Theories of the Firm–Market Boundary

A central role of the entrepreneur-manager is assembling a strategic bundle of complementary assets and activities, either existing or foreseen, which when combined create value for the firm. This process of creating value, however, requires managers to assess which activities should be handled by the market and which should be handled within hierarchy. Indeed, for more than 40 years, economists, sociologists and organizational scholars have extensively examined the theory of the firm's central question: what determines the boundaries of the firm? Many alternative theories have emerged and are frequently positioned as competing explanations, often with no shortage of critique for one another. In this paper, we review these theories and suggest that the core theories that have emerged to explain the boundary of the firm commonly address distinctly different directional forces on the firm boundary—forces that are tightly interrelated. We specifically address these divergent, directional forces—as they relate to organizational boundaries—by focusing on four central questions. First, what are the virtues of markets in organizing assets and activities? Second, what factors drive markets to fail? Third, what are the virtues of integration in organizing assets and activities? Fourth, what factors drive organizations to fail? We argue that a complete theory of the firm must address these four questions and we review the relevant literature regarding each of these questions and discuss extant debates and the associated implications for future research.     

Beyond Make‐Buy: Internalization and Integration of Design and Production

Much recent attention in industrial practice has been centered on the question of which activities a manufacturing firm should complete for itself and for which it should rely on outside suppliers. This issue, generally labeled the “make‐buy” decision, has received substantial theoretical and empirical attention. In this paper, we broaden the scope of the make‐buy decision to include product design decisions, as well as production decisions. First, we examine independently the decisions of whether to internalize design and production, and then we consider how design and production organizational decisions are interdependent. The specific research questions we address are: (1) How can design and production sourcing decisions be described in richer terms than “make” and “buy”? (2) Do existing theories of vertical integration apply to product design activities as well as production decisions? (3) What is the relationship between the organization of design and the organization of production? (4) What organizational forms for design and production are seen in practice? After developing theoretical arguments and a conceptual framework, we explore these ideas empirically through an analysis of design and production sourcing decisions for bicycle frames in the U. S. mountain bicycle industry.     

Organizational Learning under Organizational Impermanence: Collaborative Ties in Film Project Firms

In the last two decades a lot of research has been devoted to unveiling the processes through which organizations learn and store knowledge. This research is typically concerned with organizations lastingly engaged in the provision of goods or services. Permanency is usually presumed in order for the encoding of inferences from history to take place. But what if organizational permanency cannot be assumed ex-ante? Project firms represent an interesting case in point. A project firm is a transient form of organization that ceases to exist as soon as its single target is achieved, as such it does not exhibit stable structures nor does it exhibit ostensible history-based paths upon which to build its choices and nurture its organizational knowledge. This apparent paradox can be resolved, in part, by extending the view from the isolated project to the relational context in which project firms operate. Using longitudinal data from the U.S. feature film industry, we show that the process of organizational formation and dissolution that characterizes this context is underpinned by patterns of enduring collaborations among interdependent industry participants. We build on these findings to speculate on processes of learning and remembering that interpenetrate project firms’ boundaries, by being embedded within a texture of stable interpersonal ties.     

Stakeholder Actions and Their Impact on the Organizational Cultures of Two Tobacco Companies

We link the behaviors of executives and lawyers in two tobacco companies, in defending their tobacco products to the actions of stakeholders (e.g., the U.S. Government and Congress, medical researchers, consumers, public‐health organizations, tobacco‐control advocates, and insiders who have spoken out). Included in our analysis, which is based on publicly available documents spanning over a period of almost six decades, are critical incidents in which moral disengagement tactics were applied in the decision‐making process. We infer that the disengagement tactics applied by tobacco decision makers are indicative of what Schein and other organizational scientists describe as organizational culture. We equate the critical incidents to the espoused beliefs and values and underlying assumptions which comprise organizational culture and explain that the cultures of these two tobacco companies are not consistent with the stakeholder theory of management. We conclude that the critical incidents we analyze were immoral and the representatives were indeed accountable for these behaviors. From an organizational change perspective, we discuss how analyzing these critical incidents can serve to assess the extent to which an organizational culture is ethical. Furthermore, these critical incidents can be fed back to organizational decision makers and can then be used to initiate organizational changes.     

Dealing with Ethical Dilemmas in Organizational Change Processes

Several theories exist on how managers think aboutethical responsibilities in a business environment.Some stress the economic way of thinking and explainwhy there is no space for moral reasoning in abusiness environment. Others claim that in a businessenvironment also moral considerations can play animportant role. In this article, we will explore theway managers have actually dealt with potentialdilemmas in organizational change processes,especially changes with drastic consequences foremployees. Do managers consider moral arguments? Dothey feel a moral responsibility towards theiremployees? And in what way do they include a moralresponsibility in the decision process and itsoutcomes? These questions were investigated throughcase studies in two organisations and interviews withsix managers in other companies. The framework whichis used in the research will be described and the mainresults of the field-research will be presented. Wedid find that managers actually strived to some extentfor fair and morally responsible solutions in dilemmasituations, but in another way then we expectedbeforehand. Managers did not base their acting onmoral arguments. Instead they used a more pragmaticapproach wherein acting in a morally responsible wayis based on strategic arguments, such as the positiveeffects for the organisation in the long run.     

Foresight activities in the U.S.A.: Time for a re-assessment?

This article reports on a brief, informal, reconnaissance study of ‘foresight’ activities now being conducted in the private sector and the Federal government. Such activities include: external environmental assessment, internal organizational assessment, direction setting, definition, and selection of base and contingent plans, implementation, performance evaluation and feedback. The study involved the reading and analysis of the existing literature and discussions with over 50 people in diverse private and public sector organizations. The objective was to determine what foresight activities are being done, how, by whom, with what results, and what are the implications and options.     

新世纪:中国管理科学界的挑战、机遇与对策

21世纪我们将面临什么样的社会经济环境 ?在该环境下社会经济活动的管理将具有什么新特点 ?这些特点对管理科学将提出什么新要求 ?面对这些要求 ,中国管理科学界的挑战、机遇和对策是什么 ?文章将对这些问题展开讨论和分析     

Integrating Knowledge through Information Trading: Examining the Relationship between Boundary Spanning Communication and Individual Performance*

With the global penetration of Internet technologies, individuals may now cross organizational boundaries to communicate efficiently with others regardless of time and space. Thus, when looking for help in solving work tasks, knowledge workers may just as easily contact individuals in rival firms across the globe as a coworker sitting at the next desk. As a result, management faces questions such as (1) How should firms manage employees' knowledge‐sourcing activities when they span both intra‐organizational and extra‐organizational boundaries, and (2) What is the relationship between different knowledge‐sourcing activities and individual performance? Grounded in the knowledge‐based view of the firm, we investigate these questions using data from Europe's largest information technology (IT) services and management consulting company. Our results provide evidence that organizations should support boundary spanning and knowledge sourcing from both internal and external sources. Results suggest (1) a positive relationship between boundary spanning communication and creativity and general performance, and (2) a negative relationship between a reliance on colocated coworkers as knowledge sources and creativity.     

The Professional,the Personal,and the Ideal Worker: Pressures and Objectives Shaping the Boundary between Life Domains

Abstract

Both scholarly literature and popular accounts suggest that modern organizational practices have moved toward encouraging employees to “integrate” or blur the boundary between their personal and professional domains, for example, through self-disclosure at work, company-sponsored social activities or providing on-site child care. Concurrently, an ideology underlying U.S. professional norms discourages integration practices such as referencing non-work roles during workplace interactions, expressing emotions in the workplace, and/or displaying non-work-related items in workspaces. In this review, we posit that these two norms firmly coexist because they differentially serve two objectives corresponding to the parallel bodies of research we examine: one addressing boundary management as a tool for handling role responsibilities, and the other considering boundary management as a tool for shaping workplace identity and relationships. Specifically, we posit that segmenting personal and professional domains facilitates the management of role responsibilities, whereas integration is more beneficial for managing workplace identity and relationships. Furthermore, both objectives serve the “ideal worker” imperative of work primacy. We identify key contingencies that help us to further understand existing research findings, and prompt future research directions informing theories for understanding the attractiveness and efficacy of different personal–professional boundary management strategies for both organizations and individuals.     

The future of forms of data communications

The first section of the paper is a review of current and planned data communications services. This covers the current state of the art in these services, identifies the need for change and surveys what plans have been made for new services. It looks at what forms of data communications have been established in various countries including the U.K., Germany, U.S.A. and Australia. The second part of the paper poses some key questions. These are broadly similar to those involved in planning other major new investments in utilities or public transportation involving a high degree of technical innovation. They cover the problems of designing a new technology, the pricing of data communications utilities, how to evaluate new services and what the role of the monopoly supplier should be. The paper does not set out to answer these questions but to expose them as areas where controversy is centred, and new research work required.     

Identification and Inference in Ascending Auctions With Correlated Private Values

We introduce and apply a new nonparametric approach to identification and inference on data from ascending auctions. We exploit variation in the number of bidders across auctions to nonparametrically identify useful bounds on seller profit and bidder surplus using a general model of correlated private values that nests the standard independent private values (IPV) model. We also translate our identified bounds into closed form and asymptotically valid confidence intervals for several economic measures of interest. Applying our methods to much studied U.S. Forest Service timber auctions, we find evidence of correlation among values after controlling for a rich vector of relevant auction covariates; this correlation causes expected profit, the profit‐maximizing reserve price, and bidder surplus to be substantially lower than conventional (IPV) analysis of the data would suggest.     

Strategic positioning. Part 1: The sources of value under managed care

Part 1 of this series organizes and discusses the sources of value against a background of an evolving managed care market. Part 2 will present, in more detail, the marketing and financial challenges to organizational positioning and performance across the four stages of managed care. What are the basic principles or tenets of value and how do they apply to the health care industry? Why is strategic positioning so important to health care organizations struggling in a managed care environment and what are the sources of value? Service motivated employees and the systems that educate them represent a stronger competitive advantage than having assets and technology that are available to anyone. As the health care marketplace evolves, organizations must develop a strategic position that will provide such value and for which the customer will be willing to pay.     

25 Health care trends. What's hot,what's not,and what does the future hold

As we usher in 2003, America's health care system remains in a chaotic state. Will managed care live or die? Will quality improvement efforts pay off? Are we ready for the next bioterrorism attack? Will the shortage of physician soon rival the shortage of nurses? To help gauge where health care stands today and what the future holds, The Physician Executive asked doctors who serve on ACPE's peer review panel to list the hottest health care trends in the U.S right now. Then, we took the list to three respected health care futurists -- Leland Kaiser, PhD, Jeff Goldsmith, PhD, and Russel Coile, MBA -- and asked them for their insights on the trends. Yes, Kaiser, Goldsmith and Coile are opinionated. Yes, they're controversial. But no matter whether you agree or disagree with their views, the three health care futurists' comments could spark discussions that will help shape U.S. health care this year and beyond. The trends are presented in no particular order.     

A Collaborative Model for Organizational Transformation

The purpose of this study was to develop a collaborative learning and communication model for higher education. On a university campus there are various psycho-social and organizational barriers to collaboration inside and outside of the classrooms. Scholars have stated that teachers rarely talk with each other about their teaching, there is little multi-disciplinary research and studies have shown that there is little or no collaboration in meetings and forums outside of university classrooms. So, what are the barriers to collaborative communication and learning and how can these barriers be removed through collaborative strategies? These are the questions that this study explored. Through the understanding of the psycho-social and organizational barriers to collaboration, strategies began to unfold and a new model for collaborative learning and communication was developed. This model reflects a high synergy, totally integrated social and cognitive system for individual and organizational transformation.     

Leadership competencies for implementing planned organizational change

This paper bridges the leadership and organizational change literatures by exploring the relationship between managers' leadership competencies (namely, their effectiveness at person-oriented and task-oriented behaviors) and the likelihood that they will emphasize the different activities involved in planned organizational change implementation (namely, communicating the need for change, mobilizing others to support the change, and evaluating the change implementation). We examine this relationship using data from 89 clinical managers at the United Kingdom National Health Service who implemented change projects between 2003 and 2004. Our results lend overall support to the proposed theory. This finding suggests that treating planned organizational change as a generic phenomenon might mask important idiosyncrasies associated both with the different activities involved in the change implementation process and with the unique functions that leadership competencies might play in the execution of these activities.     

“U.S. Pharmaceutical Gray Markets: Why Do They Persist—and What to Do about Them?”

This article illustrates how a traditional U.S. pharmaceutical industry supply chain operates, beginning with pharmaceutical compounds and ending at patient‐dispensing hospitals or pharmacies. Furthermore, to place the problem of U.S. drug shortages in historical perspective, a review of the annual volume of such shortages over the last decade is undertaken. Following this review of recent drug shortages is an analysis of the market forces and business decisions that drive the creation of a pharmaceutical gray market, its attendant “price gouging” and product integrity issues, and the alterations in the traditional pharmaceutical industry supply chain model. In response to persistent drug shortages, the U.S. Food and Drug Administration (FDA) has recently been empowered by the executive and legislative branches of the U.S. government to actively address this issue. To reflect these FDA challenges, a thorough review of these new agency charges and responsibilities is undertaken. Lastly, an analysis of the results of recent FDA public policy actions on mitigating drug shortages, as well as recommendations tor market‐based solutions to the gray market problem that pharmaceutical manufacturers, hospitals and pharmacies could institute as industry‐wide standards of business practice, are discussed in the conclusion.     

Value Creation Versus Value Capture: Towards a Coherent Definition of Value in Strategy

Resource‐based theory has tended to focus on the development and protection of valuable resources. What determines a valuable resource has received less attention. This paper addresses three related issues concerning value and valuable resources: what is value? how is it created? and who captures it? We have tried here to integrate different strands of the literature to address these questions. First, we argue that a distinction needs to be made between use value, which is subjectively assessed by customers, and exchange value, which is only realized at the point of sale. Second, we argue that the source of new use values is the labour performed by organizational members, and that firm profits can be attributed to this labour. Profit differences between competing firms derive from labour performing heterogeneously across firms. Finally, we argue that value capture is determined by the perceived power relationships between buyers and sellers.     

More (new) products,more problems? A systems perspective on increased capability deployment and organizational errors

The capabilities-based view postulates that organizational capabilities are a key driver of competitive advantage. However, while increasing the pace of deploying organizational capabilities, such as new product development (NPD), may enable alignment with changing environments, it may also have unintended consequences. In this study, we advance theory on these unintended consequences by investigating how the increased deployment of NPD capability leads to organizational errors. Borrowing from organizational research employing systems theory, we argue that an increase in NPD deployment may increase the likelihood of routine discoordination and, thus, the incidence of intra-firm and interfirm errors. However, we also proffer that firms can mitigate errors from increases in NPD capability deployment by engaging in distinct internal and external activities that enable the accumulation of knowledge on how to coordinate systemic change. We distinguish between internal and external errors, demonstrating that in the context of increased NPD deployments, internal voluntary investigations ameliorate internal manufacturing errors, while supplier alliances mitigate outsourced component errors. We find support for our predictions using data from new product introductions and recalls in the U.S. automotive industry. This study sheds light on the tension inherent to accelerating the deployment of patterned organizational activities and suggests that the outcomes of deploying an organizational capability are best viewed holistically within the milieu of organizational systems the capability spans.     

7 Getting There from Here: Research on the Effects of Work–Family Initiatives on Work–Family Conflict and Business Outcomes

Abstract

Many employing organizations have adopted work–family policies, programs, and benefits. Yet managers in employing organizations simply do not know what organizational initiatives actually reduce work–family conflict and how these changes are likely to impact employees and the organization. We examine scholarship that addresses two broad questions: first, do work–family initiatives reduce employees’ work–family conflict and/or improve work–family enrichment? Second, does reduced work–family conflict improve employees’ work outcomes and, especially, business outcomes at the organizational level? We review over 150 peer‐reviewed studies from a number of disciplines in order to summarize this rich literature and identify promising avenues for research and conceptualization. We propose a research agenda based on four primary conclusions: the need for more multi‐level research, the necessity of an interdisciplinary approach, the benefits of longitudinal studies that employ quasi‐experimental or experimental designs and the challenges of translating research into practice in effective ways.     

Effect of economic planning on business decisions

The fact that the United States has not faced an economic perplexity of current dimensions since the depression days hardly needs any emphasis. The current economic slowdown is significant because no recovery measures which may be applied to cure the economy are in sight. Since the Great Depression, especially after World War II, Keynes' economic theories have successfully been applied in the U.S., as also in other countries of the Free World, to put the economy back on path to recovery. Unfortunately, Keynesian measures do not seem to cope with the current economic woes. Apparently, new ways need to be sought and employed to get the economy back on track. Among many new ideas that have been advanced to restore economic growth, one is national economic planning by which the Government would play an active role in setting goals for the economy and devising means to reach them.The purpose of this paper is to report the findings of a study that the author undertook to probe the opinions of chief executive officers of the largest U.S. corporations on the whole idea of national economic planning in the United States. This study is based on interviews with 23 chief executives officers (CEOs) in different industries. Table 1 shows the background of these CEOs. Specifically, the author refers to such questions as: What positive and negative attitudes do the chief executive officers maintain toward national economic planning; what difficulties do they think will have to be surmounted to accomplish national economic planning in the U.S.; what influence may national economic planning have on various business decisions; and how may national economic planning affect corporate strategy?