M-Commerce and Business Networks

Across the globe, mobile commerce (m-commerce) service providers are testing or planning to test a wide variety of business models. One of the striking features of m-commerce business models is the complex network of business relationships needed to create, launch, and sustain such services. Such business networks are comprised of telecommunications service providers, various types of device makers, payment systems and financial linkage providers, and various third-party value-adding companies.

A key question for m-commerce strategists and their financial supporters is this: What types of business network arrangements work toward promoting early success and long-term sustainability of m-commerce ventures? To seek an answer to this question, it is helpful to do the following:

• Focus on a lead country where mobile telecommunications and m-commerce have developed further than most other places.

• Draw from theoretical schemas that help us to understand complex global networks, especially networks that cross the boundaries of many nations.

From the mid-1980s, Finland has been one the leading countries in developing and deploying mobile services, in terms of per capita availability of mobile handset terminals and mobile service accounts. With its flagship company Nokia, Finland is a global technological leader in the development of mobile communication networks and terminals. By the start of the new millennium, large numbers of new start-up companies emerged in Finland to serve Nokia's and other companies' needs for mobile applications and service development. Regions such as the Helsinki suburb of Espoo and the remote Arctic Circle city of Oulu have developed as mini-Silicon Valleys, with many startup firms focused strongly on mobile communications and m-commerce.

The number and diversity of agreements, strategic alliances, and mergers featuring firms from Finland and crisscrossing geographical barriers has been staggering. The merger of Sweden's Telia and Finland's Sonera adds to this growing list. This merger represents a step toward the emergence of a pan-Nordic/Baltic telecommunications operator, with the requisite critical mass needed to thrive in that region as well as to make some global impact. Just as SAS—based on the combined strengths of Sweden, Denmark, and Norway—succeeded in the global airline market, the newly merged Scandinavian operator will have a global footprint.

Business network theories enjoyed decades of popularity in Scandinavia and were employed to study the internationalization and global linkages of Scandinavian firms. Presented in this chapter is an approach to understanding the mobile telecommunications industry, and especially, the emergent m-commerce space in Finland, using the Scandinavian-inspired business network analysis methods. In this chapter, we aim to illustrate the dynamics of the industry by presenting a market model based on business network theories. The information in this chapter is drawn from studies conducted at the Helsinki School of Economics as well as the experience of the authors.

While the chapter draws mainly from the Finnish experience, the overall objective is to create a generic analysis tool for m-commerce market actors to use to assess their strategic positions. The key questions addressed are the following:

1. What kinds of actors are there in the mobile telecommunication business, and especially in value-added m-commerce services?

2. What kinds of resources do these actors rely on?

3. How are the various actors related to each other?

4. How do these relationships help or hinder the strategy of each actor?

5. What general lessons can be drawn about the potential successes and failures of m-commerce actors and strategies?

Developed in this chapter first is a framework from illustrative analyses of the Finnish situation. Next, the model is outlined in a generic form. Suggestions are then provided for customization of the model for various countries and different market needs. Conclusions and future research directions round out the chapter.