Espacios. Vol. 37 (Nº 01) Año 2016. Pág. 8

Vertical integration by the transaction costs perspective

A integração vertical pela perspectiva dos custos de transação

Luiz Kennedy Cruz MACHADO 1; Antonio Henrique Andrade BARRANQUEIROS 2; José Willer do PRADO 3; Susy Naiara Alves da SILVA 4; Cassiano de Andrade FERREIRA 5; Antônio Carlos dos SANTOS 6

Recibido: 23/08/15 • Aprobado: 13/10/2015



1. Production chain

2. Transaction costs

3. Vertical integration with theoretical support of concurrent engineering and erp system

4. Alternative forms of the production chain management

5. Aspects of vertical integration by the transaction costs perspective

6. Conclusion



This study sought to raise the positive and negative aspects of vertical integration through the concepts of limited rationality, opportunism, assets specificity, uncertainty and contracts nexus. The analysis of vertical integration is based on theories and tools such as Concurrent Engineering, ERP system, Core Competence and Modular Production. For the main positive aspects, the study shows that vertical integration reduces the company's exposure to the risks of opportunism present in the negotiations with the market. In the case of the most significant negative aspects, the high investment in specific assets can be costly for the company and let it inflexible.
Keywords: Vertical integration; Transaction costs; Organizational strategy.


Esse estudo buscou levantar os aspectos positivos e negativos da verticalização a partir dos conceitos de racionalidade limitada, oportunismo, especificadade dos ativos, incerteza e nexo de contratos. A análise da integração vertical se embasou em teorias e ferramentas como a Engenharia Simultânea, sistema ERP, Competência Essencial e Produção Modular. Em relação aos principais aspectos positivos, o estudo evidencia que a integração vertical reduz a exposição da empresa aos riscos do oportunismo presente nas negociações com o mercado. Em se tratando dos aspectos negativos mais expressivos, o alto investimento em ativos específicos pode ser dispendioso para a empresa e deixá-la inflexível.
Palavras-chave: Integração vertical; Custos de transação; Estratégia organizacional.


In the first half of the twentieth century, specifically in 1937, Ronald Coase, in his studies about the organizations economy, begins to research on vertical integration of the production chain. Later, some scholars as Klein, Crawford and Alchian (1978) and Williamson (1979) have continued this line of research, but adding aspects of the Theory of Transaction Costs. From this perspective, the transaction costs start to gain power and importance in the understanding of organizational performance, with influence on economic and financial indicators of companies.

Faced with a domestic and international market highly competitive and seeking to meet customer needs as well as maintaining sustainable growth over time, companies have sought to use most varied strategies in order to sustain its market share from stable to rising. One strategy that has been highlighted by some researchers is the vertical integration of the production chain (BALAKRISHNAN and WERNERFELT, 1986; JOSKOW, 2005; JOSKOW, 1985; LAFONTAINE and SLADE, 2007; ROTHAERMEL, HITT and JOBE, 2006).

Through a more focused approach of vertical integration, the following question arises: what are the main positive and negative aspects of vertical integration through the transaction costs perspective? Note that transaction costs have important features to be considered, which analyzed together with the tools and other strategic forms of management, provide a more robust foundation for decision making on issues related to the adoption or not of vertical integration.

The paper was structured as follows: after this introduction, the theoretical foundations of the production chain, transaction costs and vertical integration of the production chain will be presented. Moreover, it is presented as a complement, the explanation of theories and tools as Concurrent Engineering, ERP System, Core Competence and Modular Production. Next, we tried to make a connection between the theories presented and the positive and negative aspects of vertical integration through the lens of transaction costs. Finally, it follows with notes on the study limitations and suggestions for future papers.

1. Production chain

According to Lastres and Cassiolato (2003), the production chain is the sequence of economic activities in which the various inputs pass through and are processed and transferred, including from raw materials, machinery and equipment, intermediate products until the end, its distribution and marketing. In this structure there is a growing division of labor in which each agent or group of agents specialize in different stages of the production process. A production chain can be local, regional, national or global.

This sequence of economic activities develops purchasing and selling relationships between each other. As the product is being manufactured it goes through different activities and trades that will add it value. The supply chain is constituted of all activities related to production that can separately occur, but at the same time are connected by a technician thread (BATALHA, 2007).

The production chain is made up in a binding network of systems such as commercial, financial, infrastructure, technology, and trade relations between the public and private sectors (FURLANETTO and CÂNDIDO, 2006).

Complementing the understanding about supply chains, this can be seen as the set of activities, at different stages of processing or assembly that turns basic raw materials into finished products (HAGUENAUER et al., 2001). On the one hand, the chains are created by the vertical disintegration process and technical expertise, on the other hand, competitive pressures for greater integration and coordination of activities along the chain, expand coordination between agents (KUPFER and HASENCLEVER, 2013).

Zylbersztajn (1995) emphasizes the direct relation that occurs between competitiveness and the strength of a chain, with its competence to adapt deftly to priority oscillations of its customers and consequently to the standards imposed by the market. Several researchers are working to deepen their studies on these links that make up the production chain in different sectors, such as agribusiness, veterinary medicine automotive, chemical and petrochemical industry (ALVES et al., 2012; GARCIA, 2010; ROSSI et al. 2014; ZYLBERSZTAJN, 2000).

A careful analysis within a production chain and between the links that comprise it, reveal important information for the decision-making process about the vertical integration of the firm, regarding to its size, in how fragmented is the sector chain in study or how much companies are vertically integrated and specially about the chain's ability to prosper the businesses.

2. Transaction costs

Transaction costs, according to Williamson (1985) apud Pondé, Fagundes and Possas (1997), are the expenses on economic resources to plan, adapt and monitor the interactions between agents, ensuring the compliance with contractual terms on a satisfactory way for the parties involved and in harmony with its economic functionality. Are the costs to operate the economic system (WILLIAMSON, 1985), which must not be confused with the production costs.

The basic proposition of Williamson (1985) is that economic institutions have the purpose and effect save transaction costs, whether  they are ex ante (of trades and fixation of safeguards and counterparts, of customers and suppliers location, the negotiation process) or ex post (monitoring, renegotiation and adaptation of contracts to unforeseen circumstances, maintenance of formal or informal established commitments). Transactions are characterized by objective attributes such as asset specificity, uncertainty and frequency of transactions, whose variations expose the limits of human rationality and facilitate opportunistic action (CARSON, MADHOK, WU, 2006; SILVA).

Complementing this concept, Farina et al. (1999) say that transaction costs can be defined in four levels that are: the first refers to the costs of preparing and negotiating contracts; the second is related to the cost involved in the monitoring and measurement of existing property rights in the contract. It is noteworthy that in this second case is also incorporated the cost of observation of the contracts along the time for their performance and meet the expectations of the parties who made the transaction. The third level includes the costs of maintaining and executing internal and external contracts of the firm. Finally, the last level relates to the costs of adaptation that agents suffer from environmental changes.

According to the theory of transaction costs some aspects related to the agents' behavior imply the emergence of transaction costs, as the limited rationality of economic agents and the opportunism present in the actions of these agents. The combination of these two aspects with the assets specificity, nexus of contracts and uncertainty, generate transaction costs and will influence the governance structure that will coordinate the involved economic agents.

Limited rationality consists of a rationality that is supposed that economic actors are intentionally rational, but due to the limitations of cognitive nature, which Simon (1980) says to be inherent to the human being, only part of the set of necessary knowledge and information can be prosecuted for a decision-making on a business relationship. Thus, costs emerge to reach certain information and there is a need to create mechanisms for coordination and governance structures that supply, in part, human cognitive limitations.

[...] In administrative behavior the limited rationality is characterized as a residual category - rationality is limited when lacks omniscience. And the lack of omniscience is the result mainly of gaps in the knowledge of alternatives, uncertainty about relevant exogenous events and inability to calculate the consequences [...]. (SIMON, 1980, p.42).

Opportunism is an unethical behavior with focus on personal gain and generates costs for the parties who are conducting the transaction. Supporting this idea, Williamson (1985) conceptualizes opportunism as the search for self-interest with guile and includes lying, theft and deceit, but is not limited to these. Opportunism comprises, in addition, some subtle forms of deception related to the active and passive modes and ex ante and ex post types. For example, if in a relationship B2B (business to business) one part invests significantly in software manufacturing and the counterparty seeks to act opportunistically to achieve financial gain in this exchange and threatening the operations performance of the first part, the transaction costs increase.

Regarding to the assets specificity, this term refers to a greater or lesser possibility of an alternative use of an asset and the costs involved in this process. In other words, is how much the investment in the asset is specific for the activity and how expensive is its alternative use in another situation (WILLIAMSON, 1985). "Therefore, an important aspect deserves attention: the higher is the asset specificity dedicated to the production, lower tends to be the alternative use of the same and higher are the costs involved in this transaction" (ARBAGE, 2004).

The uncertainty, according to Knight (2002, p. 224) refers to "a state in which there are no valid bases or past experience to determine the probability of a specific event". In the business environment, uncertainty arises mainly because of the limited rationality and opportunism. There is uncertainty about the recognition of relevant information for the contract or if this information is incomplete and asymmetric. Thus, the uncertainty from the market does not allow agents to create contractual clauses linking the future results of the contract with the future market reality (ROCHA JUNIOR et al., 2008).

The nexus of contracts emerge as alternatives to minimize transactions risks and that can be done internally in the company or between organizations. The closer a contract is to perfection, more efficient will be its results, and otherwise, a part may act opportunistically, masking the results and acting on its own behalf (DAGDEVIREN and ROBERTSON, 2013).

The main is the part offering the contract and the agent is the hired part that accepts or rejects the proposal of the main. The contract can be signed with some reservations made by the contractor or he has only the option to accept or not, what is known in international literature as "take-it-or-leave-it" (ALEXANDER et al., 2012). Overall, according to these authors, contracts should be a compatible incentive and be save of renegotiation.

Paiva and Souza (2012) say that the mathematical models that stand out in the literature about the relationship of the parts involved in the contracts, point out two central problems which are: "unaware of the agent's competence for performing the activity and different objectives between main and agent parts". In addition, other costs are involved in a contractual relationship, that are worth mentioning: monitoring costs, expenditures to ensure commitment of staff and opportunity costs for those involved during the contract period.

3. Vertical integration with theoretical support of concurrent engineering and erp system

Vertical integration, also known as hierarchical governance is defined by Mpoyi (2003) as the extent that a company controls the production of its inputs and, distribution and production of its outputs. In other words, according to Rodrigues (1995), it is the control of all successive stages of the production chain by the same firm. To create new goals and strategies the company must analyze the main factors that stimulate the vertical integration process, the advantages to be obtained in this system and especially consider the trends of the sector, the procedures and the competitors' governance structures (ALBUQUERQUE, FLEURY and FLEURY, 2011).

As Williamson (1979) stated, based on microeconomic definition, vertical integration refers to the development of a company to one more stage of the production chain of its line of business. In general, what justifies this transformation is the exploitation of scale economies, which expand to the set of activities of the integrated company, enabling efficiency gains and reducing transaction costs.

Joskow (2005) explains that vertical integration begins with the recognition of the firm of the potential transaction costs (contractual and organizational) present in marketing negotiations. In addition, the actor points out that the vertical relations are submitted to the organizations' efforts to mitigate market inefficiencies at one or more levels of the vertical chain or to increase the market power to other levels.

Before this aforementioned business environment, organizations are creating new ways of managing and using information technology as a strong ally for their achievements. Thus, emerges concepts and theories as concurrent engineering and management information systems - ERP.

3.1 Concurrent Engineering

Concurrent engineering, also known as parallel engineering, though do not require that all levels of the production chain belong to a single company, assists in the context and implementation of vertical integration as part of the new production philosophy. According to Moura (1998), the objective of concurrent engineering is to unify all the needed stakeholders to develop a product, in the business design stage.

It can be said that unlike the sequential engineering, in which every business sector, after running a project task, the product passes to the next sector with the expectation of no faults, in concurrent engineering the sectors work together, there is a greater integration and failures are quickly detected (KRUGLIANSKAS, 1995). Sectors such as marketing, R&D, production, projects, among others, develop their work in a unified manner for the sake of generating a product of high quality and suitable to the market. This new philosophy encompasses several managerial tools and techniques such as Total Quality Control, Benchmarking, Total Productive Maintenance, Just in Time, among others (KOSKELA, 1992).

Just to mention, the first studies on concurrent engineering were developed by Westerners in the eighties, more precisely in the North American military industrial sector, in response to the Japanese economic growth. The term was created by the Institute for Defense Anlaysis - IDA (FABRÍCIO and MELHADO, 2006; JERÔNIMO, 2014). In the literature, there are several meanings for concurrent engineering, which adapt to the objectives of the creator of each concept or the scope of application of its principles (FABRÍCIO, 2002).

According to Loureiro (2010b), Peralta (2002) and Yassine, Chelst and Falkenburg (1999), concurrent engineering uses a project methodology that unifies the internal and external resources of the firm, with the main objective to reduce the development time of products and their costs, improve products quality and to be a source of value creation for the customer.

The application of concurrent engineering is not an easy process, just because it encompasses the organization as a whole and requires the breaking of paradigms directly related to the culture and structure of the organization (RESENDE, 2008). Among the critical factors that must be taken into account when implementing this method, we can highlight: the formation of multidisciplinary teams; the use of appropriate tools and resources; the intense commitment of management; and good engagement with suppliers and customers since the creation process (DEL ROSÁRIO et al., 2004).

The concurrent engineering anticipates and brings to the initial stages of product development, the needs of each step of the whole process, identifying possible improvements and avoiding future changes that may promote setbacks in the procedure (JERÔNIMO, 2014).

Linked to the vertical integration, it can be summarized that the concurrent engineering comes as a philosophy that approaches the different stakeholders present in the development of a product, with several managerial techniques and tools. It is not specifically do the vertical integration on the firm, but to redefine its basic composition in an attempt to achieve their goals.

3.2 Integrated Management System - ERP

According to Souza and Zwicker (2003), the ERP (Enterprise Resource Planning) integrated business management systems are integrated information systems that support most of the operations of a company. They are software that allow the collection of information, a better connection and interface between sectors of an organization, hence more accurate management.

A management information system aims to consolidate and gather essential information to the organizational management. These systems can also be linked to the internet, intranet, and other sources of information technology, allowing greater integration between the subsystems present in companies and providing a flow of relevant information to decision making, as well as for the operationalization of activities from various sectors of a company (PADOVEZE, 2010).

To make a link with the vertical integration, it is noted that ERP systems are received by the corporate context as a strong ally. Organizations with vertical integration on its chain become larger and more complex, so these software allow such companies to integrate and streamline the processes of all its sectors, optimize access to operational data, bring real time information about legal and tax changes in the country, allow greater control over deadlines in different contracts, among other benefits. As a result, there is an overview of the business so that the best decisions with the agility and efficiency demanded by an increasingly competitive and dynamic market are taken.

4. Alternative forms of the production chain management

Although there are theories that address and support the vertical integration strategy, there are alternative theories to the vertical integration, as the core competence and the modular production, which are also accepted and used in the market.

4.1 Core Competence

Companies are constantly faced with questions like, "produce or obtain through the market".  By choosing to produce or buy their processes, companies are faced with the competitive strategies related to do vertical integration or vertically disintegrate. Unlike the vertical integration, some researchers argue that outsourcing allows a greater focus and investment in a small group of skills called core competencies (HAMEL and PRAHALAD, 1990).

Outsourcing enables companies to develop their core competencies and make it distinct from the competition (HAMEL and PRAHALAD, 1990). Ubeda and Santos (2008) conceptualize the core competences as the "sum of learning of the full range of skills, knowledge, technological know-how and results of decision-making processes of the organization. Is a source of competitive advantage because it must be unique, must contribute to the value perceived by the customer and should not be easily copied by concurrence".

Porter (1991) points out that the decision to vertically integrate the chain is beyond the financial analysis of costs and investments, it should also consider the strategic problems of integration when compared to the market use. In the decision models based on transaction costs and strategic analysis, their approaches are still facing the practice of outsourcing, a process that begins at the end of the core activities of the company and develops toward the core competencies of the company (DI SERIO and SAMPAIO, 2001).

4.2 Modular Production

Although extensively studied in the automotive sector, the modular production is also applied in computer sectors, production of cameras, furniture and electronics in general (ARNHEITER; HARREN, 2006).

This type of production has a different aspect of vertical integration, because, although there is a significant communication at different levels of the production chain, this chain is not integrated and suppliers, in general, are different companies from carmaker company. According to Persson (2004), the modularity is basically the process of division of a complex product into smaller subsets, called modules. These modules are generally manufactured separately by suppliers, but should fit and work as a whole. For this, interfaces are standardized.

There are some types of modular production, among which stand out the modularity of design and modularity of use. In the first type, the carmaker company specifies the functions of the product, what are the subsystems or modules and their connections. It is common that suppliers develop a significant know-how in their work and become experts in what they do, which may promote the appearance of innovations in the modules in which it operates (CAUCHICK et al., 2009; MATHIAS, KUBOTA and MIGUEL, 2012). The second case is characterized by adding value to the final product. The products are manufactured with the possibility of embedding or not some modules, it is, modules are optional. In other words, the customer chooses which modules please him or is useful, for example, air conditioning, power steering, among others, and then on the assembly line, this module is installed (CHAUCHIK and HSUAN, 2010).

This type of strategy has been adopted by some companies in order to increase efficiency and effectiveness in production, reduce costs, increase productivity and profitability. This usually occurs because the modules can be simultaneously manufactured by different suppliers, so a financial contribution is not necessary to purchase some machinery, leaving it in charge of suppliers and may be can occur an increase of innovations in products due to the high knowledge of who produces the modules (SILVA; ROZENFELD, 2007). On the other hand, we can not forget to mention some negative aspects of modularity as the possibility that there are no qualified suppliers to the function, failures or low quality production that directly affect the carmakers' production line, lack of synchronization in the production, structural limitation of the supplier, among others (SANCHEZ and COLLINS, 2001; CAUCHICK et al., 2009; MATHIAS, KUBOTA and MIGUEL, 2012).

5. Aspects of vertical integration by the transaction costs perspective

The decision to vertical integrate or outsource the production process is a doubt present in most contemporary organizations. In this context, it is wondered: choose manufacturing all inputs of production and reduce transaction costs or buy from third parts and focus on the core business? Questions like these are complex and directly influence the organization's goals, where the right strategies can generate a large competitive advantage for the company.

Links between companies - both vertically and horizontally - are oriented in search of lower transaction costs, better strategies and reducing uncertainty about the prices of inputs and finished products (ALBUQUERQUE, FLEURY and FLEURY, 2011). According to Andrade (2002), vertical integration arises as a result of some issues related to specific assets, to the troubled process of transactions and its high level of uncertainty.

In a synthesized form, the theory of transaction costs was developed to assist in understanding the different ways of structuring companies and positioning them against the market, addressing levels of uncertainty, the specificity of the assets involved in the process and the frequency of transactions (ANDRADE, 2002). And in this context, the vertical integration emerges as an alternative to minimize these issues.

Williamson (1985) reports that the vertical integration strengthens the company and stabilizes its production system structure making it less vulnerable. This hierarchical governance is convenient when its production costs are lower than transaction costs provided of negotiations in the market. Williamson cites an advantage for companies that choose to do vertical integration, as those are the best adapted to changes in the organizational environment, because they are more autonomous and control the technology for its all process.

In an analysis of the vertical integration of the supply chain through the lens of assets specificity, it is noted that the supply chain is directly related to this aspect. The higher is investment in specific assets, for example, in a case that a textile company decides to vertical integrate and make large investments in machinery for the production of specific tissues, although there is the possibility of reducing the cost of a product to the final customer, greater will be the risks of uncertainty about the success of such investment and lower is the possibility of the asset use in another activity due to its specificity, thus increasing the costs of the transaction.

An alternative source for this issue of assets specificity would be the adoption of modular production, in which these risks could be transferred to suppliers who would bear the investments for the manufacturing structure.

However, Joskow (1985) highlights a positive point of vertical integration that provides to an organization to maximize the price of its input and reduce the price of its output in order to create entry barriers for competitors. Therefore, efficient management at all levels of the production chain is necessary, moment in which the use of some management theories and tools such as concurrent engineering and the ERP system are welcome.

In the case of opportunism, Souza (2002) says that an important fact which justifies the vertical integration of the supply chain is related to transaction costs that occur in commercial operations. These costs are primarily related to opportunistic behavior resulting from the negotiation, where one part creates a degree of dependence by the high investment made to generate the negotiation. The investment cause a dependency of the other part to generate cash flow and a return on the capital employed in the agreement, leaving the part that invested vulnerable to opportunism of the other, that in some cases did not invest anything in the transaction (SOUZA, 2002). Corroborating to this reasoning, the common coordination of activities minimizes opportunistic behavior that would occur between two different agents generating higher transaction costs (KLEIN; CRAWFORD; ALCHIAN, 1978).

One has to consider, however, that a fully vertically integrated company becomes substantially larger and more complex, mostly requiring computer resources as integrated management systems (ERP) so it is possible to consolidate and use essential information to organizational management.

Some authors argue that the most costly part of the transaction costs is ex post. Williamson (1979) says that the most relevant transaction costs are related to incomplete contracts and their monitoring needs, and this phenomenon occurs due to the limited rationality of managers in accurately predict future events.

These factors such as opportunism and incomplete contracts generate large expenditures in the outsourcing process and can make not viable the use of practices seen by some as beneficial in some situations, such as the core competence, encouraging managers to vertical integrate their organizations. Some factors are cited by McIvor (2009) as a basis to generate opportunistic behavior, they are: asset specificity, small number of suppliers, impactful information and uncertainty.

The vertical integration, when analyzed by uncertainty, an element that generates transaction costs, shows us that this process of vertical integration generates greater ability to estimate demand variations of following products in the value chain. This helps to direct the production of intermediate goods, reducing the risks and consequently the uncertainty - transaction costs - associated to market fluctuations (HARRIGAN, 2003).

In vertical integration various costs associated to transactions permeated by nexus of contracts are avoided, and largely minimized. This occurs because integrated companies reduce their legal expenses with contracts monitoring and avoid spending related to the charging and alignment to ensure the commitment of the agents. It is also add the opportunity costs inherent in this type of transaction when the main part is bound by the contractual terms during the contract period, making it impossible to obtain more competitive prices for its inputs in the market. From the agent perspective, the opportunity cost is related to large price swings in the market, loss of new proposals due to exclusivity clauses, among others.

Linking the vertical integration of the production chain to the limited rationality, it is noted that this element can be detrimental to the organization. A vertically integrated company, in a way, distances itself from relations with the various companies in the market and is almost exclusively dependent on their managers to create their strategies, as the flow of inter-organizational information is reduced. This situation combined with the limitations of cognitive nature of human beings which restricts the processing of knowledge and information, can lead to wrong projections and decisions taken by such managers.

Faced with this fact, contrary to vertical integration, outsourcing is mentioned as a possible solution. In this process, it is emphasized the core competence that aims to focus on the core capabilities of the firm and thus get a differential in the market. Moreover, we have the modular production as an ally, which supports the division of production into smaller sub-sectors to achieve better efficiency and effectiveness in production and keep the company competitive in the market.

6. Conclusion

With this study we sought to analyze the vertical integration and its peculiarities from the transaction costs perspective, with the theoretical support of concurrent engineering, ERP system, core competence and modular production. Therefore, it sought to highlight the pros and cons of vertical integration related to asset specificity, opportunistic behavior, uncertainty, contracts nexus and limited rationality.

The production chain includes since the withdrawing of the raw material in nature until the manufacturing of a final product that is ready to be available on the market. In this context, the vertical integration arises when an organization operates in several branches of the production chain in which it operates, in order to reduce transaction costs, minimize dependence on third parts and, in general, obtain better results.

The determinants factors of transaction costs provide a theoretical framework for understanding the vertical integration features, which, supported by studies in concurrent engineering and ERP system, allow an analysis of the feasibility of its implementation. Otherwise, there are several studies, such as the core competence and the modular production, which highlight the strengths of outsourcing.

It can be highlighted some positive aspects of vertical integration based on transaction costs, such as: vertical integration reduces the company's exposure to risks of opportunism present in all negotiations with the market; lower risk of the organization to be impaired in a contractual relation with other companies; better control of the intermediate products that are demanded in the process, which reduces the risks and uncertainties arising from an unstable market.

Among the negative aspects of vertical integration through the lens of transaction costs, we highlight: the high investment in specific assets can be costly to the company and leave it inflexible; the limited rationality restricts the development of the organization, because it mainly is dependent on managers to create strategies due to the low relation of the company with the market, making it conditioned to the cognitive limitations of human beings; the risk related to high investment in assets due to the uncertainty of possible technological advances make these assets obsolete and the company fails to follow the market developments.

It should be noted that the decision to outsource or vertical integrate the firm can vary depending on the particularities of the sector; there are no rules that clearly prove when one is better than the other. It is expected that this decision is taken after much study and planning, being available to these "decision makers" the theoretical framework and management tools such as concurrent engineering, ERP system, the core competence and the modular production.

As a limitation of this paper, stand outs the restricted practical examples elucidated in line with the research topic. Therefore, it is suggested as a research agenda the proposal of papers focused on a particular industry, as well as empirical studies addressing this subject.


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Vol. 37 (Nº 01) Año 2016


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