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The competitive advantage potential of vertical integration

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  • Fronmueller, M. P.
  • Reed, R.

Abstract

There is a widely held belief that backward vertical integration provides firms with the potential for a low-cost competitive advantage, and forward vertical integration provides them with the potential for a differentiation advantage. This study builds theory that underpins that belief, and then tests the theory using a sample of large firms. While our findings do not support the relationship between backward vertical integration and low cost, they do provide strong support for arguments linking forward vertical integration with differentiation-based competitive advantage.

Suggested Citation

  • Fronmueller, M. P. & Reed, R., 1996. "The competitive advantage potential of vertical integration," Omega, Elsevier, vol. 24(6), pages 715-726, December.
    • Handle: RePEc:eee:jomega:v:24:y:1996:i:6:p:715-726
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    Cited by:

    1. Iacocca, Kathleen & Mahar, Stephen & Daniel Wright, P., 2022. "Strategic horizontal integration for drug cost reduction in the pharmaceutical supply chain," Omega, Elsevier, vol. 108(C).
    2. Daniele Crotti & Claudio Ferrari & Alessio Tei, 2022. "Understanding the impact of demand shocks on the container port industry," Maritime Economics & Logistics, Palgrave Macmillan;International Association of Maritime Economists (IAME), vol. 24(4), pages 778-805, December.
    3. Manuel Portugal Ferreira & Sungu Armagan & Dan Li, 2007. "Vertical Integration For Full Outsourcing: Growth And Internationalization Of A Portuguese Packaging Firm," Working Papers 4, globADVANTAGE, Polytechnic Institute of Leiria.
    4. Li, Pei & Tan, Dan & Wang, Guangyong & Wei, Hang & Wu, Jilan, 2021. "Retailer's vertical integration strategies under different business modes," European Journal of Operational Research, Elsevier, vol. 294(3), pages 965-975.
    5. Gautam Ray & Dazhong Wu & Prabhudev Konana, 2009. "Competitive Environment and the Relationship Between IT and Vertical Integration," Information Systems Research, INFORMS, vol. 20(4), pages 585-603, December.
    6. Li, Wei & Chen, Jing, 2018. "Backward integration strategy in a retailer Stackelberg supply chain," Omega, Elsevier, vol. 75(C), pages 118-130.

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