The essence of the ________ to vertical integration is that if a firm possesses valuable, rare, and costly-to-imitate resources in a business activity, it should vertically integrate into that activity otherwise it should not vertically integrate into that activity.
A) flexibility-based explanation
B) opportunism-based explanation
C) firm capability explanation
D) opportunity-based explanation

Question

Quizplus · Accepted Answer

The firm capability explanation argues that a firm should vertically integrate into a business activity if it possesses valuable, rare, and costly-to-imitate resources in that activity, and this aligns with the given statement. The flexibility-based explanation does not consider valuable resources, the opportunism-based explanation is focused on opportunistic behavior rather than resource capabilities, and the opportunity-based explanation does not consider the rarity or costliness of resources.

The Essence of the ________ to Vertical Integration Is That