Vertical Integration of Digital Platforms in the Agricultural Industry

Abstract

Vertical integration is a strategic option for a company that aims to have direct control over its value chain. With regards to digital platforms, vertical integration as a strategy is, to an extent, paradoxical, since platforms’ operating models are largely based on external actors with whom the platform owners have only an arm’s-length relationship. Many large digital platform companies have pursued vertical integration and research has been conducted on the subject, yet it is often industry-agnostic and focuses on large digital platform companies. We sought to identify the vertical integration strategies of digital platforms in the agricultural industry, as well as understand the firm- and industry-level drivers behind them. The results showed that these drivers impact vertical integration of digital platforms, which occurs along the value chain of a platform’s user groups and not solely along that of the platform. Furthermore, digitalization and data open new avenues for vertical integration.