the concept of vertical integration should be expanded to encompass a variety
of arrangements by which the firm can use outsiders (as well as its own business units) to
forge an optimal vertical system for supplying goods, services, and capabilities”. Similarly,
Blair (1983 cited in Fergusson 1993, 25) emphasized that “ownership of functions is not a
prerequisite for successful vertical integration, and that the distinction between integration
through ownership versus integration through voluntary or contractual control is not important
in assessing the benefits that might accrue to customers of the integrated process’s products.
Mahoney (1992, 559) also argued that “the vertical integration strategy may be implemented
by a continuum of governance structures which include spot markets, short-term contracts,
long-term contracts, franchising, joint ventures, and vertical financial ownership (hierarchy)”.
Thus, vertical integration does not always mean vertical financial ownership and at
least part of it can be achieved with different governance structures.
the concept of vertical integration should be expanded to encompass a varietyof arrangements by which the firm can use outsiders (as well as its own business units) toforge an optimal vertical system for supplying goods, services, and capabilities”. Similarly,Blair (1983 cited in Fergusson 1993, 25) emphasized that “ownership of functions is not aprerequisite for successful vertical integration, and that the distinction between integrationthrough ownership versus integration through voluntary or contractual control is not importantin assessing the benefits that might accrue to customers of the integrated process’s products.Mahoney (1992, 559) also argued that “the vertical integration strategy may be implementedby a continuum of governance structures which include spot markets, short-term contracts,long-term contracts, franchising, joint ventures, and vertical financial ownership (hierarchy)”.Thus, vertical integration does not always mean vertical financial ownership and atleast part of it can be achieved with different governance structures.
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