Information Technology, Communication Technology And Vertical Integration Of Enterprises

The 21st century is the information age.As a common technology,information technology is widely used in various markets and within the enterprises and greatly reduces the transaction costs.According to Williamson's theory of transaction cost economics,the choice of two different forms of governance which are market and firm is determined by the size of the respective transaction costs,which is first applied to the enterprise's decisions of "self-made" and "outsourced" or the decision of vertical integration.As the reduction of transaction costs for information technology applying occurs both in the market and within the enterprise,scholars have not reached a broad consensus on how information technology affects the vertical integration of enterprises.This paper argues that ignoring the boundaries of different types of information technology and its different effects on the vertical integration of enterprises is the main reason for the existence of differences.According to the technical characteristics,the generalized information technology should be divided into narrow information technology and communication technology.The information technology mainly refers to the information storage and processing technology,and communication technology mainly refers to the information transmission technology.Narrow information technology at the same time reduce the internal transaction costs of enterprises and the transaction costs of market,but for the reduction of internal transaction costs of enterprises is more significant,so the overall increase in the degree of vertical integration of enterprises.Communication technology also reduces the internal transaction costs of enterprises and transaction costs of market,but the reduction of market transaction costs is more significant,so the overall reduction of the degree of vertical integration of enterprises.In order to verify the above hypothesis,this paper analyzes the influence of narrow information technology and communication technology on the vertical integration of enterprises by using the panel data and the fixed effect model of the whole province in 2003-2012.The conclusion shows that the narrow sense of information technology tends to improve the degree of vertical integration of enterprises,while the communication technology tends to reduce the degree of vertical integration of enterprises;In addition,the more state-owned capital accounted for the more enterprises tend to improve the degree of vertical integration;The stronger the transport capacity of the region's enterprises,the more inclined to reduce the degree of vertical integration.This article also validates the classical conclusion that asset specificity improves the vertical integration of the firm.In order to investigate the regional differences,this paper has carried on the sample regression to the eastern,central and western regions respectively.The results show that the influence of the information technology and the communication technology on the vertica1 integration of the enterprises is significant and the coefficients are increasing sequentially.The influence of the transportation capacity on the vertically integration of the enterprise is significant and the coefficients are increasing sequentially.Finally,taking into account the endogeneity of the explanatory variables,this paper uses the tool variables and 2SLS for the robustness test,the results support the above conclusions.