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The Definition of Firm Boundaries and Its Impact on Sustainability

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  • Luis Armando Lujan Salazar
  • Gonzalo Maldonado Guzman

Abstract

The way in which the boundaries of a firm are defined also determines its responsibilities. Besides the firm¡¯s goals of profitability and survival, there are implications beyond its physical boundaries, such as sustainability. There are several definitions of the boundaries of a firm, each one with its own implications. Considering external resources related to the firm may allow decision makers to take responsibility for what takes place beyond its frontiers. Because firms are not isolated, sustainability goes beyond the boundaries of the firm and requires incorporating external factors. The relation of a firm with its external factors can be established in several dimensions; one of them is considering the relation of the firm with its environment. In this study, we reviewed literature on firm boundaries and found out that the boundaries, limits, and responsibilities of firms are not sharply defined. An interesting point is that the boundaries of the firm can be expanded to account for external resources and the impact of the firm¡¯s activities, so that the firm may take steps to reduce its green footprint and contribute to sustainability from the perspective of the triple bottom line, which includes economic, social, and environmental aspects.

Suggested Citation

  • Luis Armando Lujan Salazar & Gonzalo Maldonado Guzman, 2017. "The Definition of Firm Boundaries and Its Impact on Sustainability," Journal of Management and Sustainability, Canadian Center of Science and Education, vol. 7(2), pages 126-134, June.
    • Handle: RePEc:ibn:jmsjnl:v:7:y:2017:i:2:p:126-134
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    References listed on IDEAS

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    Cited by:

    1. Andronikidis, Andreas & Karolidis, Dimitrios & Zafeiriou, Georgia, 2021. "Reflections on grounding firm innovation and viability," European Management Journal, Elsevier, vol. 39(1), pages 2-8.

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    More about this item

    Keywords

    sustainability; firm boundaries; economic incentives; sustainable business model;
    All these keywords.

    JEL classification:

    • R00 - Urban, Rural, Regional, Real Estate, and Transportation Economics - - General - - - General
    • Z0 - Other Special Topics - - General

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