Original scientific paper
https://doi.org/10.1080/1331677X.2022.2097104
Vertical or horizontal: optimal integration strategy under separation of ownership and control
Yang Yang
Ling Yan
Jing Gu
Abstract
This study proposes a framework to analyze the strategic value of
integration, when separation of ownership and control is considered.
According to this framework, we investigate the optimal
integration strategy in different control distribution and discuss
how external market influences the best strategic choice. Beside
theoretical analysis, we also provide evidence from Chinese listed
firms to validate our research. The key results of our study show
that first, unintegrated strategy works best, if the level of controlownership
disparity is extremely high. Second, in general, vertical
strategy is more appropriate for substitute markets, while horizontal
strategy may bring more benefits in a highly complementary
market. Third, the impact of integration strategy on a firm’s performance
is negatively moderated by control-ownership disparity.
However, this moderate effect may be weakened by market structure.
Our results provide a new and comprehensive perspective
for understanding the inconsistent results from previous studies.
Moreover, the analysis in this study also highlights a firm’s strategic
decision and market regulation policy.
Keywords
Integration; vertical; horizontal; ownership; control
Hrčak ID:
304225
URI
Publication date:
31.3.2023.
Visits: 328 *