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Introduction
Supply chain integration is a frequently examined topic in the supply chain management (SCM) literature. In order to grow - and sometimes to survive - companies must make wise decisions regarding appropriate governance models for efficient supply chains. This involves considering everything from open spot markets; hybrid forms including collaboration, alliances, and joint ventures; to contracting and full vertical integration (e.g. [41] Hobbs, 1996). Vertical integration has attracted a great deal of research attention from multiple disciplines, and strategic management and organisational economics researchers have made significant contributions toward understanding this concept ([58] Mahoney, 1992). The SCM literature views vertical integration as one extreme of vertical coordination of supply chains (e.g. [42] Hobbs and Young, 2000), or as a precursor to supply chain integration (e.g. [88] Stonebraker and Liao, 2006).
Strategic concentration in supply chains marks a key issue for manufacturing firms. Vertical integration means some companies, such as the Spanish clothier Zara, owning nearly the entire supply chain, from design and production, to distribution and logistics, to stores worldwide. Zara's retail clothing peers, such as Benetton, The Gap, and Hennes & Mauritz, continue to rely on outside production partners through complete or strong outsourcing ([32] Ferdows et al. , 2004).
Many researchers herald the role of integration as the most important aspect of well-functioning supply chains (e.g. [75] Richey et al. , 2009). Simultaneously, the current prevalence of outsourcing has forced many supply chains to become more specialised, making integration across company boundaries even more important. Some theorists even believe outsourcing per se can increase the efficiency of supply chains ([47] Kroes and Ghosh, 2010). Although outsourcing is prevalent in certain industries and segments, it has been argued that different economic and technological circumstances require distinct supply chain governance strategies ([37] Grossman and Helpman, 2002; [80] Rothaermel et al. , 2006). In fact, the outsourcing of the buying firm can be seen as the downstream vertical integration of the supplying firm, in which the vertical integration results from the customer's outsourcing strategy. However, this paper focuses of a manufacturer's deliberate strategy to integrate vertically downstream.
Downstream integration plays an important role for manufacturing firms in several ways. First, it can help firms to secure the distribution channels of their products, especially in markets...