How Vertical Integration Affects Firm Innovation: Quasi-Experimental Evidence

• 成果类型: Article
• 署名作者: Zhang, Yuchen; Tong, Tony W.
• 署名单位: Tulane University; University of Colorado System; University of Colorado Boulder
• 刊物名称: ORGANIZATION SCIENCE
• ISSN/ISSBN: 1047-7039
• DOI: 10.1287/orsc.2020.1396
• 发表日期: 2021
• 页码: 455-479
• 关键词: Vertical Integration; INNOVATION; firm boundaries; Transaction cost; capabilities; knowledge-based view; mergers & acquisitions (M&As); patents

摘要

Although it is well established that vertical integration decisions have important consequences for firms, direct evidence on how vertical integration matters to firm innovation has been scarce. This study draws from seminal research on organizing for innovation and recent synthesis of transaction cost and capabilities theories to examine how vertical integration affects the rate and types of firm innovation pursued. To strengthen identification of causal effects, we exploit a quasi-experimental design to compare firms that announced and completed a vertical merger and acquisition (M&A) with those announcing but not completing the transaction. We show that firms completing vertical M&As experience a growth in their rate of innovation; in addition, such firms witness an increase in systemic innovation but a drop in autonomous innovation. Our study contributes important empirical evidence to bear on the literature on the organization of innovation, highlighting that organizational mode choices are a critical determinant of the rate and direction of inventive activity.