Vertical and Horizontal Integration in the Supply Chain: Impacts on Operational Resilience
Vertical and Horizontal Integration in the Supply Chain: Impacts on Operational Resilience
DOI:
https://doi.org/10.51473/rcmos.v1i1.2024.1418Keywords:
vertical integration; horizontal integration; supply chain; operational resilience; governance; transaction costs.Abstract
This article investigates how vertical (upstream and downstream) and horizontal (between peers or adjacent sectors) integration strategies influence the operational resilience of supply chains in highly volatile contexts. Based on the foundations of transaction cost economics and the resource-based view, combined with the literature on operations management and business continuity, we propose an analytical framework that relates governance structure (make-or-buy, alliances, and mergers), network architecture (centrality, redundancy, and modularity), and response practices.(visibility, flexibility, buffers, and substitutability) to robustness, agility, and resilience metrics (MTTR, service level, fill rate, and backlog clearing). The findings indicate that vertical integration increases control, coordination, and capacity prioritization, reducing the risk of disruption in critical inputs, while horizontal integration expands scope, economies of scale, and capacity sharing, accelerating reconfiguration in the face of shocks. However, adverse effects, such as rigidity, risk concentration, lock-in, and loss of optionality, emerge when integration occurs without dynamic viability criteria and adaptive governance. The study synthesizes evidence and presents guidelines for organizational design, investment criteria, and resilience assessment in complex supply chains.
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Copyright (c) 2024 Ivan de Matos (Autor)
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