Improving performance through vertical disintegration: evidence from UK manufacturing firms

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Unlike previous work on the vertical integration–performance relationship, we investigate the performance consequences of vertical disintegration. We offer a theoretical justification for the disintegration decision and we condition the disintegration effect on performance on the initial degree of firm integration, the timing and the direction of disintegration. Using a sample of UK manufacturing firms and controlling for disintegration endogeneity, we find that disintegration eventually results in improved operating performance, particularly when disintegration occurs as a reaction to poor performance and in cases of forward between-sector disintegration. However, being highly integrated does not guarantee gains from disintegration. The implications of these findings are discussed.
Original languageEnglish
Pages (from-to)307-324
Number of pages18
JournalManagerial and Decision Economics
Issue number5
Early online date24 Nov 2008
Publication statusPublished - Jul 2009


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