ABSTRACT
Scholars of corporate management have highlighted how business success is dependent upon a combination of vertical integration decisions that define whether a firm’s goods or services should be transferred in-house or sold to outsiders (Birkinshaw et al., 1998). The study of vertical firm-specific asset boundaries has received considerable attention due to the issues of asset heterogeneity, the imperfect mobility of resources and the effective utilization of organizational capabilities (Barney and Arikan, 2001). In service industries, corporate management is increasingly driven by rapid changes in the business environment, such as technology transformation, economic upheaval and heightened market competition, and many service firms are actively searching for new ways in which to improve their organizational structure to gain increased levels of organizational collaboration, enhanced operational excellence and improved quality of information exchange (Bhandarker, 2003). Previous studies highlight the notion that the vertical integration of corporate management implies a rationalization of long-term business development, as the level of a firm’s structural efficiency is mainly dependent upon the degree of management coherence in cross-functional collaboration (Edwards and Kuruvilla, 2005). Other studies have demonstrated that the co-ordination between the various management levels of a firm is associated with the organizational alignment of one function to other related functions in making joint decisions on business development (Grewal and Tansuhai, 2001). Furthermore, the vertical integration of a firm’s management is related to the synergistic benefits that result from the introduction of human resource management (HRM) as an institutionally supported package (Yan, 2003). It follows that studies on corporate management have become critically important in the process of strategic management, especially when the vertical integration of human assets specificities involves significant organizational changes (Meilich, 2005).
