Research On Enterprise Boundary Expansion Based On Knowledge Creation

Firm boundaries has long been the focus of modern firm theory research, the discussion of enterprise boundaries is earlier than the publication of The nature of the firm. Smith comes up with ideas about division of labor in The wealth of nations to explain why firm scale is expanding and technology is changing. The neo-classical economics take mathematics as its main research method, which thinks that technology is treated as an exogenous variable to promote the expansion of firm scale, and inside of firm is regarded as "black box". Firm boundary research is not the focus of the classical economics and the neo-classical economics, but it can be found that firm boundary is equal to entity scale of firm at that time. The nature of the firm published in 1937 discusses the firm boundary to establish theory of the modern firm, Coase thinks the transaction cost is the most important influencing factor to firm boundary. Inheriting Coase’s thoughts, Williamson discusses the vertical integration from asset specificity, transaction frequency and transaction uncertainty. Competence theory of the firm discusses the firm boundary from core competence, scarce resources and so on in the 1980s. There are more and more scholars studying the firm boundary deeply, knowledge creation get more and more attention.In the past, many scholars think the firm boundary is equal to entity scale of firm. Today the firm boundary becomes multiple under the influence of knowledge creation. Multiple nature of the firm boundary shows that innovation ability, the scope of management are affecting the firm boundary more and more deeply. Therefore, the article will discuss the firm boundary in the view of knowledge creation.The article is divided into five parts. The first part introduces the research background, significance, innovation point and research method. The second part is literature Review. The third part discusses multiple nature of the firm boundary. The fourth part discusses how knowledge is created and how knowledge creation affects the firm boundary and industrial structure, then gives an example about Apple Inc. The fifth part gives suggestions about how to promote expanding of firm boundary and upgrading of industrial structure.