The Boundaries of the Firm in Global Strategy

Global Strategy Journal, 8(2): 211-219

8 Pages Posted: 27 Dec 2018

See all articles by Alvaro Cuervo-Cazurra

Alvaro Cuervo-Cazurra

Northeastern University - Department of International Business and Strategy

Ram Mudambi

Temple University - Department of Strategic Management

Torben Pedersen

Copenhagen Business School - Department of Strategic Management and Globalization

Date Written: May 13, 2018

Abstract

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 the 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 consideration of all operations of the multinational, and the simultaneous consideration of the characteristics of all the locations where the multinational operates. These suggestions help better connect the three drivers of firm boundaries: transactions, resources, and locations.

Keywords: Firm boundaries, transaction cost economics, resource-based view, location, home country, host country, global strategy

JEL Classification: F23

Suggested Citation

Cuervo-Cazurra, Alvaro and Mudambi, Ram and Pedersen, Torben, The Boundaries of the Firm in Global Strategy (May 13, 2018). Global Strategy Journal, 8(2): 211-219. Available at SSRN: https://ssrn.com/abstract=3298383

Alvaro Cuervo-Cazurra (Contact Author)

Northeastern University - Department of International Business and Strategy ( email )

D'Amore-McKim School of Business
313 Hayden Hall, 360 Huntington Avenue
Boston, MA 02115
United States
16173736568 (Phone)
16173738628 (Fax)

HOME PAGE: http://cuervo-cazurra.com

Ram Mudambi

Temple University - Department of Strategic Management ( email )

Fox School of Business and Management
Philadelphia, PA 19122
United States
215-204-2099 (Phone)
215-204-8029 (Fax)

HOME PAGE: http://sbm.temple.edu/~rmudambi/index.html

Torben Pedersen

Copenhagen Business School - Department of Strategic Management and Globalization ( email )

Porcelænshaven 24
Frederiksberg, 2000
Denmark
+45 3815 3030 (Phone)
+45 3815 3035 (Fax)

HOME PAGE: http://www.cbs.dk/staff/tp

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