Vertical Relationship Of The Industrial Chain Governance Model Study

In recent ten years, the vertical disintegration movement among such different industries as telecommunication, electronic, automobile has been more common. Just taking automobile industry as an example, in the 1930, Ford introduced the operation mode as vertical integration on large sacle and it was followed by global big manufacturers. Ford set up its industrial empire whose business scope ranged almost all of the input supply: iron ore in Pittsburgh, coal mine in Kentucky, iron & steel woks and fleet in Five Great Lakes, glass factory in Pennsylvania, and even the meadow for the supply of woolen saddle mat, etc.But after the 1980s, especially the 1990s, the Ford stylish operation mode as vertical integration began to go to pieces, because more and more companied learnt to spin off some of the business from the complex and focused on core activities. In the June of 2000, Vieston, the component and part group of Ford, was diamantled from Ford and became a new member of World Fortune 500. Just before that, GM had also disintegrated its component and part group and initiated the movement of disintegration of global automobile industry, the new independent componet and part group Delphi became the public liseted company in New York stock market. After that, Italian automobile group Fiat and German autobolie group Mercedes-Benz followed this trend and set up their component and part group Magneti Marelli and Hella.Facing to these complicated strategic behaviors, how can the economics make explanations? In our minds, with reference to every kind of goods and service, from the initial invision to the final product, it would experience such continuous economic activies as design, procurement, manufacturing and wholesaling. Correspondingly they comprised the vertical relationship of the industrial chain. More importantly, under different indutrial development environment, the vertical relationship will be regulated by different governance mode: the hierachical coordination in the vertical intergration, or the spot market interaction with individual parts in the industrial chain, or the hybrid mode between these two extreme ones. The industrial pratices in the global automobile industry is the reseclection of governance mode for the vertical relationship actually.The corresponding question was that what kind of governance mode should the leader companies in the industrial chain select to coordinate the vertical relationship and realize the value of the product or service? What are the factors that determinate the governance modes? Whether the theoretical analysis can be verified by the real industrial practices? What are the policy implications from it? All of these questions are deserved to be make a study, and they are also the logical starting points of this paper.With the help of the paper suvey in chapter 2, the chaper 3 introduced the theoretical analysis framework with three levels of governance mode for industrial chain vertical relationship: the basic governance choice of "make or buy", the first extension with the interposition of hybrid mode, the second extension with the deeper division of hybrid mode as captive, relational and modular. After the general review of the evolution history of American automobile industry, this framework was demonstrated, that is to say, affected by one or some factors of the very environment, the vertical relationship of the industrial chain will be regulated by one particular mode.After the establishment of the theoretical analysis framework, taking the Chinese automobile industry as study object, from the chapter 4 to chapter 7, with some mathematical models and empeircal study, this paper makes a more concrete study of such key stages as before the opening up, after the permission of joint venture policy and the deregulation of industrial entrance, to find out how the influence of limited demand scale, the local content regulation, the relational specific investment and the more radical horizontal competion in the downsream made on the governance mode selection accordingly.The reason why we take Chinese automobile industry as the main study object is that as for a pillar industry in the national economy, the automobile industry has been focused on as a main theoretical study field for a long time. Especially in recent years, with the blowout-style development of the industry, it provides the industrial economics research with well-defined topics and opportunities. In particular, the vertical disintegration decisions conducted by the global automobile giants by turns should also be paid attention to. So it would be of importance to make a study of the evolution of Chinese autobile industry and its direction for adjustment and innovation in the future from the angle of industrial chain vertical relationship.Taking it into consideration, in chapter 8 and chapter 9, this paper tries to understand how China's automobile industry to coordinate and deal with the vertical relationship under the background of post-WTO and global manufacturing. Chapter 8 introduced the modes of global value chain governance again in a more microscope. It focused on the topic that the component and part companies on various levels should embed into the five modes of vertical relationship governance according to the characteristics of the products, and then connect with the global manufacturing networks and realize the product, process and function upgrading for the industry. As a result, the institutions for the industry development can file out some corresponding industrial policies so as to help the component and part industry to embed into the mode of vertical relationship more smoothly to quicken the speed of industrial upgrading.With the agreement that embedment into five different governance modes will bring different upgrading effect, the chapter 9 suggested that as for China's automobile industry, especially the component industry, the transformation of the vertical relationship governance mode can also promote the upgrading and development in depth. According, it list some strategies and policies for the component enterprises, the industry commissions and the supervisory department for industry development to make some efforts on reducing the complexity of transaction, improve the competence of suppliers and the ability to codifying the transaction.In chapter 10, we reviewed the conclusion of the whole paper briefly and gave some topics for further study.