IDEAS home Printed from https://ideas.repec.org/a/bla/jomstd/v41y2004i2p295-316.html
   My bibliography  Save this article

A Capabilities Perspective on the Evolution of Firm Boundaries: A Comparative Case Example from the Portuguese Moulds Industry

Author

Listed:
  • Joao Mota
  • Luis M. de Castro

Abstract

ABSTRACT The issue of vertical firm boundaries continues to attract interest both for economics and management research. The transaction cost economics approach, emphasizing transaction‐specific assets and opportunism in order to explain discrete ‘make‐or‐buy’ decisions, dominates the literature. Nevertheless, alternative perspectives, developed under the guise of the capabilities, competence or knowledge‐based theories of the firm, have gained attention recently. They focus on the evolutionary dynamics of boundaries in the context of the division of labour among firms in an industry and on what is to be divided and co‐ordinated – i.e. productive knowledge. The conceptual links between this line of research, which some refer to as neo‐Marshallian, and the Industrial Networks approach are explored in this paper. The paper emphasizes both a vision of firms as sets of direct and indirect capabilities, developed and combined in different ways over time, and the connectedness between inter‐firm relationships. The discussion is illustrated with the cases of two firms, which are contrasted in terms of the dynamic evolution of their boundaries. The analysis made supports the argument that firms’ vertical boundaries reflect their relationships with specific counterparts and the way they address through time the division and integration of knowledge through the configuration of direct and indirect, counterpart specific, capabilities.

Suggested Citation

  • Joao Mota & Luis M. de Castro, 2004. "A Capabilities Perspective on the Evolution of Firm Boundaries: A Comparative Case Example from the Portuguese Moulds Industry," Journal of Management Studies, Wiley Blackwell, vol. 41(2), pages 295-316, March.
    • Handle: RePEc:bla:jomstd:v:41:y:2004:i:2:p:295-316
    DOI: 10.1111/j.1467-6486.2004.00433.x
    as

    Download full text from publisher

    File URL: https://doi.org/10.1111/j.1467-6486.2004.00433.x
    Download Restriction: no
    File URL: https://libkey.io/10.1111/j.1467-6486.2004.00433.x?utm_source=ideas
    LibKey link: if access is restricted and if your library uses this service, LibKey will redirect you to where you can use your library subscription to access this item
    ---><---

    References listed on IDEAS

    as
    1. Timothy J. Sturgeon, 2002. "Modular production networks: a new American model of industrial organization," Industrial and Corporate Change, Oxford University Press and the Associazione ICC, vol. 11(3), pages 451-496, June.
    2. Jason Potts, 2000. "The New Evolutionary Microeconomics," Books, Edward Elgar Publishing, number 2258.
    3. Ikujiro Nonaka, 1994. "A Dynamic Theory of Organizational Knowledge Creation," Organization Science, INFORMS, vol. 5(1), pages 14-37, February.
    4. Helper, Susan & MacDuffie, John Paul & Sabel, Charles, 2000. "Pragmatic Collaborations: Advancing Knowledge While Controlling Opportunism," Industrial and Corporate Change, Oxford University Press and the Associazione ICC, vol. 9(3), pages 443-487, September.
    5. Loasby, Brian J., 1998. "The organisation of capabilities," Journal of Economic Behavior & Organization, Elsevier, vol. 35(2), pages 139-160, April.
    6. Anoop Madhok, 1996. "Crossroads---The Organization of Economic Activity: Transaction Costs, Firm Capabilities, and the Nature of Governance," Organization Science, INFORMS, vol. 7(5), pages 577-590, October.
    7. Nightingale, Paul, 1998. "A cognitive model of innovation," Research Policy, Elsevier, vol. 27(7), pages 689-709, November.
    8. Young, Allyn A., 1928. "Increasing Returns and Economic Progress," History of Economic Thought Articles, McMaster University Archive for the History of Economic Thought, vol. 38, pages 527-542.
    9. Richardson, G B, 1972. "The Organisation of Industry," Economic Journal, Royal Economic Society, vol. 82(327), pages 883-896, September.
    10. Anoop Madhok & Stephen B. Tallman, 1998. "Resources, Transactions and Rents: Managing Value Through Interfirm Collaborative Relationships," Organization Science, INFORMS, vol. 9(3), pages 326-339, June.
    11. Malerba, Franco & Orsenigo, Luigi, 2000. "Knowledge, Innovation Activities and Industrial Evolution," Industrial and Corporate Change, Oxford University Press and the Associazione ICC, vol. 9(2), pages 289-313, June.
    12. Foss, Nicolai J., 1999. "Networks, capabilities, and competitive advantage," Scandinavian Journal of Management, Elsevier, vol. 15(1), pages 1-15, March.
    13. Nightingale, Paul, 2000. "Economies of Scale in Experimentation: Knowledge and Technology in Pharmaceutical R&D," Industrial and Corporate Change, Oxford University Press and the Associazione ICC, vol. 9(2), pages 315-359, June.
    Full references (including those not matched with items on IDEAS)

    Citations

    Citations are extracted by the CitEc Project, subscribe to its RSS feed for this item.
    as


    Cited by:

    1. Mariluz Mate‐Sánchez‐Val, 2021. "The impact of geographical positioning on agri‐food businesses' failure considering nonlinearities," Agribusiness, John Wiley & Sons, Ltd., vol. 37(3), pages 612-628, July.
    2. Filipe J. Sousa & Luís M. de Castro, 2008. "How is the relationship significance brought about? A critical realist approach," FEP Working Papers 282, Universidade do Porto, Faculdade de Economia do Porto.
    3. Adrian Permana & Arsono Laksmana & Lena Ellitan, 2020. "The role of Dynamic Capability in Mediating the Effect of Environmental Dynamism and Managerial Capabilities, toward Firm Performance of Small Medium Enterprises," International Journal of Science and Business, IJSAB International, vol. 4(7), pages 1-25.
    4. Buenstorf, Guido & Costa, Carla, 2018. "Drivers of spin-off performance in industry clusters: Embodied knowledge or embedded firms?," Research Policy, Elsevier, vol. 47(3), pages 663-673.
    5. Peters, Frank, 2018. "The business of video games is a multi-player game : Essays on governance choices and performance in a two-sided market in the cultural industries," Other publications TiSEM 886b3148-4bbb-4ea4-b666-0, Tilburg University, School of Economics and Management.
    6. Thomas Hutzschenreuter & Florian Gröne, 2009. "Changing Vertical Integration Strategies under Pressure from Foreign Competition: The Case of US and German Multinationals," Journal of Management Studies, Wiley Blackwell, vol. 46(2), pages 269-307, March.
    7. Ulrike Gelbmann, 2010. "Establishing strategic CSR in SMEs: an Austrian CSR quality seal to substantiate the strategic CSR performance," Sustainable Development, John Wiley & Sons, Ltd., vol. 18(2), pages 90-98.
    8. Filipe J. Sousa & Luis M. de Castro, 2004. "The strategic relevance of business relationships: a preliminary assessment," FEP Working Papers 163, Universidade do Porto, Faculdade de Economia do Porto.
    9. Maté-Sánchez-Val, Mariluz & López-Hernandez, Fernando & Rodriguez Fuentes, Christian Camilo, 2018. "Geographical factors and business failure: An empirical study from the Madrid metropolitan area," Economic Modelling, Elsevier, vol. 74(C), pages 275-283.
    10. Luis M. Castro & Joao Mota, 2009. "Technological Centers as a Negotiated Context to Combine Technological Capabilities," Group Decision and Negotiation, Springer, vol. 18(5), pages 467-482, September.
    11. , 2024. "Effect of Marketing Strategies on the Performance of Agribusinesses in North-Central, Nigeria," International Journal of Research and Innovation in Social Science, International Journal of Research and Innovation in Social Science (IJRISS), vol. 8(1), pages 993-1024, January.
    12. Filipe J. Sousa & Luís M. de Castro, 2005. "Relationship significance: is it sufficiently explained?," FEP Working Papers 183, Universidade do Porto, Faculdade de Economia do Porto.
    13. José Manuel López‐Fernández & Mariluz Maté‐Sánchez‐Val & Francisco Manuel Somohano‐Rodriguez, 2021. "The effect of micro‐territorial networks on industrial small and medium enterprises' innovation: A case study in the Spanish region of Cantabria," Papers in Regional Science, Wiley Blackwell, vol. 100(1), pages 51-77, February.
    14. Ibrahim Abosag & David Ross Brennan, 2017. "Understanding marketing innovativeness in Asia: a research agenda," Asian Business & Management, Palgrave Macmillan, vol. 16(4), pages 212-225, December.

    Most related items

    These are the items that most often cite the same works as this one and are cited by the same works as this one.
    1. Luis M. Castro & Joao Mota, 2009. "Technological Centers as a Negotiated Context to Combine Technological Capabilities," Group Decision and Negotiation, Springer, vol. 18(5), pages 467-482, September.
    2. Davide Consoli & Pier Paolo Patrucco, 2011. "Complexity and the Coordination of Technological Knowledge: The Case of Innovation Platforms," Chapters, in: Handbook on the Economic Complexity of Technological Change, chapter 8 Edward Elgar Publishing.
    3. Davide Consoli & Pier Paolo Patrucco, 2011. "Complexity and the Coordination of Technological Knowledge: The Case of Innovation Platforms," Chapters, in: Cristiano Antonelli (ed.), Handbook on the Economic Complexity of Technological Change, chapter 8, Edward Elgar Publishing.
    4. Loasby, Brian J., 2002. "The evolution of knowledge: beyond the biological model," Research Policy, Elsevier, vol. 31(8-9), pages 1227-1239, December.
    5. John Finch, 2000. "Is post-Marshallian economics an evolutionary research tradition?," The European Journal of the History of Economic Thought, Taylor & Francis Journals, vol. 7(3), pages 377-406.
    6. Alex Eapen & Rekha Krishnan, 2019. "Transferring Tacit Know-How: Do Opportunism Safeguards Matter for Firm Boundary Decisions?," Organization Science, INFORMS, vol. 30(4), pages 715-734, July.
    7. Harry Bloch & Stan Metcalfe, 2011. "Complexity in the Theory of the Developing Firm," Chapters, in: Cristiano Antonelli (ed.), Handbook on the Economic Complexity of Technological Change, chapter 3, Edward Elgar Publishing.
    8. Finch, John H. & Macmillan, Fiona E. & Simpson, Graeme S., 2002. "On the diffusion of probabilistic investment appraisal and decision-making procedures in the UK's upstream oil and gas industry," Research Policy, Elsevier, vol. 31(6), pages 969-988, August.
    9. Patrucco, Pier Paolo, 2013. "The Evolution of Knowledge Organization: The Emergence of Innovation Platform in the Turin Car System," Department of Economics and Statistics Cognetti de Martiis LEI & BRICK - Laboratory of Economics of Innovation "Franco Momigliano", Bureau of Research in Innovation, Complexity and Knowledge, Collegio 201315, University of Turin.
    10. Patrucco, Pier Paolo, 2008. "Complexity and Organizational Change in the Coordination of Technological Knowledge: Evidence from the Automobile Cluster in Turin," Department of Economics and Statistics Cognetti de Martiis LEI & BRICK - Laboratory of Economics of Innovation "Franco Momigliano", Bureau of Research in Innovation, Complexity and Knowledge, Collegio 200808, University of Turin.
    11. Soufiane Mezzourh & Walid A Nakara, 2009. "Governance and innovation : A Knowledge-based approach [La gouvernance de l'innovation : une approche par la connaissance]," Post-Print halshs-01955966, HAL.
    12. Susan Helper & Mari Sako, 2010. "Management innovation in supply chain: appreciating Chandler in the twenty-first century," Industrial and Corporate Change, Oxford University Press and the Associazione ICC, vol. 19(2), pages 399-429, April.
    13. Pettus, Michael L. & Kor, Yasemin Y. & Mahoney, Joseph T., 2007. "A Theory of Change in Turbulent Environments: The Sequencing of Dynamic Capabilities Following Industry Deregulation," Working Papers 07-0100, University of Illinois at Urbana-Champaign, College of Business.
    14. Gianluigi Giustiziero & Tobias Kretschmer & Deepak Somaya & Brian Wu, 2023. "Hyperspecialization and hyperscaling: A resource‐based theory of the digital firm," Strategic Management Journal, Wiley Blackwell, vol. 44(6), pages 1391-1424, June.
    15. Christos N. Pitelis, 2011. "Foreign Direct Investment and Economic Integration," Chapters, in: Miroslav N. Jovanović (ed.), International Handbook on the Economics of Integration, Volume III, chapter 1, Edward Elgar Publishing.
    16. Moller, Kristian & Rajala, Arto & Svahn, Senja, 2005. "Strategic business nets--their type and management," Journal of Business Research, Elsevier, vol. 58(9), pages 1274-1284, September.
    17. Ana Villar & César Camisón & Montserrat Boronat, 2007. "Technical Strategic Alliances And Performance: The Mediating Effect Of Knowledge ¿Based Competencies," Working Papers. Serie EC 2007-11, Instituto Valenciano de Investigaciones Económicas, S.A. (Ivie).
    18. Stan Metcalfe, "undated". "Capitalism and evolution," Openloc Working Papers 1201, Public policies and local development.
    19. Malo, Stéphane, 2009. "The contribution of (not so) public research to commercial innovations in the field of combinatorial chemistry," Research Policy, Elsevier, vol. 38(6), pages 957-970, July.
    20. Per L. Bylund, 2015. "Signifying Williamson's Contribution to the Transaction Cost Approach: An Agent-Based Simulation of Coasean Transaction Costs and Specialization," Journal of Management Studies, Wiley Blackwell, vol. 52(1), pages 148-174, January.

    More about this item

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:bla:jomstd:v:41:y:2004:i:2:p:295-316. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a bibliographic reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: Wiley Content Delivery (email available below). General contact details of provider: http://www.blackwellpublishing.com/journal.asp?ref=0022-2380 .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.