THE COMPETITIVE ADVANTAGE POTENTIAL OF VERTICAL INTEGRATION

There is a widely held belief that backward vertical integration provi des firms with the potential for a low-cost competitive advantage, and forward vertical integration provides them with the potential for a d ifferentiation advantage. This study builds theory that underpins that belief, and then tests the theory using a sample of large firms. Whil e our findings do not support the relationship between backward vertic al integration and low cost, they do provide strong support for argume nts Linking forward vertical integration with differentiation-based co mpetitive advantage. Copyright (C) 1996 Elsevier Science Ltd.