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Forward Integration and Innovation: Transaction Costs and Beyond

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  • Teece, David J.

Abstract

The Transaction Cost Economics (TCE) theory developed by Oliver Williamson has provided a deep understanding of factors behind the vertical integration decisions of firms. This paper begins with a brief case study of forward integration in the early years of select industries. The analysis suggests that other factors, such as capabilities, can complement the TCE approach. The paper shows how TCE has been combined with these other concepts and the Profiting From Innovation framework to provide a more complete analytical toolkit for evaluating forward vertical integration decisions, particularly in the context of innovation.

Suggested Citation

  • Teece, David J., 2010. "Forward Integration and Innovation: Transaction Costs and Beyond," Journal of Retailing, Elsevier, vol. 86(3), pages 277-283.
    • Handle: RePEc:eee:jouret:v:86:y:2010:i:3:p:277-283
    DOI: 10.1016/j.jretai.2010.07.013
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    References listed on IDEAS

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    1. Teece, David J., 2010. "Technological Innovation and the Theory of the Firm," Handbook of the Economics of Innovation, in: Bronwyn H. Hall & Nathan Rosenberg (ed.), Handbook of the Economics of Innovation, edition 1, volume 1, chapter 0, pages 679-730, Elsevier.
    2. Jacobides, Michael G. & Knudsen, Thorbjorn & Augier, Mie, 2006. "Benefiting from innovation: Value creation, value appropriation and the role of industry architectures," Research Policy, Elsevier, vol. 35(8), pages 1200-1221, October.
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    Cited by:

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    2. Hou, Jianyun & Huo, Xuexi, 2015. "Transaction Costs and Farm-to-Market Linkages: Empirical Evidence from China Apple Producers," 2015 Conference, August 9-14, 2015, Milan, Italy 211746, International Association of Agricultural Economists.
    3. Hiroko Nagano, 2020. "The impact of knowledge diversity: Integrating two economic perspectives through the dynamic capability approach," Managerial and Decision Economics, John Wiley & Sons, Ltd., vol. 41(6), pages 1057-1070, September.
    4. Broekhuizen, Thijs L.J. & Lampel, Joseph & Rietveld, Joost, 2013. "New horizons or a strategic mirage? Artist-led-distribution versus alliance strategy in the video game industry," Research Policy, Elsevier, vol. 42(4), pages 954-964.
    5. Noriaki Hashimoto, 2021. "Self-Expansion or Internalization as the Two Processes of Vertical Integration: What Informs the Decision?," Economies, MDPI, vol. 9(4), pages 1-14, December.
    6. Moerchel, Alexander & Tietze, Frank & Urmetzer, Florian, 2023. "Visualising dynamics in innovation ecosystems: A new method and demonstration in the commercial aircraft MRO ecosystem," Technovation, Elsevier, vol. 128(C).
    7. Lim, Boram & Xie, Ying & Haruvy, Ernan, 2022. "The impact of mobile app adoption on physical and online channels," Journal of Retailing, Elsevier, vol. 98(3), pages 453-470.
    8. Reinartz, Werner & Wiegand, Nico & Imschloss, Monika, 2019. "The impact of digital transformation on the retailing value chain," International Journal of Research in Marketing, Elsevier, vol. 36(3), pages 350-366.
    9. Wang LIJIA & Huo XUEXI, 2014. "Transaction Costs Comparison Between Cooperatives And Conventional Apple Producers: A Case Study Of Northwestern China," Annals of Public and Cooperative Economics, Wiley Blackwell, vol. 85(2), pages 233-255, June.

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