The boundaries of the firm in global strategy

Abstract

Research summary We briefly review the evolution in the analysis of the boundaries of the firm in global strategy. We explain how initial studies that argued that firm boundaries were driven by the minimization of transaction costs were later complemented by analyses that proposed that firm boundaries were driven by the development and use of resources to maximize value creation and capture. Studies of global strategy combine these two approaches and introduce the influence of location—both the home and host countries—as a third influence on boundary decisions. We encourage future studies to focus more deeply on the complexity, dynamics, and mechanisms of three themes: the consideration of all boundary options, the study of the entirety of the multinational, and the simultaneous consideration analysis of the characteristics of all the locations in which the multinational is active. These suggestions help better connect the three drivers of firm boundaries: transactions, resources, and locations. Managerial summary We briefly review the evolution in academic thinking regarding the scope of activities of a firm, that is, a firm's boundaries, in global strategy. We explain how initial studies that argued that firm boundaries are driven by a desire to reduce costs were complemented by analyses that proposed that firm boundaries are driven by a desire to increase value creation and capture. Studies of global strategy combine these two drivers and introduce the influence of the location of operation—the home and host countries—as a third influence on boundary decisions. We provide suggestions for future studies on how to incorporate the complexity, dynamics, and mechanisms of the complete array of methods to manage boundaries, the complete set of subsidiaries of the multinational, and the complete set of characteristics of the relevant locations.

Shared digital identity and rich knowledge ties in global 3D printing—A drizzle in the clouds?

“…It drives global digital technology emergence and markets. Our study supports the importance of knowledge in global linkages (Awate & Mudambi, 2018; Cuervo‐Cazurra, Mudambi, & Pedersen, 2018; Lorenzen & Mudambi, 2013; Mudambi, 2008; Turkina, Van Assche, & Kali, 2016). In finding “rich” international knowledge exchanges, we challenge the understanding that codified knowledge exchange is the focus of global ties argued on the basis of international differences and distance (Parkhe, 1991, 1998; Tallman & Phene, 2007).…”

“…Knowledge exchanges and boundary spanning is important to global business (Awate & Mudambi, 2018; Cuervo‐Cazurra et al, 2018; Lorenzen & Mudambi, 2013; Mudambi, 2008; Pesch & Bouncken, 2017; Turkina et al, 2016). Global business can take advantage of the digital ties that face no spatial limits and allow network‐economies (Chu & Manchanda, 2016; Gawer & Phillips, 2013; Sawhney & Zabin, 2002).…”

“…They can occur as person‐based global linkages and/or organization‐based linkages, the latter referred to as pipelines (Lorenzen & Mudambi, 2013). While the digital and tacit knowledge needs to be integrated and contextualized it needs organizational commonality at both ends (Awate & Mudambi, 2018; Cuervo‐Cazurra et al, 2018; Lorenzen & Mudambi, 2013; Mudambi, 2008; Turkina et al, 2016). Previous research assumes that individuals have a tendency to stick to their accumulated tacit, especially practical knowledge and that change becomes less likely when crossing physical or psychological boundaries (Carlile, 2002).…”

Past, ongoing, and future debate on the interplay between internationalization and digitalization

“…At the same time, the international business literature has revealed that firms' are increasingly making decisions to sell their products in many countries and meet multiple market demands or move, partially or entirely, production abroad (Grant 2016). Correspondingly, scholars have attempted to disentangle the antecedents (with a special focus on transactions, resources, locations, and institutions; Cuervo-Cazurra et al 2018, 2019Matysiak and Bausch 2012) and consequences (Kirca et al 2012) of this internationalization.…”

Accounting for firm heterogeneity in global value chains

“…Electronic supplementary material The online version of this article (https://doi.org/10.1057/s41267-019-00282-0) contains supplementary material, which is available to authorized users. 2016), the drivers influencing the decision of where to locate value activities and how to govern them (Bunyaratavej, Hahn, & Doh, 2007, 2008Cuervo-Cazurra, Mudambi, & Pedersen, 2018;Doh, Bunyaratavej, & Hahn, 2009;Giroud & Mirza, 2015), the effects of such ''fine-slicing'' on innovation processes (Andersson, Dasi, Mudambi, & Pedersen, 2016;Mudambi, 2008), as well as on factor prices and wages in host economies (Grossman & Rossi-Hansberg, 2008;Hummels, Jørgensen, Munch, & Xiang, 2014). 1 Thus far, researchers have assessed GVCs and its implications mainly relying on enterprise surveys, international trade statistics, and input-output (IO) models.…”