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By Jarkko Vesa

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31), the term “network” is widely used both by economists and marketers (not to mention organizational theorists and sociologists). ” Copyright © 2005, Idea Group Inc. Copying or distributing in print or electronic forms without written permission of Idea Group Inc. is prohibited. 26 Vesa In this book, the term “networked economy” refers to business networks, that is, networks that represent a new kind of organizational form that has emerged as an intermediate way of organizing between markets and hierarchies.

Vertical integration gives the firm the enhanced ability to differentiate and thereby an opportunity to capture a bigger slice of the value added. One could, of course, claim just the opposite — by relying on external suppliers, the firm can reach both economies of scale and flexibility. Strategic Costs of Integration In his analysis of vertical integration, Porter also identifies several strategic costs of integration. One such cost is the cost of overcoming mobility barriers to compete in the upstream or downstream of the value chain (1980, p.

31), the term “network” is widely used both by economists and marketers (not to mention organizational theorists and sociologists). ” Copyright © 2005, Idea Group Inc. Copying or distributing in print or electronic forms without written permission of Idea Group Inc. is prohibited. 26 Vesa In this book, the term “networked economy” refers to business networks, that is, networks that represent a new kind of organizational form that has emerged as an intermediate way of organizing between markets and hierarchies.

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