In this paper we analyze the effect of vertical scope decisions on product portfolio composition. In particular we highlight the strategic-organizational role of taper integration, which embodies both vertical integration and strategic outsourcing, as a factor positively affecting the number of related products in a firm’s portfolio. Taper integration has been suggested to facilitate innovation incorporated in successful products, by having an organizational form in which a firm simultaneously pursues the same value chain activity in-house as well as through strategic outsourcing. While the determination of firm boundaries appears to be largely explained by transaction cost-based considerations, this theory has overlooked the dynamic nature of competition and of empirical contexts that may lead to a revision of boundary decisions. Further, the literature has left almost untouched an important related aspect that is the possibility that a firm can simultaneously pursue different organizational forms. The analysis of this choice on firm performance (i.e., product portfolio composition), rather than the rationale behind such decisions, is the main contribution of this paper. Our objective is accomplished using primary data coming from an Italian leading firm operating in an innovative industry. We gathered information covering the 8-year time period between 2002 and 2009. This particular time period was characterized both by the firm’s introduction of a new production strategy and the late 2000’s financial crisis, accompanied by the significant decline in global economic activity of year 2009. By using descriptive statistics (oneway ANOVA) we show an increase of related products in the firm’s portfolio associated with the use of taper integration, over time. Taper integration, while involving moderately high production costs, allows a firm to fully exploit its capacity leaving to external partners the matter of absorbing demand and technological uncertainties. This can represent an important direction for firms aiming at shaping their organizational boundaries as the economic crisis is forcing them to revise their sourcing strategies.

"L'effetto della taper integration sul portafoglio prodotti di impresa"

COLUCCI, MARIACHIARA
2010

Abstract

In this paper we analyze the effect of vertical scope decisions on product portfolio composition. In particular we highlight the strategic-organizational role of taper integration, which embodies both vertical integration and strategic outsourcing, as a factor positively affecting the number of related products in a firm’s portfolio. Taper integration has been suggested to facilitate innovation incorporated in successful products, by having an organizational form in which a firm simultaneously pursues the same value chain activity in-house as well as through strategic outsourcing. While the determination of firm boundaries appears to be largely explained by transaction cost-based considerations, this theory has overlooked the dynamic nature of competition and of empirical contexts that may lead to a revision of boundary decisions. Further, the literature has left almost untouched an important related aspect that is the possibility that a firm can simultaneously pursue different organizational forms. The analysis of this choice on firm performance (i.e., product portfolio composition), rather than the rationale behind such decisions, is the main contribution of this paper. Our objective is accomplished using primary data coming from an Italian leading firm operating in an innovative industry. We gathered information covering the 8-year time period between 2002 and 2009. This particular time period was characterized both by the firm’s introduction of a new production strategy and the late 2000’s financial crisis, accompanied by the significant decline in global economic activity of year 2009. By using descriptive statistics (oneway ANOVA) we show an increase of related products in the firm’s portfolio associated with the use of taper integration, over time. Taper integration, while involving moderately high production costs, allows a firm to fully exploit its capacity leaving to external partners the matter of absorbing demand and technological uncertainties. This can represent an important direction for firms aiming at shaping their organizational boundaries as the economic crisis is forcing them to revise their sourcing strategies.
2010
Colucci M.
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Utilizza questo identificativo per citare o creare un link a questo documento: https://hdl.handle.net/11585/129874
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