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The rise and fall of the competitive local exchange carriers in the U.S.: An institutional perspective

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Abstract

The debacle of the telecommunications industry at the turn of the millennium resulted in significant consequences for investors, workers, financial institutions, telecom companies, and the economy in general worldwide. In the midst of the telecom bubble, the CLECs (competitive local exchange carriers) adopted similar or identical business plans and saturated the market, which resulted in destructive competition. In this study, we investigate the isomorphic business models of the CLECs from the perspectives of the new institutional theory. We argue that the combined coercive, mimetic, and normative institutional forces exerted on the companies by the actors who controlled the funding, managed the business, and provided the information fashioned the isomorphic CLEC business models, which in turn contributed to the demise of these companies and thus the burst of the telecom bubble. Evidence of the institutional influences on CLECs and the actors exerted the influences are presented and their consequences are discussed.

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Authors and Affiliations

  1. Department of Information Technology & Operations Management, College of Business, Florida Atlantic University, Boca Raton, FL, 33431-0991, USA

    Qing Hu & C. Derrick Huang

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  1. Qing Hu
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  2. C. Derrick Huang
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Correspondence to Qing Hu.

Additional information

Qing Hu is Professor of Information Systems in the Department of Information Technology & Operations Management at Florida Atlantic University. He earned his Ph.D. in Computer Information Systems from the University of Miami. His research interests include economics of information technology (IT), IT strategy and management, and information security. His work has been published in leading academic journals including Information Systems Research, Journal of Management Information Systems, Communications of the ACM, Communications of the AIS, California Management Review, and IEEE Transactions on Software Engineering. He also serves as associate and guest-editors for a number of IS journals and major conferences.

C. Derrick Huang is Assistant Professor in the Department of Information Technology & Operations Management in the College of Business at Florida Atlantic University. Previously, as a practitioner, he held executive-level positions in the area of marketing and strategic planning in a number of high-tech companies. Dr. Huang’s research interest lies in the business value and strategic impact of information technology in organizations, and his current focus is on the economics and management of information security investments. He holds Ph.D. from Harvard University.

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Hu, Q., Huang, C.D. The rise and fall of the competitive local exchange carriers in the U.S.: An institutional perspective. Inf Syst Front 8, 225–239 (2006). https://doi.org/10.1007/s10796-006-8781-1

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  • DOI: https://doi.org/10.1007/s10796-006-8781-1

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