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УДК 338.43:631.1

DOI: https://doi.org/10.36887/2415-8453-2025-3-76

Hrosul Oleksandr,
Lecturer in the Department of Finance, Banking, Insurance, and the Stock Market,
Mykolaiv Polytechnic International Technological University.
https://orcid.org/0009-0003-4409-626X

JEL classification: Q13, L22, D23

This article examines the theoretical foundations of mechanisms for vertical integration of agricultural business entities in the context of the transformation of the agricultural sector, increased competition, and the growing complexity of agro-food value chains. The study aims to substantiate the theoretical foundations of vertical integration of agricultural business entities. The article argues that vertical integration is a strategic tool for integrating successive stages of production, processing, logistics, and distribution within a single organizational system or through contractual coordination, ensuring alignment of economic interests among market participants, supply stability, and improvements in agricultural product quality. Existing theoretical approaches to understanding vertical integration, developed within the frameworks of the neo-institutional theory, transaction cost theory, and the resource-based approach, are summarized. It is established that the key prerequisites for the formation of vertically integrated structures are asset specificity, environmental uncertainty, transaction frequency, and information asymmetry among participants of the agro-food value chain. It is shown that, as transaction costs increase, internal firm coordination is more efficient than market contracts, thereby driving the development of integrated organizational forms in the agricultural sector. The article substantiates the specific features of vertical integration formation in agricultural business, which are determined by the seasonality of production, dependence on natural and climatic conditions, territorial dispersion of producers, high logistics costs, and increased product quality requirements. It is determined that integrating production, processing, and distribution allows synchronization of production processes, optimization of processing capacities, reduction of product losses, and enhancement of agricultural enterprise efficiency. The formation of unified logistics systems within vertically integrated structures contributes to reducing transportation costs, accelerating the turnover of material flows, and improving product quality control. The main factors of vertical integration in the agricultural sector are systematized, including technological, seasonal, natural-climatic, logistical, economic, quality-related, contractual, and institutional factors. Their impact on establishing stable production and economic links across the agro-food chain is justified, and the expected outcomes of integration are identified, including reducing technological gaps, increasing resource utilization efficiency, enhancing product quality control, and strengthening the competitiveness of agricultural enterprises.

Keywords: integration, vertical integration, agricultural business, agricultural enterprises, agricultural business entities, logistics coordination.

Rеferences

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The article was received 15.08.2025

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Hrosul O. 15.08.2025 . Theoretical foundations of forming mechanisms for vertical integration of agricultural business entities. Ukrainian Journal of Applied Economics and Technology. 2025. №3. 380-384 pp. https://doi.org/10.36887/2415-8453-2025-3-76

Quote article, MLA style

Hrosul O. Theoretical foundations of forming mechanisms for vertical integration of agricultural business entities. Ukrainian Journal of Applied Economics and Technology. 15.08.2025 . https://doi.org/10.36887/2415-8453-2025-3-76