Evolution of the Boundaries of the Firm (original) (raw)
Related papers
The history of technological change is not only a story of scientists, inventors and laboratories, but also a story of firms and entrepreneurs. The firm has always been the place where decisions were made, initiatives were taken, and ideas turned into real products. Even if this is true today, there have been important changes in the way firms play this role. Differentiation and specialization tendencies have made that innovation is now, more than in the past, the result of organized interactions between formally independent firms. The result is an overall increase in the complexity of innovation processes in the economy, requiring new organizational capabilities. This chapter discusses the changing role of the firm in innovation processes and the way this has been reflected in academic and management literature.
The Multiple Boundaries of the Firm*
2003
The notion of firm boundaries has received considerable attention in theories of the firm that address the problems of investment incentives and mitigation of hold-up problems. In this paper we attempt to develop a different approach to the problem of vertical firm boundaries, based on recent advances in the capabilities view of the firm. Our arguments rely on the pioneering insights of Penrose, Richardson and Loasby to elaborate a view of the boundaries determined by the interaction of the firm's direct and indirect capabilities with other actors. We develop the notion of indirect capabilities to highlight how firm boundaries respond to the distribution of capabilities in the economy as well as the modes of access to complementary and external capabilities. We conclude that the evolution of firm boundaries must be understood in the context of decisions on how the firm relates to other actors in its environment.
The boundaries of the firm revisited
The Journal of Economic Perspectives, 1998
Journal of Economic Perspectives-Volume 12, Number 4-Fall 1998-Pages 73-94 ... W ^ thy do firms exist? What is their function, and what determines their scope? These remain the central questions in the economics of organi- zation. They ...
The boundaries of the firm: the theories of Coase, Knight and Weitzman
Legal Studies, 1997
Boundaries are of the utmost importance because they establish size and shape. In so far as changes in the law affect the elements making up the boundaries of the firm, such changes can be expected to have an impact on the size and structure of firms. Theories which are capable of explaining how operations within the firm are different from those outside can be used to draw the boundaries of the firm and so to define its essence or nature. In this article three theories which give substance to the boundaries of the firm are presented and analysed. The major debate in recent corporate legal theory has been between the coercionists and the contractarians. This can be caricatured as a dispute between those who follow institutional arguments, seeing the firm as a concession of the State, and those who follow economic theory, seeing the firm as a nexus of contracts.
Industrial revolutions and the evolution of the firm’s organization: an historical perspective
La reproduction ou représentation de cet article, notamment par photocopie, n'est autorisée que dans les limites des conditions générales d'utilisation du site ou, le cas échéant, des conditions générales de la licence souscrite par votre établissement. Toute autre reproduction ou représentation, en tout ou partie, sous quelque forme et de quelque manière que ce soit, est interdite sauf accord préalable et écrit de l'éditeur, en dehors des cas prévus par la législation en vigueur en France. Il est précisé que son stockage dans une base de données est également interdit.
Looking for a theory of the firm: Future challenges
Journal of Economic Behavior & Organization, 2005
In this paper we present the main developments of the theories of the firm rooted in Coase's . The nature of the firm. Economica, New Series 4, 386-405] seminal article. We show that the two important topics of the nature and boundaries of the firm, as well as the internal organization of the firm, give place to essential contributions. We present those contributions and their limits and then their possible developments. Finally we introduce the papers of this issue.
Disentangling the Theories of Firm Boundaries
Organization Science, 2002
Theories on the motivation underlying firm boundaries have recently sparked renewed debate. What best explains whether a firm relies on market control or hierarchical control to secure required resources? How do the characteristics of the resources come into play? In this study, we consider a comprehensive path model of the governance mode decision for sourcing technological know-how. By integrating different perspectives on firm boundaries, including transaction cost economics, a resourcebased view, and an options perspective, we link characteristics of the technology (i.e., uniqueness, barriers to imitation, commercial uncertainty, technological dynamism) to the perceived threat of opportunism, the potential for sustainable advantage, and the pursuit of a licensing agreement vis-à-vis the outright acquisition of the firm that possesses the desired know-how. We use structural equation modeling to analyze 127 sourcing arrangements. Our results show that technological dynamism and barriers to imitation indirectly influence the governance mode decision by increasing the perceived threat of opportunism. Commercial uncertainty directly influences the governance mode and decreases the likelihood of an acquisition vis-à-vis a licensing agreement. Although uniqueness and barriers to imitation are also positively associated with the perceived potential for sustainable advantage, the potential for sustainable advantage had no direct effect on governance mode. Implications and suggestions for further research are offered.