IDEAS home Printed from https://ideas.repec.org/
MyIDEAS: Log in (now much improved!) to save this paper

Vertical organization of production and firm growth behavior

Listed author(s):
  • Fabio Pieri

    (Departamento de Economía Aplicada, Universitat de València)

Many industries are characterized by a marked heterogeneity in vertical boundaries among their firms: some firms are vertically integrated in the production of inputs while others adopt disintegration strategies. This paper empirically explores if different vertical organizational forms are associated with unlike growth “behaviors” within the same industry. To this end, an econometric analysis is conducted over a sample of around 500 Italian machine tool (MT) builders for the period 1998-2007. Ceteris paribus, vertically integrated firms show a distribution of growth rates with a higher number of episodes of “moderate” growth, and this is true in case of both output expansion and contraction. Adjustment costs, organizational slacks, a better coordination along the production chain and a more effective handling of changes in customers’ needs may all concur to explain their more “moderate” growth profile with respect to disintegrated firms. This work provides insight into the output dynamics in a mature industry in which both vertically integrated and dis-integrated firms coexist.

If you experience problems downloading a file, check if you have the proper application to view it first. In case of further problems read the IDEAS help page. Note that these files are not on the IDEAS site. Please be patient as the files may be large.

File URL: ftp://147.156.210.157/RePEc/pdf/eec_1508.pdf
File Function: First version, 2015
Download Restriction: no

Paper provided by Department of Applied Economics II, Universidad de Valencia in its series Working Papers with number 1508.

as
in new window

Length:
Date of creation: Oct 2015
Handle: RePEc:eec:wpaper:1508
Contact details of provider: Postal:
Edifici Departamental Oriental, Campus dels Tarongers, Avda. dels Tarongers, S/N (4P15), 46022 - València

Phone: 963 82 83 49
Fax: 963 82 83 54
Web page: http://www.estructuraeconomica.es
Email:


More information through EDIRC

References listed on IDEAS
Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.:

as
in new window


  1. Mikael Carlsson & Stefan Laséen, 2005. "Capital Adjustment Patterns In Swedish Manufacturing Firms: What Model Do They Suggest?," Economic Journal, Royal Economic Society, vol. 115(506), pages 969-986, October.
  2. Walter Elberfeld, 2001. "Explaining Intraindustry Differences in the Extent of Vertical Integration," Journal of Institutional and Theoretical Economics (JITE), Mohr Siebeck, Tübingen, vol. 157(3), pages 465-477, September.
  3. Franco Malerba & Richard Nelson & Luigi Orsenigo & Sidney Winter, 2008. "Vertical integration and disintegration of computer firms: a history-friendly model of the coevolution of the computer and semiconductor industries," Industrial and Corporate Change, Oxford University Press, vol. 17(2), pages 197-231, April.
  4. Marco Capasso & Elena Cefis, 2012. "Firm Size and Growth Rate Variance: The Effects of Data Truncation," Review of Industrial Organization, Springer;The Industrial Organization Society, vol. 41(3), pages 193-205, November.
  5. John McLaren, 2000. ""Globalization" and Vertical Structure," American Economic Review, American Economic Association, vol. 90(5), pages 1239-1254, December.
  6. Alessandro Manello & Giuseppe G. Calabrese & Piercarlo Frigero, 2016. "Technical efficiency and productivity growth along the automotive value chain: evidence from Italy," Industrial and Corporate Change, Oxford University Press, vol. 25(2), pages 245-259.
  7. Giorgio Fagiolo & Alessandra Luzzi, 2006. "Do liquidity constraints matter in explaining firm size and growth? Some evidence from the Italian manufacturing industry," Industrial and Corporate Change, Oxford University Press, vol. 15(1), pages 1-39, February.
  8. Coad, Alex & Rao, Rekha, 2008. "Innovation and firm growth in high-tech sectors: A quantile regression approach," Research Policy, Elsevier, vol. 37(4), pages 633-648, May.
  9. Giulio Bottazzi & Angelo Secchi, 2006. "Gibrat's Law and diversification," Industrial and Corporate Change, Oxford University Press, vol. 15(5), pages 847-875, October.
  10. Marco Grazzi & Nadia Jacoby & Tania Treibich, 2016. "Dynamics of investment and firm performance: comparative evidence from manufacturing industries," Empirical Economics, Springer, vol. 51(1), pages 125-179, August.
  11. David J. Teece, 2008. "Firm organization, industrial structure, and technological innovation," World Scientific Book Chapters,in: The Transfer And Licensing Of Know-How And Intellectual Property Understanding the Multinational Enterprise in the Modern World, chapter 11, pages 265-296 World Scientific Publishing Co. Pte. Ltd..
  12. Winter, Sidney G., 1984. "Schumpeterian competition in alternative technological regimes," Journal of Economic Behavior & Organization, Elsevier, vol. 5(3-4), pages 287-320.
  13. Jaramillo, Fidel & Schiantarelli, Fabio & Sembenelli, Alessandro, 1993. "Are Adjustment Costs for Labor Asymmetric? An Econometric Test on Panel Data for Italy," The Review of Economics and Statistics, MIT Press, vol. 75(4), pages 640-648, November.
  14. Øivind Anti Nilsen & Fabio Schiantarelli, 2003. "Zeros and Lumps in Investment: Empirical Evidence on Irreversibilities and Nonconvexities," The Review of Economics and Statistics, MIT Press, vol. 85(4), pages 1021-1037, November.
  15. Antonietti, Roberto & Cainelli, Giulio & Lupi, Claudio, 2013. "Vertical disintegration and spatial co-localization: The case of Kibs in the metropolitan region of Milan," Economics Letters, Elsevier, vol. 118(2), pages 360-363.
  16. Hall, Bronwyn H, 1987. "The Relationship between Firm Size and Firm Growth in the U.S. Manufacturing Sector," Journal of Industrial Economics, Wiley Blackwell, vol. 35(4), pages 583-606, June.
  17. Cabral, Luís & Vasconcelos, Hélder, 2011. "Vertical integration and right of first refusal," Economics Letters, Elsevier, vol. 113(1), pages 50-53, October.
  18. Enghin Atalay & Ali Horta?su & Chad Syverson, 2014. "Vertical Integration and Input Flows," American Economic Review, American Economic Association, vol. 104(4), pages 1120-1148, April.
  19. Pol Antras & Elhanan Helpman, 2004. "Global Sourcing," Journal of Political Economy, University of Chicago Press, vol. 112(3), pages 552-580, June.
  20. Daniel S. Hamermesh & Gerard A. Pfann, 1996. "Adjustment Costs in Factor Demand," Journal of Economic Literature, American Economic Association, vol. 34(3), pages 1264-1292, September.
  21. Fabio Pieri & Enrico Zaninotto, 2013. "Vertical integration and efficiency: an application to the Italian machine tool industry," Small Business Economics, Springer, vol. 40(2), pages 397-416, February.
  22. Mazzola, Fabio & Bruni, Sergio, 2000. "The role of linkages in firm performance: evidence from southern Italy," Journal of Economic Behavior & Organization, Elsevier, vol. 43(2), pages 199-221, October.
  23. Tasneem Chipty, 2001. "Vertical Integration, Market Foreclosure, and Consumer Welfare in the Cable Television Industry," American Economic Review, American Economic Association, vol. 91(3), pages 428-453, June.
  24. Bigelow, Lyda S. & Argyres, Nicholas, 2008. "Transaction costs, industry experience and make-or-buy decisions in the population of early U.S. auto firms," Journal of Economic Behavior & Organization, Elsevier, vol. 66(3-4), pages 791-807, June.
  25. John Haltiwanger & Ron S. Jarmin & Javier Miranda, 2013. "Who Creates Jobs? Small versus Large versus Young," The Review of Economics and Statistics, MIT Press, vol. 95(2), pages 347-361, May.
  26. Fabio Pieri & Enrico Zaninotto, 2013. "Technical efficiency and the vertical boundaries of the firm: theory and evidence," Applied Economics Letters, Taylor & Francis Journals, vol. 20(17), pages 1538-1543, November.
  27. Richard Ericson & Ariel Pakes, 1995. "Markov-Perfect Industry Dynamics: A Framework for Empirical Work," Review of Economic Studies, Oxford University Press, vol. 62(1), pages 53-82.
  28. Kalafsky, Ronald V & MacPherson, Alan D, 2002. "The Competitive Characteristics of U.S. Manufacturers in the Machine Tool Industry," Small Business Economics, Springer, vol. 19(4), pages 355-369, December.
  29. Pooran Wynarczyk & Robert Watson, 2005. "Firm Growth and Supply Chain Partnerships: An Empirical Analysis of U.K. SME Subcontractors," Small Business Economics, Springer, vol. 24(1), pages 39-51, February.
  30. Anna Giunta & Annamaria Nifo & Domenico Scalera, 2012. "Subcontracting in Italian Industry: Labour Division, Firm Growth and the North--South Divide," Regional Studies, Taylor & Francis Journals, vol. 46(8), pages 1067-1083, December.
  31. Francine Lafontaine & Margaret Slade, 2007. "Vertical Integration and Firm Boundaries: The Evidence," Journal of Economic Literature, American Economic Association, vol. 45(3), pages 629-685, September.
  32. Perry, Martin K., 1984. "Vertical equilibrium in a competitive input market," International Journal of Industrial Organization, Elsevier, vol. 2(2), pages 159-170, June.
  33. Lee, Neil, 2011. "Free to grow? Assessing the barriers faced by actual and potential high growth firms," MPRA Paper 36396, University Library of Munich, Germany.
  34. Jovanovic, Boyan, 1982. "Selection and the Evolution of Industry," Econometrica, Econometric Society, vol. 50(3), pages 649-670, May.
  35. Helfat, Constance E & Teece, David J, 1987. "Vertical Integration and Risk Reduction," Journal of Law, Economics and Organization, Oxford University Press, vol. 3(1), pages 47-67, Spring.
  36. Marco Capasso & Elena Cefis & Alessandro Sapio, 2013. "Reconciling quantile autoregressions of firm size and variance–size scaling," Small Business Economics, Springer, vol. 41(3), pages 609-632, October.
  37. Zélia Serrasqueiro & Paulo Maçãs Nunes & João Leitão & Manuel Armada, 2010. "Are there non-linearities between SME growth and its determinants? A quantile approach," Industrial and Corporate Change, Oxford University Press, vol. 19(4), pages 1071-1108, August.
  38. Secondo Rolfo, 1993. "The Italian Machine Tool Industry," CERIS Working Paper 199304, Institute for Economic Research on Firms and Growth - Moncalieri (TO) ITALY -NOW- Research Institute on Sustainable Economic Growth - Moncalieri (TO) ITALY.
  39. Maddigan, Ruth J, 1981. "The Measurement of Vertical Integration," The Review of Economics and Statistics, MIT Press, vol. 63(3), pages 328-335, August.
  40. Das, Sanghamitra, 1995. "Size, age and firm growth in an infant industry: The computer hardware industry in India," International Journal of Industrial Organization, Elsevier, vol. 13(1), pages 111-126, March.
  41. Robert E. Lucas & Jr., 1967. "Adjustment Costs and the Theory of Supply," Journal of Political Economy, University of Chicago Press, vol. 75, pages 321-321.
Full references (including those not matched with items on IDEAS)

This item is not listed on Wikipedia, on a reading list or among the top items on IDEAS.

When requesting a correction, please mention this item's handle: RePEc:eec:wpaper:1508. See general information about how to correct material in RePEc.

For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (Vicente Esteve)

If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

If references are entirely missing, you can add them using this form.

If the full references list an item that is present in RePEc, but the system did not link to it, you can help with this form.

If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your profile, as there may be some citations waiting for confirmation.

Please note that corrections may take a couple of weeks to filter through the various RePEc services.

This information is provided to you by IDEAS at the Research Division of the Federal Reserve Bank of St. Louis using RePEc data.