Vertical integration for full outsourcing: growth and internationalization of a portuguese packaging firm

Based on a case study of a Portuguese packaging firm, this paper examines how vertical integration of the supplier serves as a vehicle for the full outsourcing of the client firms'needs in a solution that reduces transaction costs, favors specialization, and permits small and medium?sized firms to develop competencies that may be exploited in a wide array of projects. Vertical integration by the supplier (a governance decision) is a strategic response to changes in the sourcing model of the clients. Client?supplier relationships have inter?spatial and inter?temporal value that surpasses spot market exchanges.