ON THE ROLE OF SOCIAL ASSET SPECIFICITY IN THE CHANNEL INTEGRATION DECISION

In this paper we critically examine the role that social asset specifi city plays in influencing channel integration decisions. Transaction c ost literature is combined with the literature on property rights to d evelop our arguments, and we empirically examine integration in a cont ext where the firm-market choice is not apparent: integration of distr ibution activities. Using data for 1392 business units, we perform tes ts, the results of which indicate that social asset considerations are important in influencing firms to vertically integrate, while upholdi ng in general the predictions of the transaction cost framework.