Vertical or horizontal: optimal integration strategy under separation of ownership and control

This study proposes a framework to analyze the strategic value of integration, when separation ownership and control is considered. According this framework, we investigate optimal integration strategy in different distribution discuss how external market influences best choice. Beside theoretical analysis, also provide evidence from Chinese listed firms validate our research. The key results show that first, unintegrated works best, if level control-ownership disparity extremely high. Second, general, vertical more appropriate for substitute markets, while horizontal may bring benefits highly complementary market. Third, impact on firm’s performance negatively moderated by disparity. However, moderate effect be weakened structure. Our new comprehensive perspective understanding inconsistent previous studies. Moreover, analysis highlights decision regulation policy.