Vertical Boundary Dynamics under Foreign Competition Pressure
The following chapter is based on, and follows Hutzschenreuter and Gröne, 2009b. While the previous chapter provides important additions to the literature on product- and geographic boundary dynamics, it does not yet present an integrate perspective across all firm scope dimensions, which also include firms' vertical boundaries (Chandler, 1962; Andrews, 1971/1987; Porter, 1985). We have observed that vertical scope research has developed along a stream of literature that is somewhat disconnected from product- and geographic scope research. The main emphasis of extant vertical scope work is on micro-level analyses of various theoretical constructs such as transaction frequency, uncertainty, asset specificity, or small numbers-type settings that have been advanced by transaction cost economics (e.g., Lafontaine and Slade, 2007; Carter and Hodgson, 2006; Geyskens, Steenkamp and Kumar, 2006; David and Han, 2004). Perspectives on more palpable competition-related concepts remain rare. Also, while firm-level product- and geographic scope dimensions have been assessed in the light of various specific types of foreign competition (e.g., Wiersema and Bowen, 2008; Liu, 2006; Meyer, 2006; Bowen and Wiersema, 2005), vertical boundaries have been looked at mostly at the industry level, and, if at all, with a rather broad, unspecific representation of globalization-related forces (e.g., Toulan, 2002 or McLaren, 2000).
KeywordsVertical Integration North American Free Trade Agreement Asset Specificity German Firm Foreign Competition
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