Vertical Integration Depth and Supplier Opportunism Mitigation: An Empirical Analysis of Transaction Cost Governance in Tier-1 Automotive OEM Supply Chains
Keywords:
vertical integration, transaction cost economics, supplier opportunism, relational governance, asset specificity, OEM supply chain, structural equation modeling, strategic sourcing, supply chain governanceAbstract
This study investigates the relationship between vertical integration depth and supplier opportunism mitigation within Tier-1 original equipment manufacturer (OEM) supply chains in the global automotive sector. Drawing on transaction cost economics (TCE) and relational governance theory, we employ a mixed-methods design combining structural equation modeling (SEM) across 214 OEM–supplier dyads with semi-structured interviews from six multinational procurement executives. Findings demonstrate that asset specificity and behavioral uncertainty jointly moderate the efficacy of hierarchical governance mechanisms, while relational capital attenuates opportunistic behavior beyond the threshold predicted by classical TCE. Contrary to established models, partial vertical integration outperforms full integration in volatile input-cost environments. These results refine extant supply chain governance frameworks and carry direct implications for OEM strategic sourcing policy under geopolitical supply disruption conditions prevalent in 2024–2025.
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