ABSTRACT
This conclusion presents some closing thoughts on the key concepts discussed in the preceding chapters of this book. The book investigates the relationship between a firm's decision to integrate vertically and its research and development strategy. It focuses on the "knowledge complementarity effect" of vertical integration and the "transaction costs" of technology trading. The knowledge complementarity effect was explained to be a mechanism through which vertical integration positively affects technological innovation. The transaction costs were the underlying reason for a firm's choice of internal research and development (R & D) over using external technology market when the firm expects its future innovation to be significant. In analyzing the determinants of vertical integration, the book explains the externality effect of vertical integration and its relevant transaction costs. It then employs a two-equation approach in order to investigate the main hypothesis directly from the behavioral equation and has employed a dynamic simultaneous equation method in order to be econometrically correct.
