Improving performance through vertical disintegration: evidence from UK manufacturing firms
Article first published online: 24 NOV 2008
Copyright © 2008 John Wiley & Sons, Ltd.
Managerial and Decision Economics
Volume 30, Issue 5, pages 307–324, July 2009
How to Cite
Desyllas, P. (2009), Improving performance through vertical disintegration: evidence from UK manufacturing firms. Manage. Decis. Econ., 30: 307–324. doi: 10.1002/mde.1452
- Issue published online: 17 JUN 2009
- Article first published online: 24 NOV 2008
Unlike previous work on the vertical integration–performance relationship, we investigate the performance consequences of vertical disintegration. We offer a theoretical justification for the disintegration decision and we condition the disintegration effect on performance on the initial degree of firm integration, the timing and the direction of disintegration. Using a sample of UK manufacturing firms and controlling for disintegration endogeneity, we find that disintegration eventually results in improved operating performance, particularly when disintegration occurs as a reaction to poor performance and in cases of forward between-sector disintegration. However, being highly integrated does not guarantee gains from disintegration. The implications of these findings are discussed. Copyright © 2008 John Wiley & Sons, Ltd.