The Analysis Of Vertical Integration And Industry Characteristics Development In Taiwan Industry

Vertical integration strategy, which decides the business boundaries, core competences and competitive advantages, is one of the most significant enterprise strategies. The decisions of vertical integration usually accompany with the giant investments and its quality and outcome often plays an impressive role on the ability of successful access to core competence and competitive advantages, even to the future development and survival of one firm.The mainstream of vertical integration theories are the Industrial Organization (IO) and Transaction Cost Economics (TCE) theories. Most prior research has focused on the single industry and the determinants of the vertical integration. In contrast, this study tries to combine the distinguishing features of the two major theories and break the limitation of industry boundary to build up a cross-industry framework of the behavior and value of vertical integration.The research setting for the study aimes at the six Taiwan Manufacturing Industries and selects the 437 listed companies among these industries as the research samples. This study takes two routes: one is the inner industry research which employs regression statistics to examine the relationship the vertical integration and firm performance; the other is the cross-industry research which analyzes the great impacts on the trend of each industry vertical integration development during 2000-2005 and induces the first-step common industry factors.Extracting the six key industry factors from the first-step common industry and take the Pearson's correlation analysis to test the influence of industry factors on the relationship the industry vertical integration change behavior and value. The technique complexity and industry concentration are the effective industry factors of the determinant of vertical integration trend and firm performance, respectively. At last, according to the research result, two preliminary hopetheses are developed.