This working paper investigates the relationship between vertical integration in modern manufacturing firms and their performance, specifically focusing on how knowledge and product complexity influence this connection. The research utilises a novel text-mining approach to analyse data from a large sample of UK manufacturing firms, identifying different types of vertical integration based on pre-production and post-production activities.
The findings suggest that integrating pre-production activities, or both pre and post-production, can enhance firm performance, while integrating only post-production activities may not. Furthermore, product complexity is found to moderate these relationships in a U-shaped manner, indicating a complex interplay between integration strategies and the nature of the products manufactured.
Authors Myungun Kim, Yifeng (Philip) Chen, Pengbo Qi, Chander Velu
