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Explaining Downstream Integration
Author(s) -
Majumdar Sumit K.,
Ramaswamy Venkatram
Publication year - 1994
Publication title -
managerial and decision economics
Language(s) - English
Resource type - Journals
SCImago Journal Rank - 0.288
H-Index - 51
eISSN - 1099-1468
pISSN - 0143-6570
DOI - 10.1002/mde.4090150204
Subject(s) - downstream (manufacturing) , transaction cost , dimension (graph theory) , sample (material) , context (archaeology) , industrial organization , vertical integration , database transaction , business , microeconomics , econometrics , computer science , marketing , economics , mathematics , paleontology , chemistry , chromatography , pure mathematics , biology , programming language
Abstract We examine the downstream integration decision by businesses, deriving hypotheses from the transaction cost literature which are empirically tested for a sample of 1392 businesses operating in a wide spectrum of industries. Our results provide corroboration for each dimension of the transaction cost framework in explaining why firms might integrate their downstream business activities. Given the large cross‐sectional sample, our results provide some evidence of the general validity of the transaction cost framework within the context of downstream integration.