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- Title
INDUSTRY CHANGE THROUGH VERTICAL DISINTEGRATION: HOW AND WHY MARKETS EMERGED IN MORTGAGE BANKING.
- Authors
Jacobides, Michael G.
- Abstract
This paper provides an inductive theoretical framework that explains how and why vertical disintegration happens, showing that transaction costs are an incidental feature of industry evolution. I find that gains from intrafirm specialization set off a process of intraorganizational partitioning, which simplifies coordination along parts of the value chain. Likewise, latent gains from trade foster interfirm cospecialization, which leads to information standardization. Given standardized information and simplified coordination, new intermediate markets emerge, breaking up the value chain, allowing new types of vertically specialized firms to participate in an industry, and changing the industry's competitive landscape.
- Subjects
VERTICAL integration; EMERGING markets; INDUSTRIAL organization research; MARKETING strategy; TRANSACTION costs; INTERORGANIZATIONAL relations; ORGANIZATIONAL change; MORTGAGE banks; LOAN originations; FINANCIAL services industry; LOAN servicing
- Publication
Academy of Management Journal, 2005, Vol 48, Issue 3, p465
- ISSN
0001-4273
- Publication type
Article
- DOI
10.5465/AMJ.2005.17407912