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Improving performance through vertical disintegration: evidence from UK manufacturing firms

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  • Panos Desyllas

    (University of Manchester, Manchester Business School, Manchester, UK)

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    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.

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    Article provided by John Wiley & Sons, Ltd. in its journal Managerial and Decision Economics.

    Volume (Year): 30 (2009)
    Issue (Month): 5 ()
    Pages: 307-324

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    Handle: RePEc:wly:mgtdec:v:30:y:2009:i:5:p:307-324

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    Web page: http://www3.interscience.wiley.com/cgi-bin/jhome/7976

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