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Customer satisfaction and vertical integration

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  • Murdock, Marina
  • Ngo, Thanh
  • Richie, Nivine

Abstract

We explore the relationship between vertical integration of the firm and customer satisfaction, contributing to the emerging literature on the interaction of finance and marketing. Using the American Customer Satisfaction Index (ACSI) to measure customer satisfaction from 1995 to 2021 and the vertical integration scores gathered from Frésard, Hoberg, & Phillips (2020), we find that customer satisfaction is higher for vertically integrated firms. We examine two channels—trade credit and inventory management—through which vertical integration may affect customer satisfaction. We find that increased trade credit is associated with higher levels of customer satisfaction, and this relationship is intensified for firms that are more highly integrated along the supply chain. Additionally, customer satisfaction is inversely related to inventory turnover, and this inverse relationship is mitigated by increased relatedness along the integrated supply chain. The findings suggest that control over various stages of production and distribution enables firms to better anticipate and manage inventory levels, reducing the risk of stockouts and overstocking.

Suggested Citation

  • Murdock, Marina & Ngo, Thanh & Richie, Nivine, 2025. "Customer satisfaction and vertical integration," The North American Journal of Economics and Finance, Elsevier, vol. 80(C).
    • Handle: RePEc:eee:ecofin:v:80:y:2025:i:c:s106294082500138x
    DOI: 10.1016/j.najef.2025.102498
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    JEL classification:

    • G30 - Financial Economics - - Corporate Finance and Governance - - - General
    • G34 - Financial Economics - - Corporate Finance and Governance - - - Mergers; Acquisitions; Restructuring; Corporate Governance
    • L14 - Industrial Organization - - Market Structure, Firm Strategy, and Market Performance - - - Transactional Relationships; Contracts and Reputation
    • L22 - Industrial Organization - - Firm Objectives, Organization, and Behavior - - - Firm Organization and Market Structure
    • L25 - Industrial Organization - - Firm Objectives, Organization, and Behavior - - - Firm Performance
    • M30 - Business Administration and Business Economics; Marketing; Accounting; Personnel Economics - - Marketing and Advertising - - - General

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