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Gérard Guerrier

DBA Graduate - 1997

Supervisor(s)

Jean-Jacques Chanaron
Transaction cost analysis represents one of the leading theories to explain vertical integration phenomena. The main objective of this thesis therefore is to confirm how well this theory applies to the channel length decision for complex industrial products. This research, based on the detailed investigation of four cases, thus aims to make two main contributions. First, the contextual exploration identifies several original aspects: a description of the "distribution value system" for complex industrial products; the identification of "systems management" as a core activity of such a system; an analysis of "product complexity" and its components, each with a particular effect on the channel length decision; and a synthetic model that maps the channel length decision and identifies key decision parameters. Second, this thesis focuses particularly on the influence of specific assets on the decision to integrate a channel. Distribution channels for complex industrial products are normally characterized by a high level of human assets, which are specific to the transaction. According to transaction cost theory, these channels should be integrated, because specific assets create bilateral dependency and contractual hazard, considering the risk of opportunism of potential distributors. This thesis proposes that the managers interviewed for the case studies integrate not because of such contractual hazards but rather in response to the parameters related to switching costs or economies of scale or scope. This thesis highlights both confirmations and divergences between the case materials and the transaction cost analysis and thereby proposes some tentative explanations for the findings.