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The competitive advantage potential of vertical integration

Author

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  • Fronmueller, M. P.
  • Reed, R.

Abstract

There is a widely held belief that backward vertical integration provides firms with the potential for a low-cost competitive advantage, and forward vertical integration provides them with the potential for a differentiation advantage. This study builds theory that underpins that belief, and then tests the theory using a sample of large firms. While our findings do not support the relationship between backward vertical integration and low cost, they do provide strong support for arguments linking forward vertical integration with differentiation-based competitive advantage.

Suggested Citation

  • Fronmueller, M. P. & Reed, R., 1996. "The competitive advantage potential of vertical integration," Omega, Elsevier, vol. 24(6), pages 715-726, December.
  • Handle: RePEc:eee:jomega:v:24:y:1996:i:6:p:715-726
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    References listed on IDEAS

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    6. Perry, Martin K., 1989. "Vertical integration: Determinants and effects," Handbook of Industrial Organization,in: R. Schmalensee & R. Willig (ed.), Handbook of Industrial Organization, edition 1, volume 1, chapter 4, pages 183-255 Elsevier.
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    13. MacDonald, James M, 1985. "Market Exchange or Vertical Integration: An Empirical Analysis," The Review of Economics and Statistics, MIT Press, vol. 67(2), pages 327-331, May.
    14. Perry, Martin K, 1978. "Vertical Integration: The Monopsony Case," American Economic Review, American Economic Association, vol. 68(4), pages 561-570, September.
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    Cited by:

    1. Manuel Portugal Ferreira & Sungu Armagan & Dan Li, 2007. "Vertical Integration For Full Outsourcing: Growth And Internationalization Of A Portuguese Packaging Firm," Working Papers 4, globADVANTAGE, Polytechnic Institute of Leiria.
    2. repec:eee:jomega:v:75:y:2018:i:c:p:118-130 is not listed on IDEAS

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