UCLA Anderson School of Management
Los Angeles, CA 90095
NBER Working Papers and Publications
|July 2007||Complementarity Among Vertical Integration Decisions: Evidence from Automobile Product Development|
with Scott Stern: w13232
This paper examines complementarity among vertical integration decisions in automobile product development. Though most research assumes that contracting choices are independent of each other, contracting complementarity arises when the returns to a single vertical integration decision are increasing in the level of vertical integration associated with other contracting choices. First, effective coordination may depend on the level of (non-contractible) effort on the part of each agent; contracting complementarity results if coordination efforts are interdependent and vertical integration facilitates a higher level of non-contractible effort. Second, effective coordination may require the disclosure of proprietary trade secrets, and the potential for expropriation by external suppliers ...
Published: Complementarity among vertical integration decisions: evidence from automobile product development Management Science, Vol. 55, No. 2. (2009), pp. 311-332 by S. Novak, S. Stern posted to automobile complementarity file-import-09-12-23 industry integration outsourcing strategies vertical by whutabarat on 2009-12-23 14:43:53
|How Does Outsourcing Affect Performance Dynamics? Evidence from the Automobile Industry|
with Scott Stern: w13235
This paper examines the impact of vertical integration on the dynamics of performance over the automobile product development lifecycle. Building on recent work in organizational economics and strategy, we evaluate the relationship between vertical integration and different performance margins. Outsourcing facilitates access to cutting-edge technology and the use of high-powered performance contracts. Vertical integration allows firms to adapt to unforeseen contingencies and customer feedback, maintain more balanced incentives over the lifecycle, and develop firm-specific capabilities over time. Together, these effects highlight a crucial tradeoff: while outsourcing is associated with higher levels of initial performance, vertical integration will be associated with performance improvem...
Published: doi: 10.1287/mnsc.1080.0922 Management Science December 2008 vol. 54 no. 12 1963-1979