The Firm Boundary Research On Ability, Knowledge And Management

Following the coming of the era of knowledgeable economy in 21st century, management will be subjected to a grim challenge, especially the diversification and complication of the firm forms, which makes it important to manage the firm boundary. The point that the relation between the firm and the market is absolute oppose has not give reasonable explanation to the forms of some firm in reality, so we must change angle of view to think about it .Firstly, the enterprises have adjusted the managing strategy from aimlessly expanding their managing area to focusing on few industries ,because they have realized the importance of the firm boundary from the teaching of the aimless multi-industry expanding, it is called a refocusing strategy .Then the current merges between the firms are the more collated horizontal integration not the less collated vertical. Most enterprises only focus their core business and transfer the less collated business with the core business to other enterprises. The traditional viewpoint of the strategy theory cannot sufficiently explain this phenomenon, so it becomes more important to retreat the firm boundary. Finally the boundary between firm and market become even dim. There are some organizations such as the strategic alliance, the virtual organization. The point that the relation between the firm and the market is absolute oppose has not give reasonable explanation to the forms of some firm in reality, so we must change angle of view to think about it.The exchange cost theory is deficient in studying the firm boundary, such as its research only on view of the interior element, so this paper will generally analyze the firm boundary from three angles of view such as ability, knowledge and management on the basis of the theoretical bases of most of newly results in modern science (e.g. exchange cost theory, knowledge theory and producing and managing theory).Firstly it will analyze the firm boundary from the ability which is the character inessence. But the ability is a great abstract concept, and then what is its backside? Then itwill study the firm boundary from the knowledge, but both the ability and the knowledge origin from the production and the management.It thinks the district between the enterprise and the market has no clear and definite boundary, point out the enterprise containing its upper limit with lower limit, at that both namely are the misty of enterprise and market.On the view of ability, the lower limit of the firm boundary is consisting of the core ability of the firm; the upper limit of the firm boundary is determined by the way of acquiring the accessorial ability. On the view of knowledge, the core of the firm must be controlled by the firm itself, which is determined by the relation between ability and knowledge and the knowledge operational mechanism. The controller of the dim range between the firm and the market is determined the complemented ability. On the view of management, the firm boundary is determined by the element which the core ability and the core knowledge bring from.