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Organizational Structure and Technological Investment

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  • Inés Macho‐Stadler
  • Noriaki Matsushima
  • Ryusuke Shinohara
Abstract
We analyze firms’ decisions on their vertical organization, taking into account the characteristics of both the final good competition and the R&D process. We consider two vertical chains where upstream sectors invest in R&D. Such investment determines the production costs of the downstream sector and has spillovers on the production and the investment costs of the rival. In a general setting, we show that the equilibrium organizational structure depends on whether the situation considered belongs to one of four possible cases. We study how final good market competition, R&D spillover, and R&D incentives interact to determine the equilibrium vertical structure.

Suggested Citation

  • Inés Macho‐Stadler & Noriaki Matsushima & Ryusuke Shinohara, 2021. "Organizational Structure and Technological Investment," Journal of Industrial Economics, Wiley Blackwell, vol. 69(4), pages 785-816, December.
    • Handle: RePEc:bla:jindec:v:69:y:2021:i:4:p:785-816
    DOI: 10.1111/joie.12277
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    Cited by:

    1. Yasuhiro Arai & Noriaki Matsushima, 2023. "The impacts of suppliers and mutual outsourcing on organizational forms," Canadian Journal of Economics/Revue canadienne d'économique, John Wiley & Sons, vol. 56(1), pages 114-132, February.
    2. Akio Kawasaki & Tomomichi Mizuno & Kazuhiro Takauchi, 2023. "Downstream new product development and upstream process innovation," Journal of Economics, Springer, vol. 140(3), pages 209-231, December.
    3. Hamada, Kojun, 2023. "Organizational structure and technological investment revisited: An explanation based on the property rights approach," Research in Economics, Elsevier, vol. 77(3), pages 390-401.

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    More about this item

    JEL classification:

    • L22 - Industrial Organization - - Firm Objectives, Organization, and Behavior - - - Firm Organization and Market Structure
    • L13 - Industrial Organization - - Market Structure, Firm Strategy, and Market Performance - - - Oligopoly and Other Imperfect Markets
    • O32 - Economic Development, Innovation, Technological Change, and Growth - - Innovation; Research and Development; Technological Change; Intellectual Property Rights - - - Management of Technological Innovation and R&D
    • C72 - Mathematical and Quantitative Methods - - Game Theory and Bargaining Theory - - - Noncooperative Games

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