Digital Transformation and Vertical (Dis-)Integration:The Role of Technological Change and the Importance of the Institutional Context

Digital transformation has reopened the debate on vertical (dis-)integration strategies. However, there is a lack of empirical studies on how vertical integration and vertical disintegration strategies can coexist at the industry level, or which of the two strategic options allows firms to capture more economic value. This study represents an attempt to fill these gaps. Contextualising digital transformation in the cultural heritage sector, we studied the evolution over the last 20 years using a case study methodology. Our analysis shows that differences in institutional contexts are a relevant variable in the evolution of an industry's architecture and should be included in theoretical contributions on the vertical disintegration of sectors. Specifically, our results show that an institutional context that facilitates the institutionalisation of new activities–by favouring flexibility in the acquisition of resources and competencies and strategic autonomy–leads organisations to vertically integrate, thus avoiding relational dependencies with new technological players (e.g., Google). Our evidence contributes to the vertical integration literature and provides important implications in light of the changes in social, economic, and industrial structures brought about by digital transformation and the sudden acceleration worldwide caused by the coronavirus pandemic.