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Vertical Integration and Information Technology Investment in the Insurance Industry

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  • Chris Forman
  • Anne Gron

Abstract

In this paper, we examine whether frictions created by differences in firm boundaries affect the speed with which firms adopt new Information Technology. Using a rich dataset on organizational characteristics and Internet investment by over 100 firms in the insurance industry, we show that vertical integration in distribution has a significant impact on the speed with which insurers adopt consumer Internet applications that complement the existing distribution relationship. Vertical integration, however, has no effect on the adoption of tools that enable electronic communication between an insurer and its sales force. Furthermore, vertical integration has no affect on the adoption of Internet technologies, such as basic access, that are not used in distribution. The Author 2009. Published by Oxford University Press on behalf of Yale University. All rights reserved. For Permissions, please email: journals.permissions@oxfordjournals.org, Oxford University Press.

Suggested Citation

  • Chris Forman & Anne Gron, 2011. "Vertical Integration and Information Technology Investment in the Insurance Industry," The Journal of Law, Economics, and Organization, Oxford University Press, vol. 27(1), pages 180-218.
    • Handle: RePEc:oup:jleorg:v:27:y::i:1:p:180-218
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    File URL: http://hdl.handle.net/10.1093/jleo/ewp023
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    Cited by:

    1. Leila Agha & Keith Marzilli Ericson & Xiaoxi Zhao, 2020. "The Impact of Organizational Boundaries on Healthcare Coordination and Utilization," NBER Working Papers 28179, National Bureau of Economic Research, Inc.
    2. Dionne, Georges & Harrington, Scott, 2017. "Insurance and Insurance Markets," Working Papers 17-2, HEC Montreal, Canada Research Chair in Risk Management.
    3. Alipranti, Maria & Milliou, Chrysovalantou & Petrakis, Emmanuel, 2015. "On vertical relations and the timing of technology adoption," Journal of Economic Behavior & Organization, Elsevier, vol. 120(C), pages 117-129.
    4. Ajay Agrawal & Joshua S. Gans & Avi Goldfarb, 2023. "Similarities and Differences in the Adoption of General Purpose Technologies," NBER Chapters, in: Technology, Productivity, and Economic Growth, National Bureau of Economic Research, Inc.
    5. Atnashev, Timur M. (Атнашев, Тимур) & Balobanov, A.E. (Балобанов, А.Е.), 2016. "The Ratio of Project Management Tools and 'Classical' Public Service in OECD Countries and Developing Countries [Соотношение Инструментов Проектного Управления И «Классической» Государственной Служ," Working Papers 2869, Russian Presidential Academy of National Economy and Public Administration.
    6. Marissa Beck & Fiona Scott Morton, 2021. "Evaluating the Evidence on Vertical Mergers," Review of Industrial Organization, Springer;The Industrial Organization Society, vol. 59(2), pages 273-302, September.
    7. Vincent Y. L. Chang, 2024. "Technology investments and firm performance under the wave of InsurTech," The Geneva Papers on Risk and Insurance - Issues and Practice, Palgrave Macmillan;The Geneva Association, vol. 49(3), pages 501-536, July.
    8. Venkat Kuppuswamy & Carliss Y. Baldwin, 2012. "Risky Business: The Impact of Property Rights on Investment and Revenue in the Film Industry," Harvard Business School Working Papers 13-007, Harvard Business School, revised Aug 2012.
    9. Bruno Emmanuel Ongo Nkoa & Cédric Meytang & Thierry Mamadou Asngar & Guivis Zeufack Nkemgha, 2024. "What Drives Life Insurance Development in Sub-Saharan Africa? The Role of Information and Communication Technology," Journal of the Knowledge Economy, Springer;Portland International Center for Management of Engineering and Technology (PICMET), vol. 15(2), pages 6878-6907, June.

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