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Strategic organization in mature industries: boundary architecture as a source of competitive advantage

Author: Santos, Filipe M. ; Abrunhosa, Ana ; Costa, InêsINSEAD Area: Entrepreneurship and Family Enterprise Series: Working Paper ; 2006/22/EFE Publisher: Fontainebleau : INSEAD, 2006.Language: EnglishDescription: 51 p.Type of document: INSEAD Working Paper Online Access: Click here Abstract: This paper explores the concept of boundary architecture as a combination of firm-level decisions about the scope, permeability, and modularity of a firm's activities. We develop a new analytical tool to track boundary changes over time, and use it to study how boundary architecture impacts the long-term performance of firms operating in a mature and competitive industry. The findings suggest that an architecture of boundaries that involves extending the scope of activities, increasing their permeability to markets, and improving the modularity of internal units leads to high performance. We discuss the advantages and limitations of these three characteristics of boundaries and their implication for the strategic organization of firms.
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This paper explores the concept of boundary architecture as a combination of firm-level decisions about the scope, permeability, and modularity of a firm's activities. We develop a new analytical tool to track boundary changes over time, and use it to study how boundary architecture impacts the long-term performance of firms operating in a mature and competitive industry. The findings suggest that an architecture of boundaries that involves extending the scope of activities, increasing their permeability to markets, and improving the modularity of internal units leads to high performance. We discuss the advantages and limitations of these three characteristics of boundaries and their implication for the strategic organization of firms.

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