the large number of and diverse literature on convergence, relatively few have specifically dealt with the business and industry perspectives with the empirical approach. The objective of this dissertation is to examine the impact of convergence on the cross-industry value chain governance and business performance using analytical model with empirical data. To identify the various effects being driven by industry convergence, this study is organized by three perspectives of relationships between convergence and its consequences