We investigate the financial implications of a multinational firm’s choice between outsourcing and integration from the perspective of the supplier. Using a simple model, we explore the extent to which an integrated supplier’s access to finance, as well as its sources of funding, change relative to a firm supplying a multinational at arm’s-length. The model predicts that integrated firms have b...

A central debate in industrial policy today is that between proponents of large vertically integrated firms on the one hand and those of networks of small specialized producers on the other. This paper argues that neither institutional structure is the panacea its supporters claim. The menu of institutional alternatives is in fact quite large, and both firms and networks — of which there are se...

Vertical integration has received much attention in the last 25 years and there are wellknown theories that explain this behavior. However, the one common thread that runs through virtually all of this research is the assumption of private property rights. Very little attention has been paid to how firms behave when the property rights structure under which they operate changes. The commercial ...

Recently, the European Commission has decided to implement a simplified procedure in the context of vertical integration. If the combined market shares of the merging firms are less than 25 percent, upstream and downstream, the Commission will consider the merger harmless. The purpose of this study is to examine the welfare aspects of vertical integration in a simple model and investigate the a...

In vertical integration literature, controversy remains over how organizational cost changes after vertical integration and how technological uncertainty influences vertical integration decisions. To reach a reconciliation, I draw on knowledge-based view of the firm (Grant, 1996, 1998; Spender, 1996, 1998), and propose a contingency model that examines moderating effects of knowledge absorptive...

This paper explores the motives for vertical integration in the US generic pharmaceutical industry. There is some evidence of strategic complementarity: a firm is more likely to enter a generic drug market in a vertically integrated manner if it expects a higher degree of vertical integration among rivals. This suggests that vertical integration is characterized by bandwagon behavior. While ban...

This study aims to analyze the determinants of vertical integration (ownership and contract-ing) among peasant farmers in Northern Algeria. The choice of asset control is between ownership and a simple contracting. Thus, the integration of vertical stages of agricultural produc-tion leads to higher gross margins, influences the choice of marketing and supply channels, and improves market partic...