Determinants And Effects of Vertical Electronic Integration Test of a Transact

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Determinants And Effects of Vertical Electronic Integration Test of a Transact
Akbar Zaheer
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01; 16 Determinants of VI Table 3 summarizes the results of estimating equation (1). The regression model was significant (F value: 23. 36, p<. 01), and explained over 40% of the variance in VI. How^ever, it is important to highlight that the hypotheses relating to asset specificity and product complexity were not supported. Further, trust emerged significant in the direction opposite to the one hypothesized, and size -- introduced as a control variable -- emerged as negative and significant {a. 4 = -0. 531; t-value: 7. 48) determinant of VI. Table 3: Model Estimation (Equation 1) Coefficient OLS Estimates (t-value) ai (Trust) -0. 2217 (-3. 145)** 32 (Asset Specificity) -. 0431 (-. 618) 33 (Complexity) -. 0778 (-1. 096) ^4 (Size) -. 5310 (-7. 483)** ** p<. 001; The lack of support for the hypothesized determinants of vertical integration, in parhcular, asset specificity and product complexity, is a striking finding. The results are specially noteworthy in the Hght of the strong theoretical rationale in the transaction cost framework for expecting these variables to predict vertical integration, as well as previous empirical work (Anderson, 1985; John and Weitz, 1988) which has generally yielded statistically significant relationships in the direction hypothesized.

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