Shall we integrate?

In this research, the relationship between vertical integration and firm performance (for various stakeholders) will be identified. A holistic firm performance measure is created and consequently identified by making use of three performance measures: financial, organizational and environmental performance. Vertical integration is identified by creating an index, making use of SSIC-codes and identifying the number of segments that are integrated within a product line. Literature review concludes a positive relationship with financial & environmental - and negative relationship with organizational performance. From the results can be concluded that there exists a negative relationship between vertical integration and financial and environmental performance, which negative effect is stronger for little to highly vertically integrated firms. From this research's results can be concluded that vertical integration has a negative effect on firm performance.