Value Chain Glossary: Horizontal Linkages
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Horizontal Linkages
Market and non-market interactions and relationships between firms performing the same function (e.g., operating at the same level) in the value chain. Horizontal linkages tend to be longer-term, cooperative arrangements among firms that involve interdependence, trust and resource pooling in order to jointly accomplish common goals. Both formal and informal horizontal linkages can help reduce transaction costs, create economies of scale, and contribute to the increased efficiency and competitiveness of an industry. In addition to lowering the cost of inputs and services (including financial services), inter-firm horizontal linkages can contribute to shared skills and resources and enhance product quality through common production standards. Such linkages also facilitate collective learning and risk sharing while increasing the potential for upgrading and innovation. Small-scale producer groups have strong potential to increase their bargaining power in the marketplace, while processors, suppliers and traders may also form their own groups to strengthen their position within industries.
Related Articles
- Horizontal Linkages
- Inter-Firm Cooperation-Horizontal Linkages Resource page
- Briefing Paper: Groups, Associations and Other Horizontal Linkages, McCarthy, Steve. January, 2008.
- Briefing Paper: Transforming Inter-firm Linkages. Campbell, Ruth. September, 2008.
- Briefing Paper: Participatory Approaches to Value Chain Development. February, 2009.
