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Essays On Corporate Vertical Integration, He Li
Essays On Corporate Vertical Integration, He Li
Open Access Theses & Dissertations
My Dissertation examines the corporate diversification strategy of vertical integration. Vertical integration refers to the organizational structure in which divisions within the firm are integrated along the supply chain. I examine the advantages and disadvantages associated with vertical integration in two chapters.
In Chapter 2, I model how inter-divisional spillover effects mitigate internal capital market (ICM) inefficiencies. The model shows that the spillover effect helps align the objectives of division managers and the objective of the CEO and the firm, and thus facilitates efficient capital allocation at equilibrium. Empirically, I measure the size of the spillover effect by the degree …