Contesting Firm Boundaries

Cost management across firm boundaries

For most companies the costs of purchased goods and services have come to account for the main part of total costs. The primary driving force underlying this development is the increasing reliance on outsourcing, making efficient purchasing activities of crucial importance for the financial performance of companies. Therefore, Monczka and Morgan (2000) argue that there must be an ‘absolute link...

What Determines Firm Boundaries in Biotech?

Incomplete Contracts and Firm Boundaries: New Directions

The seminal work by Grossman and Hart (1986 “The Costs and Benefits of Ownership: A Theory of Vertical and Lateral Integration”, 94 Journal of Political Economy 691–19.) made the study of firm boundaries susceptible to formal economic analysis, and illuminated an important role for markets in providing incentives. In this essay, I discuss some new directions that the literature has taken since....

Electronic Markets, Search Costs, and Firm Boundaries

We study how electronic markets that facilitate broader inter-firm transactions affect the vertical scope of emerging IT-enabled extended enterprises. We do so by modeling firms in a three-tier value chain who are each connected to a common electronic market that facilitates direct business transactions across tiers, and that lowers the search costs associated with finding an appropriate tradin...

Vertical Integration and Firm Boundaries: The Evidence