Vertical integration and technological innovation: A transaction-cost approach

Thesis/Dissertation · Fri Jan 01 04:00:00 EST 1988

OSTI ID:5430084

Lee, Y H

This research investigates the relationship between a firm's decision to integrate vertically and its research and development (R D) strategy. Specifically, the following two hypotheses are presented: (1) the more vertically integrated a firm is, the more efficient will be the firm's R D activity, and (2) the more a firm expects future innovation to be significant, the more the firm will be vertically integrated. The concept of the knowledge-complementarity effect of vertical integration is developed to explain the first hypothesis. The high transaction costs related to technology transactions are adopted as an economic reason for the second hypothesis. Empirical evidence for these hypotheses is derived from an analysis of vertical integration and technological innovation in the electronics industry. The empirical test featuring the rational expectations hypothesis uses a dynamic simultaneous equation model with an expectation variable and various time lags.

• Research Organization: Pennsylvania State Univ., University Park, PA (USA)
• OSTI ID: 5430084
• Country of Publication: United States
• Language: English

Related Subjects

29 ENERGY PLANNING, POLICY, AND ECONOMY
290200 -- Energy Planning & Policy-- Economics & Sociology
290500* -- Energy Planning & Policy-- Research
Development
Demonstration
& Commercialization
CORRELATIONS
ECONOMIC ANALYSIS
ECONOMICS
INDUSTRY
RESEARCH PROGRAMS
TECHNOLOGY TRANSFER
VERTICAL INTEGRATION