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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)

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.

Suggested Citation

  • Panos Desyllas, 2009. "Improving performance through vertical disintegration: evidence from UK manufacturing firms," Managerial and Decision Economics, John Wiley & Sons, Ltd., vol. 30(5), pages 307-324.
    • Handle: RePEc:wly:mgtdec:v:30:y:2009:i:5:p:307-324
    DOI: 10.1002/mde.1452
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