Innovation, Networks, and Vertical Integration

Paul L. Robertson () and Richard N. Langlois ()

Industrial Organization from EconWPA

Abstract: A central debate in industrial policy today is that between proponents of large vertically integrated firms on the one hand and advocates of networks of small specialized producers on the other. This paper argues that neither institutional structure is the universal panacea its enthusiasts claim. The menu of institutional alternatives is in fact quite large, and both firms and networks -- of which there is more than one kind -- can be successful, growth- promoting adaptations to the competitive environment. Industrial structures vary in their ability to coordinate information flows necessary for innovation and to overcome power relationships adverse to innovation. The relative desirability of the various structures, then, will depend on the nature and scope of technological change in the industry and on the effects of various product life-cycle patterns. The principal policy conclusion of this analysis is that the government's role ought to be facilitating rather than narrow and

JEL-codes: L (search for similar items in EconPapers)
Date: Written
Note: 40 pages. Forthcoming in Research Policy
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Related works:
Journal Article: Innovation, networks, and vertical integration (1995)
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Persistent link: http://EconPapers.repec.org/RePEc:wpa:wuwpio:9406006

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