Risky Business - Uncertain Access to Specialized Complementary Assets, Vertical Integration, and the Commercial Performance of New Products
48 Pages Posted: 17 Oct 2010
Date Written: October 15, 2010
Abstract
The present study explores the antecedents and consequences of vertical integration choices in the context of new product development using project-level data from the motion picture industry. I show that uncertain access to specialized complementary assets can generate market failures for certain products, which drive the owners of these assets to vertically integrate into upstream innovation. Furthermore, I explore whether vertical integration affects downstream investments in specialized complementary resources and ultimately, the commercial performance of new products. I find that vertical integration promotes greater commercial success and that this effect is completely mediated by enhanced downstream investments.
Keywords: Vertical Integration, Complementary Assets, New Product Development, Performance
JEL Classification: L22, O32
Suggested Citation: Suggested Citation