Improving performance through vertical disintegration: evidence from UK manufacturing firms
✍ Scribed by Panos Desyllas
- Publisher
- John Wiley and Sons
- Year
- 2009
- Tongue
- English
- Weight
- 179 KB
- Volume
- 30
- Category
- Article
- ISSN
- 0143-6570
- DOI
- 10.1002/mde.1452
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✦ Synopsis
Abstract
Unlike previous work on the vertical integration–performance relationship, we investigate the performance consequences of vertical disintegration. We offer a theoretical justification for the disintegration decision and we condition the disintegration effect on performance on the initial degree of firm integration, the timing and the direction of disintegration. Using a sample of UK manufacturing firms and controlling for disintegration endogeneity, we find that disintegration eventually results in improved operating performance, particularly when disintegration occurs as a reaction to poor performance and in cases of forward between‐sector disintegration. However, being highly integrated does not guarantee gains from disintegration. The implications of these findings are discussed. Copyright © 2008 John Wiley & Sons, Ltd.