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Organizational boundaries are a central phenomenon, yet despite their significance, research is dominated by transaction cost economics and related exchange-efficiency perspectives. While useful, it is time to engage in a broader view. Our purpose is to provide a deeper understanding of organizational boundaries. First, we develop four boundary conceptions (efficiency, power, competence, and identity) and their distinctive features including organizational and environmental assumptions, unique conception of boundaries, theoretical arguments, empirical validity, contributions, and limitations. Efficiency takes a legal-ownership view of atomistic boundary decisions. In contrast, the power conception emphasizes the sphere of influence of the organization, while competence focuses on the resource portfolio and its related configuration, and identity centers on the often unconscious mind-set by which organizational members understand "who we are." We also indicate relationships, both coevolutionary and synergistic, among the conceptions. Second, we juxtapose these conceptions with the current literature to create a springboard for a renewed research agenda. This agenda includes greater focus on nonefficiency perspectives, relationships (not competition) among boundary conceptions, studies that take the normative implication of theories more seriously, and problem-driven research on contemporary boundary issues such as contract employment and business ecosystems.
Key words: organizational bounderies; organizational theories; efficiency; power; competence; identity
Organizational boundaries are a central phenomenon that has been viewed with multiple theoretical lenses (Thompson 1967, Pfeffer and Salancik 1978). For some, boundaries are the demarcation of the social structure that constitutes an organization. As such, activities operate under a specific logic of identity that shapes how things are done in the organization and sets the rules for inclusion (Dutton et al. 1994, Kogut 2000). For others, boundaries are the demarcation of the resources possessed by the firm, thus shaping organizational growth trajectories (Helfat 1997). For still others, boundaries determine the sphere of organizational influence, including its degree of industry control and its power over external forces (D'Aveni 2001, Santos and Eisenhardt 2005).
However, despite the significance and theoretical richness of organizational boundaries, the research agenda is limited. It has been shaped significantly by transaction cost economics (TCE) (Williamson 1975, 1981) and related exchange-efficiency perspectives (Poppo and Zenger 1998, Nickerson and Silverman 2003). This, in turn, has led to research dominated by a focus on boundary decisions as discrete make-or-buy choices, and governance efficiency...