| This article focuses on the how vertical integration affects performance of non-ferrous metals enterprises based on current development of this industry. China’s non-ferrous metals industry plays an important role in global market. However, non-ferrous metals enterprises face not only competition from other enterprises on the same link of industrial chain, but also game strategies between resource suppliers and manufacturers as well as that between manufacturers and distributors. So this study has its practical meaning.First considering factors such as region and ownership structure, this study builds theoretical models to discuss how enterprises make vertical integration decision. Secondly vertical integration index is calculated using input-output table. Thirdly with panel data of 17 public enterprises from year 2007 to 2011, empirical models are established to explore how vertical integration affects performance of sample enterprises. The result shows that vertical integration indeed has quadratic nonlinear relationship with performance of the enterprise while the actual situation varies on the right part of the parabola, which means currently the correlation between vertical integration and performance of the enteiprise is negative. In addition, this study tests the effects that region and ownership structure have on the model using Chou test which demonstrates different region and different ownership structure indeed have different mechanism to influence performance. Finally several suggestions are provided for business decisions and government policy. |
