Session 318

The Boundary of the Firm

Track F

Date: Tuesday, September 23, 2014


Time: 17:15 – 18:30


Room: Londres

Session Chair:

  • Douglas Miller, Rutgers University

Title: Organizing Supplier-Provided Knowledge Work at the Boundary of the Firm


  • Douglas Miller, Rutgers University
  • Carmen Weigelt, Tulane University

Abstract: We examine governance inseparability between transactions for organizing knowledge work at the boundary of the firm. Employing multitask theory, we highlight complementarity between tasks and explain how client operational capabilities moderate the relationship between task complementarity and in-sourcing of knowledge work. Further, we extend theory on supply relationships by considering dyadic relational capabilities and client bargaining power relative to the focal supplier. Using a sample of sourcing relationships of 2022 credit unions with their IT suppliers from 2000-2004, we find that client operational capabilities reinforce the tendency to have a supplier provide customized services at the client’s site rather than deliver standard services from a remote location, whereas dyadic relational capabilities and client bargaining power offer safeguards that reduce the client’s preference for in-sourcing.

Title: Resource Attributes and the Theory of the Firm: How the Fungibility and Scalability of Resources Impact Vertical Integration


  • Gianluigi Giustiziero, University of Michigan
  • Deepak Somaya, University of Illinois at Urbana-Champaign
  • Brian Wu, University of Michigan

Abstract: We seek to advance resource-based explanations for the theory of the firm through a formal model that casts the vertical integration problem as a biform game between two firms. In contrast with received theory, we find that a firm’s resource advantage is neither necessary nor sufficient for integration even when transaction costs are absent. Instead, our results indicate that vertical integration choices are strongly influenced by the attributes of firms’ resources, in particular their fungibility and scalability. Our findings suggest a comparative advantage type logic for specialization and vertical disintegration when the scalability and fungibility of resources is limited. Additionally, we find that taper (partial) integration is observed under a wide range of realistic resource-related assumptions, which have not previously been considered in the literature.

Title: The Role of Industry Vertical Integration and Minority Owners Protection in Determining Subsidiary Ownership Share and Resource Redeployment


  • Niron Hashai, Hebrew University of Jerusalem
  • Sharon Belenzon, Duke University

Abstract: Related acquisitions expand the firm boundaries in terms of their economic activity and strategic focus, because they allow access to additional resources along the industry value chain. The development of internal input markets within the firm (i.e. the engagement in inter-unit transactions) through partial acquisitions is a cheap way to control additional assets and expand firm boundaries, because it allows a firm to gain full control over external resources by acquiring only part of them. This, in turn, allows firms with limited financial resources to expand their controlled resources and their internally governed transactions with other firms.

All Sessions in Track F...

Sun: 08:00 – 09:15
Session 400: Teaching Corporate Strategy: Insights and Opportunities
Sun: 11:15 – 12:30
Session 401: Research Synergies in Corporate Strategy and Entrepreneurship
Sun: 15:45 – 17:00
Session 398: Corporate Strategy and Corporate Finance: Continuing the Research Conversation
Sun: 17:15 – 18:30
Session 602: Corporate Strategy IG Business Meeting
Mon: 08:00 – 09:15
Session 308: How do firms grow? Canvasing Different Perspectives
Session 316: Acquisitions and Divestures: Antecedents and Consequences
Mon: 11:00 – 12:15
Session 319: International Corporate Strategy
Mon: 14:45 – 16:00
Session 437: Corporate Structure, Resource allocation, and Portfolio planning
Mon: 16:30 – 17:45
Session 325: Product Scope Strategy in Different Empirical Contexts
Tue: 08:00 – 09:15
Session 327: Market Response to M&A
Tue: 11:00 – 12:15
Session 328: New Angles of Examining Acquisition Strategies
Tue: 15:30 – 16:45
Session 399: The Role of Industry/Environmental Conditions in Corporate Strategy
Tue: 17:15 – 18:30
Session 318: The Boundary of the Firm

Strategic Management Society