Study of R&D cyclicity in telecom industry opportunities for R&D companies

Abstract

Telecommunications Industry (further referred to as "telecom industry" in this report) worldwide has shown extremely interesting characteristics. Recent studies report nature of such peculiarities. Our focus in this study is to examine the characteristics of R&D activities in telecommunications industry. Our hypothesis is that, R&D activities in this industry are cyclical in nature and are linked with the business cvcles of the industry. Based on this we will try to answer the question - "Does this cyclical nature of R&D in telecom industry indicate opportunities for R&D companies?" The nature of telecommunication (industry structure is extremely complex. The industry is divided into several layers and these layers are hierarchical in nature. Each layer forms its own value network that further interacts with the value network of layer below it as well as above it. Each entity in this value network further has its own value chain. The study of this layered structure and the value network in each layer will be presented in this report. We will also briefly touch upon the evolution of telecom industry. After the discussion on structure and evolution of telecom industry, we will analyze the changes and the nature of dynamics driving these changes in this industry based upon classical economic theory as well as value chain theory. Based upon which we will construct a model to capture these changes and to bridge the theoretical and empirical gap between value chain theory and classical economics. We will use this model for testing our hypothesis about cyclical nature of R&D in telecom industry. Please note that, this model is still empirical in nature and needs to be improved by building an econometric model around it. Please note that, due to complex and vast nature of the industry we have limited our scope of discussion to wireless industry while generalizing the findings wherever appropriate. We then apply various R&D outsourcing models to identify the situations under which organizations in this industry will outsource the R&D. What we attempt here is to establish a linkage the dynamics of industry life cycle to that of cyclical nature of R&D in this industry. Please note that, due to complex and vast nature of the industry we have limited the scope of this part of study only to certain layers within the industry and also to certain segments of the value network in that layer. We also have not included in our scope inter-layer dynamics of telecom industry. Also we have not tried to generalize our findings across the telecom industry. In chapter 1, we will discuss the reasons and nature of the problem along with the summary of literature study. Chapter 2 will discuss the structure of telecommunications industry. In chapter 3, we will establish the cyclical nature of R&D in telecom industry. Chapter 4 will present results of linkages between R&D cycles and industry life cycles based on our case studies. Chapter 5 presents the conclusions. Thesis Supervisor: Prof Shyamal Roy