IDEAS home Printed from https://ideas.repec.org/a/sae/sagope/v13y2023i1p21582440231156351.html
   My bibliography  Save this article

Vertical Integration Strategies and Environmental Uncertainty: China’s Film Industry

Author

Listed:
  • Yubin Yang
  • Seungyoup Choo
  • Seong-Joon Limb

Abstract

This study analyses the effectiveness of vertical integration for motion pictures’ box office revenues and the moderating effects of environmental uncertainty on China’s film industry, where a market economy was introduced in 2002. We analyzed a sample of 1,824 films released between 2005 and 2016 using a PROCESS model. We found strong evidence that vertical integration positively influenced box office revenues, which were higher under greater environmental uncertainty post reforms than under relative stability. We also found films that (1) had major producers or distributors, (2) were based on intellectual property, (3) belonged to the action or fantasy genre, or (4) featured superstars performed better. This study demonstrates the current operating level of the market economy in China’s film industry and offers a unique, fresh dataset comprising almost all films released in Mainland China and produced by enterprises in Greater China.

Suggested Citation

  • Yubin Yang & Seungyoup Choo & Seong-Joon Limb, 2023. "Vertical Integration Strategies and Environmental Uncertainty: China’s Film Industry," SAGE Open, , vol. 13(1), pages 21582440231, February.
    • Handle: RePEc:sae:sagope:v:13:y:2023:i:1:p:21582440231156351
    DOI: 10.1177/21582440231156351
    as

    Download full text from publisher

    File URL: https://journals.sagepub.com/doi/10.1177/21582440231156351
    Download Restriction: no
    File URL: https://libkey.io/10.1177/21582440231156351?utm_source=ideas
    LibKey link: if access is restricted and if your library uses this service, LibKey will redirect you to where you can use your library subscription to access this item
    ---><---

    References listed on IDEAS

    as
    1. Williamson, Oliver E, 1979. "Transaction-Cost Economics: The Governance of Contractural Relations," Journal of Law and Economics, University of Chicago Press, vol. 22(2), pages 233-261, October.
    2. Jehoshua Eliashberg & Anita Elberse & Mark A.A.M. Leenders, 2006. "The Motion Picture Industry: Critical Issues in Practice, Current Research, and New Research Directions," Marketing Science, INFORMS, vol. 25(6), pages 638-661, 11-12.
    3. Joseph J. Spengler, 1950. "Vertical Integration and Antitrust Policy," Journal of Political Economy, University of Chicago Press, vol. 58(4), pages 347-347.
    4. Gerda Gemser & Martine Oostrum & Mark Leenders, 2007. "The impact of film reviews on the box office performance of art house versus mainstream motion pictures," Journal of Cultural Economics, Springer;The Association for Cultural Economics International, vol. 31(1), pages 43-63, March.
    5. Sumit Raut & Sanjeev Swami & Eunkyu Lee & Charles B. Weinberg, 2008. "How Complex Do Movie Channel Contracts Need to Be?," Marketing Science, INFORMS, vol. 27(4), pages 627-641, 07-08.
    6. Kathryn Rudie Harrigan, 1986. "Matching vertical integration strategies to competitive conditions," Strategic Management Journal, Wiley Blackwell, vol. 7(6), pages 535-555, November.
    7. W. Wayne Fu, 2009. "Screen Survival of Movies at Competitive Theaters: Vertical and Horizontal Integration in a Spatially Differentiated Market," Journal of Media Economics, Taylor & Francis Journals, vol. 22(2), pages 59-80.
    8. Ravid, S Abraham, 1999. "Information, Blockbusters, and Stars: A Study of the Film Industry," The Journal of Business, University of Chicago Press, vol. 72(4), pages 463-492, October.
    9. W. D. Walls & A. DeVany, "undated". "Big budgets, big openings, and legs: Analysis of the blockbuster strategy," Working Papers 2014-57, Department of Economics, University of Calgary, revised 23 Sep 2014.
    10. Lieberman, Marvin B, 1991. "Determinants of Vertical Integration: An Empirical Test," Journal of Industrial Economics, Wiley Blackwell, vol. 39(5), pages 451-466, September.
    11. Kenneth S. Corts, 2001. "The Strategic Effects of Vertical Market Structure: Common Agency and Divisionalization in the US Motion Picture Industry," Journal of Economics & Management Strategy, Wiley Blackwell, vol. 10(4), pages 509-528, December.
    12. Williamson, Oliver E, 1993. "Calculativeness, Trust, and Economic Organization," Journal of Law and Economics, University of Chicago Press, vol. 36(1), pages 453-486, April.
    13. Ricard Gil & Wesley Hartmann, 2007. "The Role and Determinants of Concession Sales in Movie Theaters: Evidence from the Spanish Exhibition Industry," Review of Industrial Organization, Springer;The Industrial Organization Society, vol. 30(4), pages 325-347, June.
    14. Basuroy, Suman & Chatterjee, Subimal, 2008. "Fast and frequent: Investigating box office revenues of motion picture sequels," Journal of Business Research, Elsevier, vol. 61(7), pages 798-803, July.
    15. Liran Einav, 2007. "Seasonality in the U.S. motion picture industry," RAND Journal of Economics, RAND Corporation, vol. 38(1), pages 127-145, March.
    16. Jimmyn Parc, 2021. "Business integration and its impact on film industry: The case of Korean film policies from the 1960s until the present," Business History, Taylor & Francis Journals, vol. 63(5), pages 850-867, June.
    17. Andrew Ainslie & Xavier Drèze & Fred Zufryden, 2005. "Modeling Movie Life Cycles and Market Share," Marketing Science, INFORMS, vol. 24(3), pages 508-517, November.
    18. Joseph Lampel & Theresa Lant & Jamal Shamsie, 2000. "Balancing Act: Learning from Organizing Practices in Cultural Industries," Organization Science, INFORMS, vol. 11(3), pages 263-269, June.
    19. Michael H. Riordan & David E. M. Sappington, 1987. "Information, Incentives, and Organizational Mode," The Quarterly Journal of Economics, President and Fellows of Harvard College, vol. 102(2), pages 243-263.
    20. Silver, Jon & Alpert, Frank, 2003. "Digital dawn: a revolution in movie distribution?," Business Horizons, Elsevier, vol. 46(5), pages 57-66.
    21. Helfat, Constance E & Teece, David J, 1987. "Vertical Integration and Risk Reduction," The Journal of Law, Economics, and Organization, Oxford University Press, vol. 3(1), pages 47-67, Spring.
    22. John M. Mezias & Stephen J. Mezias, 2000. "Resource Partitioning, the Founding of Specialist Firms, and Innovation: The American Feature Film Industry, 1912–1929," Organization Science, INFORMS, vol. 11(3), pages 306-322, June.
    23. John, George & Weitz, Barton A, 1988. "Forward Integration into Distribution: An Empirical Test of Transaction Cost Analysis," The Journal of Law, Economics, and Organization, Oxford University Press, vol. 4(2), pages 337-355, Fall.
    Full references (including those not matched with items on IDEAS)

    Most related items

    These are the items that most often cite the same works as this one and are cited by the same works as this one.
    1. Francine Lafontaine & Margaret Slade, 2007. "Vertical Integration and Firm Boundaries: The Evidence," Journal of Economic Literature, American Economic Association, vol. 45(3), pages 629-685, September.
    2. Tirtha Dhar & Guanghui Sun & Charles Weinberg, 2012. "The long-term box office performance of sequel movies," Marketing Letters, Springer, vol. 23(1), pages 13-29, March.
    3. Judy Ma & Dongling Huang & M. Kumar & Andrei Strijnev, 2015. "The impact of supplier bargaining power on the advertising costs of movie sequels," Journal of Cultural Economics, Springer;The Association for Cultural Economics International, vol. 39(1), pages 43-64, February.
    4. Moez Hababou & Nawel Amrouche & Kamel Jedidi, 2016. "Measuring Economic Efficiency in the Motion Picture Industry: a Data Envelopment Analysis Approach," Customer Needs and Solutions, Springer;Institute for Sustainable Innovation and Growth (iSIG), vol. 3(3), pages 144-158, December.
    5. Gaenssle Sophia & Budzinski Oliver & Astakhova Daria, 2018. "Conquering the Box Office: Factors Influencing Success of International Movies in Russia," Review of Network Economics, De Gruyter, vol. 17(4), pages 245-266, December.
    6. Joan Calzada & Tommaso M. Valletti, 2012. "Intertemporal Movie Distribution: Versioning When Customers Can Buy Both Versions," Marketing Science, INFORMS, vol. 31(4), pages 649-667, July.
    7. Christian Balcells, 2022. "Determinants of firm boundaries and organizational performance: an empirical investigation of the Chilean truck market," Journal of Evolutionary Economics, Springer, vol. 32(2), pages 423-461, April.
    8. Ronny Behrens & Natasha Zhang Foutz & Michael Franklin & Jannis Funk & Fernanda Gutierrez-Navratil & Julian Hofmann & Ulrike Leibfried, 2021. "Leveraging analytics to produce compelling and profitable film content," Journal of Cultural Economics, Springer;The Association for Cultural Economics International, vol. 45(2), pages 171-211, June.
    9. Dapeng Liu & Pascal Courty, 2022. "Some economics of movie exhibition: increasing returns and Imax revenue premium," Journal of Cultural Economics, Springer;The Association for Cultural Economics International, vol. 46(4), pages 597-634, December.
    10. Hofmann, Julian & Clement, Michel & Völckner, Franziska & Hennig-Thurau, Thorsten, 2017. "Empirical generalizations on the impact of stars on the economic success of movies," International Journal of Research in Marketing, Elsevier, vol. 34(2), pages 442-461.
    11. Legoux, Renaud & Larocque, Denis & Laporte, Sandra & Belmati, Soraya & Boquet, Thomas, 2016. "The effect of critical reviews on exhibitors' decisions: Do reviews affect the survival of a movie on screen?," International Journal of Research in Marketing, Elsevier, vol. 33(2), pages 357-374.
    12. Davide Vannoni, 1999. "Empirical Studies of Vertical Integration: the Transaction Cost Orthodoxy," CERIS Working Paper 199903, CNR-IRCrES Research Institute on Sustainable Economic Growth - Torino (TO) ITALY - former Institute for Economic Research on Firms and Growth - Moncalieri (TO) ITALY.
    13. Ricard Gil & Wesley R. Hartmann, 2009. "Empirical Analysis of Metering Price Discrimination: Evidence from Concession Sales at Movie Theaters," Marketing Science, INFORMS, vol. 28(6), pages 1046-1062, 11-12.
    14. Juan Prieto-Rodriguez & Fernanda Gutierrez-Navratil & Victoria Ateca-Amestoy, 2015. "Theatre allocation as a distributor’s strategic variable over movie runs," Journal of Cultural Economics, Springer;The Association for Cultural Economics International, vol. 39(1), pages 65-83, February.
    15. Amanda S. King & John T. King & Michael Reksulak, 2017. "Signaling for access to high-demand markets: evidence from the US motion picture industry," Journal of Cultural Economics, Springer;The Association for Cultural Economics International, vol. 41(4), pages 441-465, November.
    16. Lajili, Kaouthar & Mahoney, Joseph T., 2005. "Revisiting Agency and Transaction Costs Theory Predictions on Vertical Financial Ownership and Contracting: Electronic Integration as an Organizational Form Choice," Working Papers 05-0106, University of Illinois at Urbana-Champaign, College of Business.
    17. Jordi McKenzie, 2010. "Do 'African American' films perform better or worse at the box office? An empirical analysis of motion picture revenues and profits," Applied Economics Letters, Taylor & Francis Journals, vol. 17(16), pages 1559-1564.
    18. Fernanda Gutierrez-Navratil & Victor Fernandez-Blanco & Luis Orea & Juan Prieto-Rodriguez, 2014. "How do your rivals’ releasing dates affect your box office?," Journal of Cultural Economics, Springer;The Association for Cultural Economics International, vol. 38(1), pages 71-84, February.
    19. Christian Opitz & Kay H. Hofmann, 2014. "Adverse Selection and Moral Hazard in Equity Partnerships: Evidence from Hollywood's Slate Financing Agreements," Journal of Economics & Management Strategy, Wiley Blackwell, vol. 23(4), pages 811-838, December.
    20. Katherine Goff Inglis & Saeed Zolfaghari, 2017. "A Review of Scheduling Problems and Research Opportunities in Motion Picture Exhibition," Interfaces, INFORMS, vol. 47(2), pages 175-187, April.

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:sae:sagope:v:13:y:2023:i:1:p:21582440231156351. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a bibliographic reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: SAGE Publications (email available below). General contact details of provider: .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.