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Dynamic Boundaries of the Firm: Are Firms Better off Being Vertically Integrated in the Face of a Technological Change?
The Academy of Management Journal
Vol. 44, No. 6 (Dec., 2001), pp. 1211-1228
Published by: Academy of Management
Stable URL: http://www.jstor.org/stable/3069397
Page Count: 18
You can always find the topics here!Topics: Technological change, Emerging technology, Computer technology, Incumbents, Vertical integration, Business structures, Microprocessors, Market share, Corporations, Management science
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Building on transaction cost economics and the knowledge-based theory of the firm, I argue that, following a technological change that is competence-destroying to firms and their suppliers, firms that are integrated vertically into the new technology will perform better than those that are not. At the same time, firms that had been vertically integrated into the old technology will perform worse than those that had not been. This argument suggests that the efficient boundaries of a firm are dynamic. I used the adoption of reduced instruction set computer (RISC) technology by makers of computer workstations to explore the hypotheses.
The Academy of Management Journal © 2001 Academy of Management