26 Pages Posted: 25 May 2017
Date Written: Summer 2017
This paper uses three cross‐industry datasets from China and other developing countries to study the effect of vertical integration on firm productivity. Our findings suggest that vertical integration has a negative impact on productivity, in contrast to recent studies based on U.S. firms. We argue that in settings with poor corporate governance, vertical integration reduces firm productivity because it enables inefficient rent‐seeking by insiders.
Suggested Citation: Suggested Citation
Li, Hongyi and Lu, Yi and Tao, Zhigang, Vertical Integration and Firm Productivity (Summer 2017). Journal of Economics & Management Strategy, Vol. 26, Issue 2, pp. 403-428, 2017. Available at SSRN: https://ssrn.com/abstract=2972943 or http://dx.doi.org/10.1111/jems.12191
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