Integrated Digital Image Correlation (IDIC) is nowadays a well established full-field experimental procedure for reliable and accurate identification of material parameters. It is based on the correlation of a series of images captured during a mechanical experiment, that are matched by displacement fields derived from an underlying mechanical model. In recent studies, it has been shown that when the applied boundary conditions lie outside the employed field of view, IDIC suffers from inaccuracies. A typical example is a micromechanical parameter identification inside a Microstructural Volume Element (MVE), whereby images are usually obtained by electron microscopy or other microscopy techniques but the loads are applied at a much larger scale. For any IDIC model, MVE boundary conditions still need to be specified, and any deviation or fluctuation in these boundary conditions may significantly influence the quality of identification. Prescribing proper boundary conditions is generally a challenging task, because the MVE has no free boundary, and the boundary displacements are typically highly heterogeneous due to the underlying microstructure. The aim of this paper is therefore first to quantify the effects of errors in the prescribed boundary conditions on the accuracy of the identification in a systematic way. To this end, three kinds of mechanical tests, each for various levels of material contrast ratios and levels of image noise, are carried out by means of virtual experiments. For simplicity, an elastic compressible Neo-Hookean constitutive model under plane strain assumption is adopted. It is shown that a high level of detail is required in the applied boundary conditions. This motivates an improved boundary condition application approach, which considers constitutive material parameters as well as kinematic variables at the boundary of the entire MVE as degrees of freedom in the IDIC procedure, assuring that both are identified with equal precision and importance. This problem has been studied in the literature with a different method, i.e. Finite Element Method Updating framework.