How Vertical Integration Affects Firm Innovation: Quasi-Experimental Evidence

References

• Aggarwal VA , Hsu DH (2014) Entrepreneurial exits and innovation. Management Sci. 60(4):867–887.Link, Google Scholar
• Aggarwal VA , Hsu DH , Wu A (2020) Organizing knowledge production teams within firms for innovation. Strategy Sci. 5(1):1–16.Link, Google Scholar
• Ahuja G , Katila R (2001) Technological acquisitions and the innovation performance of acquiring firms: A longitudinal study. Strategic Management J. 22(3):197–220.Crossref, Google Scholar
• Ahuja G , Lampert C , Tandon V (2008) Moving beyond Schumpeter: Management research on the determinants of technological Innovation. Acad. Management Ann. 2(1):1–98.Crossref, Google Scholar
• Ali A , Kravet T (2016) The effect of SFAS 141 and 142 on the market for corporate control. Working paper, University of Texas Dallas, Richardson.Google Scholar
• Angrist J , Pischke J (2009) Mostly Harmless Econometrics (Princeton University Press, Princeton, NJ).Crossref, Google Scholar
• Argyres NS , Bigelow L (2010) Innovation, modularity, and vertical deintegration: Evidence from the early US auto industry. Organ. Sci. 21(4):842–853.Link, Google Scholar
• Argyres NS , Silverman BS (2004) R&D, organization structure, and the development of corporate technological knowledge. Strategic Management J. 25(8–9):929–958.Crossref, Google Scholar
• Argyres NS , Zenger TR (2012) Capabilities, transaction cost and firm boundaries. Organ. Sci. 23(6):1643–1657.Link, Google Scholar
• Argyres NS , Felin T , Foss N , Zenger TR (2012) Organizational economics of capability and heterogeneity. Organ. Sci. 23(5):1213–1226.Link, Google Scholar
• Armour HO , Teece DJ (1980) Vertical integration and technological innovation. Rev. Econom. Statist. 62(3):470–474.Crossref, Google Scholar
• Arrow KJ (1962) Economic welfare and the allocation of resources for invention. The Rate and Direction of Inventive Activity (Princeton University Press, Princeton, NJ), 609–626.Crossref, Google Scholar
• Baldwin CY (2008) Where do transactions come from? Modularity, transactions, and the boundaries of firms. Indust. Corporate Change 17(1):155–195.Crossref, Google Scholar
• Baldwin CY , Clark KB (2000) Design Rules: The Power of Modularity (MIT Press, Cambridge, MA).Crossref, Google Scholar
• Balsmeier B , Fleming L , Manso G (2017) Independent boards and innovation. J. Financial Econom. 123(3):536–557.Crossref, Google Scholar
• Bena J , Li K (2014) Corporate innovations and mergers and acquisitions. J. Finance 69(5):1923–1960.Crossref, Google Scholar
• Ben-Menahem SM , von Krogh G , Erden Z , Schneider A (2016) Coordinating knowledge creation in multidisciplinary teams: Evidence from early-stage drug discovery. Acad. Management J. 59(4):1308–1338.Crossref, Google Scholar
• Bhaskarabhatla A , Hegde D (2014) An organizational perspective on patenting and open innovation. Organ. Sci. 25(6):1744–1763.Link, Google Scholar
• Blackwell M , Iacus S , King G , Porro G (2009) CEM: Coarsened exact matching in Stata. Stata J. 9(4):524–546.Crossref, Google Scholar
• Bresnahan TF , Levin JD (2012) Vertical integration and market structure. NBER Working Paper 17889, National Bureau of Economic Research, Cambridge, MA.Google Scholar
• Cabigiosu A , Camuffo A (2012) Beyond the “mirroring” hypothesis: Product modularity and interorganizational relations in the air conditioning industry. Organ. Sci. 23(3):686–703.Link, Google Scholar
• Capron L , Mitchell W (1998) Bilateral resource redeployment and capabilities improvement following horizontal acquisitions. Indust. Corporate Change 7(3):453–484.Crossref, Google Scholar
• Chesbrough HW , Teece DJ (1996) Organizing for innovation: When is virtual virtuous? Harvard Bus. Rev. (January–February) 74(1):65–73.Google Scholar
• Chi T (1994) Trading in strategic resources: Necessary conditions, transaction cost problems, and choice of exchange structure. Strategic Management J. 15(4):271–290.Crossref, Google Scholar
• Claussen J , Kretschmer T , Stieglitz N (2015) Vertical scope, turbulence, and the benefits of commitment and flexibility. Management Sci. 61(4):915–929.Link, Google Scholar
• Cloodt M , Hagedoorn J , Kranenburg HV (2006) Mergers and acquisitions: Their effect on the innovative performance of companies in high-tech industries. Res. Policy 35(5):642–654.Crossref, Google Scholar
• Conner KR , Prahalad CK (1996) A resource-based theory of the firm: Knowledge vs. opportunism. Organ. Sci. 7(5):477–501.Link, Google Scholar
• Fan JPH , Goyal VK (2006) On the patterns and wealth effects of vertical mergers. J. Bus. 79(2):877–902.Crossref, Google Scholar
• Fan JPH , Lang LHP (2000) The measurement of relatedness: An application to corporate diversification. J. Bus. 73(4):629–660.Crossref, Google Scholar
• Farre-Mensa J , Hegde D , Ljungqvist A (2020) What is a patent worth? Evidence from the U.S. patent “lottery.” J. Finance 75(2):639–682.Google Scholar
• Felin T , Zenger TR (2014) Closed or open innovation? Problem solving and the governance choice. Res. Policy 43(5):914–925.Crossref, Google Scholar
• Fleming L , Sorenson O (2001) Technology as a complex adaptive system: Evidence from patent data. Res. Policy 30(7):1019–1039.Crossref, Google Scholar
• Fleming L , Sorenson O (2004) Science as a map in technological search. Strategic Management J. 25(8–9):909–928.Crossref, Google Scholar
• Forbes SJ , Lederman M (2010) Does vertical integration affect firm performance? Evidence from the airline industry. RAND J. Econom. 41(4):765–790.Crossref, Google Scholar
• Ganco M (2013) Cutting the Gordian knot: The effect of knowledge complexity on employee mobility and entrepreneurship. Strategic Management J. 34(6):666–686.Crossref, Google Scholar
• Gibbons R (2005) Four formal(izable) theories of the firm? J. Econom. Behav. Organ. 58(2):202–247.Crossref, Google Scholar
• Griliches Z (1990) Patent statistics as economic indicators: A survey. J. Econom. Literature 28(4):1661–1707.Google Scholar
• Hall BH , Jaffe AB , Trajtenberg M (2001) The NBER patent citation data file: Lessons, insights and methodological tools. NBER Working Paper 8498, National Bureau of Economic Research, Cambridge, MA.Google Scholar
• He W , He Z-L , Tong TW (2020) Ownership change and firm innovation: The mediating role of interest alignment. Strategy Sci. 5(1):17–38.Link, Google Scholar
• Heckman JJ , Ichimura H , Todd P (1998) Matching as an econometric evaluation estimator. Rev. Econom. Stud. 65(2):261–294.Crossref, Google Scholar
• Helfat CE , Campo-Rembado MA (2016) Integrative capabilities, vertical integration, and innovation over successive technology lifecycles. Organ. Sci. 27(2):249–264.Link, Google Scholar
• Henderson RM , Clark KB (1990) Architectural innovation: The reconfiguration of existing product technologies and the failure of established firms. Admin. Sci. Quart. 35(1):9–30.Crossref, Google Scholar
• Hennart J-F (2009) Down with MNE-centric theories! Market entry and expansion as the bundling of MNE and local assets. J. Internat. Bus. Stud. 40(9):1432–1454.Crossref, Google Scholar
• Hsu P-H , Tian X , Xu Y (2014) Financial development and innovation: Cross-country evidence. J. Financial Econom. 112(1):116–135.Crossref, Google Scholar
• Iacus SM , King G , Porro G (2012) Causal inference without balance checking: Coarsened Exact Matching. Political Anal. 20(1):1–24.Crossref, Google Scholar
• Jung HJ , Lee J (2016) The quest for originality: A new typology of knowledge search and breakthrough inventions. Acad. Management J. 59(5):1725–1753.Crossref, Google Scholar
• Karim S , Kaul A (2015) Structural recombination and innovation: Unlocking intraorganizational knowledge synergy through structural change. Organ. Sci. 26(2):439–455.Link, Google Scholar
• Katila R , Ahuja G (2002) Something old, something new: A longitudinal study of search behavior and new product introduction. Acad. Management J. 45(6):1183–1194.Crossref, Google Scholar
• Kauffman SA (1993) The Origins of Order (Oxford University Press, New York).Crossref, Google Scholar
• Kaul A (2013) Entrepreneurial action, unique assets, and appropriation risk: Firms as a means of appropriating profit from capability creation. Organ. Sci. 24(6):1765–1781.Link, Google Scholar
• Kaul A , Wu B (2016) A capabilities-based perspective on target selection in acquisitions. Strategic Management J. 37(7):1220–1239.Crossref, Google Scholar
• Kogut B , Zander U (1996) What firms do? Coordination, identity, and learning. Organ. Sci. 7(5):502–518.Link, Google Scholar
• Lafontaine F , Slade M (2007) Vertical integration and firm boundaries: The evidence. J. Econom. Literature 45(3):629–685.Crossref, Google Scholar
• Lai R, D'Amour A , Yu A , Sun Y , Fleming L (2011) Disambiguation and Co-authorship Networks of the U.S. Patent Inventor Database (1975 - 2010), Accessed XX, XXXX https://doi.org/10.7910/DVN/5F1RRI Google Scholar
• Leiblein MJ , Reuer JJ , Dalsace F (2002) Do make or buy decisions matter? The influence of organizational governance on technological performance. Strategic Management J. 23(9):817–833.Crossref, Google Scholar
• Lerner J , Stern S (2012) The Rate and Direction of Inventive Activity Revisited (University of Chicago Press, Chicago).Crossref, Google Scholar
• Li G-C , Lai R , D’Amour A , Doolin DM , Sun Y , Torvik VI , Yu AZ , Fleming L (2014) Disambiguation and co-authorship networks of the U.S. patent inventor database (1975–2010). Res. Policy 43(6):941–955.Google Scholar
• Liebeskind JP (1996) Knowledge, strategy, and the theory of the firm. Strategic Management J. 17(S2):93–107.Crossref, Google Scholar
• Macher JT (2006) Technological development and the boundaries of the firm: A knowledge-based examination in semiconductor manufacturing. Management Sci. 52(6):826–843.Link, Google Scholar
• Makri M , Hitt MA , Lane PJ (2010) Complementary technologies, knowledge relatedness, and invention outcomes in high technology mergers and acquisitions. Strategic Management J. 31(6):602–628.Crossref, Google Scholar
• Mansfield E (1986) Patents and innovation: An empirical study. Management Sci. 32(2):173–181.Link, Google Scholar
• Masten SE , Meehan JW , Snyder EA (1991) The cost of organization. J. Law Econom. Organ. 7(1):1–25.Google Scholar
• McGuckin RH , Nguyen SV , Andrews SH (1991) The relationships among acquiring and acquired firms’ product lines. J. Law Econom. 34(2, Part 2):477–502.Crossref, Google Scholar
• Metcalfe R , Powdthavee N , Dolan P (2011) Destruction and distress: Using a quasi-experiment to show the effects of the September 11 attacks on mental well-being in the United Kingdom. Econom. J. 121(550):F81–F103.Google Scholar
• Meyer BD (1995) Natural and quasi-experiments in economics. J. Bus. Econom. Statist. 13(2):151–161.Crossref, Google Scholar
• Monteverde K (1995) Technical dialog as an incentive for vertical integration in the semiconductor industry. Management Sci. 41(10):1624–1638.Link, Google Scholar
• Monteverde K , Teece DJ (1982) Supplier switching costs and vertical integration in the automobile industry. Bell J. Econom. 13(1):206–213.Crossref, Google Scholar
• Nelson RR , Winter SG (1982) An Evolutionary Theory of Economic Change (Belknap Press, Cambridge, MA).Google Scholar
• Newson RB , The ALSPAC Study Team (2003) Multiple-test procedures and smile plots. Stata J. 3(2):109–132.Crossref, Google Scholar
• Newson RB (2010) Frequentist q-values for multiple-test procedures. Stata J. 10(4):568–584.Crossref, Google Scholar
• Nickerson JA , Zenger TR (2004) A knowledge-based theory of the firm: The problem-solving perspective. Organ. Sci. 15(6):617–632.Link, Google Scholar
• Pisano GP (1990) The R&D boundaries of the firm: An empirical analysis. Admin. Sci. Quart. 35(1):153–176.Crossref, Google Scholar
• Pisano GP (1991) The governance of innovation: Vertical integration and collaborative arrangements in the biotechnology industry. Res. Policy 20(3):237–249.Crossref, Google Scholar
• Puranam P , Singh H , Zollo M (2006) Organizing for innovation: Managing the coordination-autonomy dilemma in technology acquisitions. Acad. Management J. 49(2):263–280.Crossref, Google Scholar
• Reuer JJ, Tong TW, Tyler BB, Arino A (2013) Executive preferences for governance modes and exchange partners: An information economics perspective. Strategic Management J. 34(9):1104-1122.Google Scholar
• Rumelt RP , Schendel DE , Teece DJ (1994) Fundamental Issues in Strategy: A Research Agenda (Harvard Business School Press, Boston).Google Scholar
• Sampat B (2012) Examiner Citation Data. Accessed October 8, 2014, http://hdl.handle.net/1902.1/18735, data deposited at Harvard Dataverse, V2, UNF:5:mKUxLoeuskOler9Lq8l7cw==.Google Scholar
• Savor PG , Lu Q (2009) Do stock mergers create value for acquirers? J. Finance 64(3):1061–1097.Crossref, Google Scholar
• Schumpeter JA (1939) Business Cycles (McGraw-Hill Book Company, New York).Google Scholar
• Seru A (2014) Firm boundaries matter: Evidence from conglomerates and R&D activity. J. Financial Econom. 111(2):381–405.Crossref, Google Scholar
• Seth A (1990) Sources of value creation in acquisitions: An empirical investigation. Strategic Management J. 11(6):431–446.Crossref, Google Scholar
• Shalev R , Zhang IX , Zhang Y (2013) CEO compensation and fair value accounting: Evidence from purchase price allocation. J. Accounting Res. 51(4):819–854.Crossref, Google Scholar
• Shenoy J (2012) An examination of the efficiency, foreclosure, and collusion rationales for vertical takeovers. Management Sci. 58(8):1482–1501.Link, Google Scholar
• Simon HA (1962) The architecture of complexity. Proc. Amer. Philos. Soc. 106(6):467–482.Google Scholar
• Simon HA (1973) Decision making and organizational design. Pugh PS , ed. Organizational Theory: Selected Readings (Penguin, London), 202–223.Google Scholar
• Sorenson O (2003) Interdependence and adaptability: Organizational learning and the long-term effect of integration. Management Sci. 49(4):446–463.Link, Google Scholar
• Stock JH , Yogo M (2005) Testing for weak instruments in linear IV regression. Andrews DWK , Stock JH , eds. Identification and Inference for Econometric Models (Cambridge University Press, New York), 80–108.Crossref, Google Scholar
• Teece DJ (1977) Technology transfer by multinational firms: The resource cost of transferring technological know-how. Econom. J. 87(346):242–261.Google Scholar
• Teece DJ (1996) Firm organization, industrial structure, and technological innovation. J. Econom. Behav. Organ. 31(2):193–224.Crossref, Google Scholar
• Tong TW , Li Y (2011) Real options and investment mode: Evidence from corporate venture capital and acquisition. Organ. Sci. 22(3):659–674.Link, Google Scholar
• Tong JY , Zhang F (2014) More evidence that corporate R&D investment (and effective boards) can increase firm value. J. Appl. Corporate Finance 26(2):94–100.Crossref, Google Scholar
• U.S. Patent and Trademark Office (USPTO) (2012) Overview of the U.S. Patent Classification System (USPC). Accessed February 12, 2017, https://www.uspto.gov/sites/default/files/patents/resources/classification/overview.pdf.Google Scholar
• Valentini G (2012) Measuring the effect of M&A on patenting quantity and quality. Strategic Management J. 33(3):336–346.Crossref, Google Scholar
• Villalonga B , McGahan AM (2005) The choice among acquisitions, alliances, and divestitures. Strategic Management J. 26(13):1183–1208.Crossref, Google Scholar
• Williamson OE (1975) Markets and Hierarchies: Analysis and Antitrust Implications (Free Press, New York).Google Scholar
• Williamson OE (1985) The Economic Institutions of Capitalism (Free Press, New York).Google Scholar
• Williamson OE (1991) Comparative economic organization: The analysis of discrete structural alternatives. Admin. Sci. Quart. 36(2):269–296.Crossref, Google Scholar
• Wooldridge JM (2002) Econometric Analysis of Cross Section and Panel Data (MIT Press, Cambridge, MA).Google Scholar
• Younge KA , Tong TW (2018) Competitive pressure on the rate and scope of innovation. J. Econom. Behav. Organ. 150(June):162–181.Crossref, Google Scholar
• Younge KA , Tong TW , Fleming L (2015) How anticipated employee mobility affects acquisition likelihood: Evidence from a natural experiment. Strategic Management J. 36(5):686–708.Crossref, Google Scholar
• Zenger TR , Felin T , Bigelow L (2011) Theories of the firm-market boundary. Acad. Management Ann. 5(1):89–133.Crossref, Google Scholar