Diversification, vertical integration, and industry analysis: new perspectives and measurement

Article Abstract:

The COMPUSTAT II and TRINET data bases are evaluated based on their potential to analyze vertical integration, diversification and industry trends within, among and across business segments. The COMPUSTAT II data base shows great potential as a valuable tool in the calculation of vertical integration and in industry analysis. However, this data base's ability to gauge diversity should not be limited to the extent of diversity declared by business organizations. The analysis of diversification is more effectively facilitated by the TRINET data base, particularly in the determination of diversification indices. The TRINET data base is also effective in the computation of benchmarks. The usefulness of the Census of Manufacturers, Standard & Poor's Financial Dynamics, Dun and Bradstreet's Industry Norms and Key Business Ratios in industry analysis is also assessed.

Evaluation, Diversification in industry, Industrial diversification, Databases

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Vertical integration in franchise systems: agency theory and resource explanations

Article Abstract:

A path model of franchise ownership strategies is developed based on the analysis of 128 Canadian franchise systems. The franchise ownership model synthesizes elements of the resource scarcity thesis and the administrative efficiency thesis. Two crucial elements of the model are that franchising offers efficiency advantages over vertical integration and that franchising allows growth while minimizing resource constraints. The path model is used to explain the fundamental decision to select between ownership and a degree of franchising.

Patent owners and lessors, Management, Franchises, Corporate growth, Agency (Law)

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