Vertical Integration Without Ownership: Strategic Alliances Offer a Managerial Alternative

Abstract

Changing business realities are forcing firms to reexamine traditional business paradigms such as the desirability of vertical integration. This paper proposes that advances in information technology enable vertical integration without financial ownership and that logistical processes facilitate this integration. Two forms of intra-channel alliances, basic and extended, are examined to provide evidence of this shift toward channel integration. While vertical integration without ownership is shown to be theoretically possible, the operational methods for achieving integration remain undeveloped. This paper calls for the development of managerial guidelines for forming strategic alliances.