Changing Vertical Integration Strategies under Pressure from Foreign Competition: The Case of US and German Multinationals.

Hutzschenreuter, Thomas; Gröne, Florian

This study contributes to the emerging body of research into the influence of foreign competition on firm scope. Industrial organization economics, the resource-based view of the firm, and transaction cost economics consistently predict vertical de-integration in the face of intensifying pressure from imports and foreign direct investment. We show this was the case for 407 US firms between 1987 and 2003. Results for a panel of 95 German firms reveal a similar reaction to pressure from an increase in imports, but show no reaction to increased exposure to incoming foreign direct investment during the same time frame.

VERTICAL integration; INTERNATIONAL competition; INTERNATIONAL business enterprises; INDUSTRIAL organization (Economic theory); FOREIGN investments; IMPORTS

Journal of Management Studies (Wiley-Blackwell), 2009, Vol 46, Issue 2, p269

0022-2380

Academic Journal

10.1111/j.1467-6486.2008.00811.x