The Revival of Vertical Integration: Strategic Choice and Performance Influences

Abstract

For the past few years, several big companies have taken actions to gain more control over their supply chains. Against the popular trend of outsourcing, they tend to go back to gain a higher level of vertical integration. Just as outsourcing once raised challenges to global management, the revival of vertical integration sure brings benefits as well as new challenges. Motivated by this recent phenomenon, this paper investigates the influences of strategic choices on the change of vertical integration level and the performance implication of such changes. The findings support the cost-driven concern of the decisions on vertical integration level changes and certain performance benefits that the changes would bring to the companies.