Vertical Integration Strategies and Environmental Uncertainty: China’s Film Industry

Abstract

This study analyses the effectiveness of vertical integration for motion pictures’ box office revenues and the moderating effects of environmental uncertainty on China’s film industry, where a market economy was introduced in 2002. We analyzed a sample of 1,824 films released between 2005 and 2016 using a PROCESS model. We found strong evidence that vertical integration positively influenced box office revenues, which were higher under greater environmental uncertainty post reforms than under relative stability. We also found films that (1) had major producers or distributors, (2) were based on intellectual property, (3) belonged to the action or fantasy genre, or (4) featured superstars performed better. This study demonstrates the current operating level of the market economy in China’s film industry and offers a unique, fresh dataset comprising almost all films released in Mainland China and produced by enterprises in Greater China.