Changing integration strategies: A theoretical approach and an empirical test

The literature on corporate strategies highlights the occurrence of significant changes in firms' integration levels among US manufacturing companies. A focus is put on a growing trend toward vertical disintegration. While a number of researchers (e.g. Chandler, 1990; Hoskisson & Hitt, 1994; Stuckey & White, 1993) acknowledge that vertical disintegration is increasing, the determining factors are yet to be empirically identified. The objective of the dissertation is to theoretically and empirically explore the factors that may be related to changes in integration strategies. Building upon economic theories, the dissertation proposes that changes in integration levels may be caused by uncertainty, industry concentration, production costs, and bureaucratic costs.; In this study, the unit of analysis is the parent company. Data were collected by consulting archival data from the COMPUSTAT PC PLUS database and the census of manufacturers. Both a discriminant analysis and a regression analysis were the statistical techniques used.; The empirical investigation leads to the suggestion that three factors, uncertainty, production costs, and bureaucratic costs, are associated with changes in integration levels. The results show that uncertainty, production costs, and bureaucratic costs are negatively and significantly related to changes in the levels of vertical integration. Furthermore, the study found that 44% of the companies in the sample disintegrated, thus establishing that vertical disintegration is taking place and is a widespread phenomenon.