Some leading manufactures vertically integrate wholesale functions in order to control those functions. Based on transaction cost analysis (TCA) and capability approach, this research proposes a conceptual framework why manufactures integrate wholesale functions or not. Specifically, it is suggested that human asset specificity and teachability positively related with vertical integration, while outside wholesaler know-how negatively related with vertical integration. Empirical analysis shows that decision on integration of wholesale functions are influenced by TCA and capability factors.

• Sho Yuki(Kobe University, Japan)
• Tomokazu Kubo(Chuo University, Japan)