Vertical integration and performance in marketing channels

Since the late 1960's there has been an increasingtendency to analyse marketing channels as social systemsrather than as economic systems. Despite this, therelationship between vertical integration and performancein marketing channels has continued to be analysedfrom an economic perspective. In this study, not onlyis a social systems approach adopted to examine therelationship between vertical integration and performance,but certain additional features are also includedto refine this approach.There are a variety-of social systems, each withdistinct characteristics. This study argues that themarketing channel can be interpreted as an InterorganisationalCollectivity, a form of interorganisationalsystem.The model of vertical integration and performance thatis proposed, and subsequently examined, is based on acombination of theoretical and empirical analysis. Thiswork involved a series of in-depth interviews, referenceto studies of interorganisational networks other thanmarketing channels, and a consideration of certainbehavioural themes from the channels literature.In addition to the social systems approach, this modeldiffers from previous models in several other respects.These are the separation of vertical integration andco-ordination, -the multi-dimensional view of channelperformance and the introduction of channel atmosphereas a principal factor.A detailed analysis of marketing channels in the eggindustry is used to test the appropriateness of themodel, and to identify some modifications to itsoperational elements. These modifications allow forfurther validation to take place. Although the empiricalexamination of the model was affected by a fundamental reorganisationwithin the industry during the course of thework, the results do serve to indicate the usefulness ofthe concept of channel atmosphere and the need to takeaccount of the size of channel members whenever the.relationship between vertical integration and performanceis considered.