Technical change, competition and vertical integration

Technical change, competition and vertical integration This paper starts with a survey of the received theories of vertical integration. We then extend these theories by arguing that while uncertainty in general will make integration more effective, a particular type of uncertainty, the possibility of technological obsolescence, works the other way. After making this point at a conceptual level, we build a model to study how the frequency of technological change interacts with the intensity of competition to influence the optimal level of integration. The predictions of the model are then tested and very strongly supported by data from 93 industries. http://www.deepdyve.com/assets/images/DeepDyve-Logo-lg.png Strategic Management Journal Wiley

Technical change, competition and vertical integration

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Publisher
Wiley
Copyright
Copyright © 1986 John Wiley & Sons, Ltd.
ISSN
0143-2095
eISSN
1097-0266
DOI
10.1002/smj.4250070405
Publisher site
See Article on Publisher Site

Abstract

This paper starts with a survey of the received theories of vertical integration. We then extend these theories by arguing that while uncertainty in general will make integration more effective, a particular type of uncertainty, the possibility of technological obsolescence, works the other way. After making this point at a conceptual level, we build a model to study how the frequency of technological change interacts with the intensity of competition to influence the optimal level of integration. The predictions of the model are then tested and very strongly supported by data from 93 industries.

Journal

Strategic Management JournalWiley

Published: Jul 1, 1986

References

  • The Nature of the Firm
    Coase, Coase

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