Research, Risk-based View Of Firm Boundaries

In order to adapt to challenges arising from globalization and information age, more and more companies are ready to adjust organization structures and firm boundaries. On the one hand, global annexing between companies becomes more common; on the other hand, companies try and proceed with great change and reform taking place in market of our motherland. Rapid development of modern science and technology accelerate products updating, reduce products' life-cycle, and meet customized demands, which provides great chances to mid and small companies.Because of the background and reasons, researches on firm boundaries have great values in theory and practice. Since 1990's, people learning more about the principles and laws of firm boundaries has founded the theoretic basis for researches on building-up and defining horizontal boundaries, vertical boundaries and integer boundaries with rapid development of transactional cost economics, which help people to make decisions on the strategies of integration, diversification and strategic alliances. At the same time, with the development of corporation theory, especially the resource based theory and corporation core competence theory, provide the further understanding on the source of competent advantages and the scope of corporations. But in research, these two theories are frequently separated. We will ignore characters of firm resource if we study firm boundaries merely from transactional cost, while we will ignore the relations among firm, other firms and market if we study firm boundaries from resource based view.So on basis of reviewing two theories, we join two theories from risk view and restudy the firm boundaries form new angle. There are two kinds of uncertainties of firm. One comes from outside of firm and the other exists in the firm. We call them external uncertain and internal uncertain. In this article, we give the definition to internal uncertain which decide the internal boundaries. There are three determinants, firm resource, transactional cost and attitudes to risk, which together decide the external boundaries of firm. According to there determinants above, we analyze the movement of firm external boundaries and evaluate the efficiency of external boundaries from scale, integration and diversification. Internal boundaries are determined by there determinants: uncertain of transaction, firm resource and attitudes to risk, from which we analyze the internal boundaries and evaluate the internal efficiency from the view of resource.