Vertical Integration in Competitive Markets Under Uncertainty

A multi-level investigation of information technology outsourcing

“…Organizations tend to keep in-house the resources they use regularly, making full utilization of their resources, and letting suppliers absorb low probability demand (Carlton, 1979). This argument resembles the TCT frequency argument (Williamson, 1985).…”

Software-as-a-Service Model: Elaborating Client-Side Adoption Factors

“…), according to the production cost economics, external service vendors are more efficient in bearing the risk since they can pool demand from many clients and are able to meet the same demand with less redundant capacity (Carlton 1979;Lacity and Hirschheim 1993;Perry 1989). In particular, when clients' demand shocks are not highly correlated, according to the law of large numbers, vendors can be more efficient in handling demand volume uncertainty.…”

The choice of organizational form: Vertical financial ownership versus other methods of vertical integration

“…In the case of asymmetric upstream information (Arrow, 1975) (Teece, 1980). In the Carlton (1979) (Walker & Weber, 1984) could write contracts which include a large penalty such as holding "hostages" (Williamson, 1983), collateral (Benjamin, 1978), or deferred rebates, performance bonds and liquidated damage provisions (Goldberg, 1979;Klein 11 & Leffler, 1981;Telser, 1980). In terms of product quality and service, Harrigan (1986) persuasively argues that new pioneering products and high quality differentiated products require vertical financial ownership to insure that quality is maintained through the linkages of the value-added chain (Anderson & Coughlan, 1987).…”

“…Price Discrimination (Vernon and Graham, 1971) Tying contract (Schmalensee, 1973) (Burstein, 1960a) (Blair & Kaserman, 1978) (Crandall, 1968) (Perry,1980) Tying contract (Burstein, 1960b) (Blackstone, 1975) Territorial restrictions coupled with resale price maintenance (Phillips & Mahoney,1985) Uncertainties (Arrow, 1975) Vertical contract (Teece, 1982) Reduce or transfer risk (Carlton, 1979) Long-term contract (Carlton, 1979) Assure Supply (Demand uncertainty) (Walker & Weber, 1984) Collateral (Benjamin, 1978) Deferred rebates (Goldberg, 1979) Control quality and services (Harrigan, 1986) Exclusive territories (Goldberg, 1982) Resale price maintenance (Marvel & McCafferty, 1984;Phillips & Mahoney, 1985) Reduce shirking (Measurement Uncertainty) (Alchian & Demsetz, 1972) Relational contract (Williamson, 1979) Reduce technological uncertainty (Teece, 1982) Equity joint venture (Hennart, 1988a) Appropriate R&D spillovers (Phillips, 1983) Vertical contracts (Evans & Grossman, 1983) Trading of Technology (Arrow, 1971) Equity joint venture (Kogut, 1988) …”