Please use this identifier to cite or link to this item: http://hdl.handle.net/10419/72577
Authors: 
Vermeulen, Ben
Pyka, A.
La Poutré, J. A.
de Kok, A. G.
Year of Publication: 
2013
Series/Report no.: 
FZID Discussion Paper 71-2013
Abstract: 
We investigate patterns of vertical governance over the product life-cycle as function of the capability regime properties imitability and substitutability. We use a novel neo-Schumpeterian model to study emerging governance patterns. We find that, in the era of incremental change, firms prefer vertical specialization. In the era of ferment, no governance form dominates. Imitability and substitutability, in interplay, determine the governance form preferred. High imitability frustrates appropriation and thereby integration for synergistic advantages. However, firms need not vertically specialize: under low substitutability, incompatibilities reduce the advantages of specialization. When both substitutability and imitability are low, firms can appropriate the value of their inventions and there is no combinatorial advantage of specialization, so firms predominantly integrate. If substitutability is high and imitability is low, the combinatorial advantage of specialization balances with the synergistic advantage of integration.
Persistent Identifier of the first edition: 
Document Type: 
Working Paper

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