A study on korean telecommunications operators' expenditure efficiency

Abstract

Korean telecommunications operators have spent almost 40% of sales revenue on marketing and capital expenditures. As such, it is crucial for top management to set the right amount of expenses. However, thus far there are few literatures which empirically evaluate the scale of expenditure in the telecommunications industry so far. In this research, we examine telecommunications operators`` technical and allocative efficiency on these two accounts using Data Envelopment Analysis (DEA). Our results indicated that telecommunications operators`` technical and allocative efficiencies are enhancing over time, and fixed network service providers are more efficient than mobile service providers. In additions, it is found that there are differences in the causes of inefficiency depending on their positions, not only in terms of whether they are first or late mover, but also among late movers themselves.