Vertical Integration in Automakers

Cleiciele Albuquerque Augusto, José Paulo de Souza and Silvio Antonio Ferraz Cario

RAC - Revista de Administração Contemporânea (Journal of Contemporary Administration), 2018, vol. 22, issue 5, 704-725

Abstract: In this article the aim was to understand the choice of vertical integration in automakers considering the presence of transaction costs, measurement costs and strategic resources. For this, multiple qualitative-descriptive case studies were carried out using semi-structured interviews in three automakers and the Industrial Federation of the State of Parana (FIEP), all located in the State of Paraná. The proposition of formulated complementarity considered that vertical integration is due to the presence of specific assets, influenced by the difficulty of measuring them, and their importance as strategic resources. This proposition was ratified, as we found that vertical integration occurs for items such as design, stamping, motor, and transmission, which have high specificity, are difficult to measure (internal engine parts, transmission, and design aspects, for example) and constitute automaker identity, which confirms their strategic importance. We concluded that the complementarity between these theoretical-analytical conceptions can build a referential with greater power for understanding choices involving governance structures.

Date: 2018
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