How firm boundaries are drawn

2012

While many studies exist regarding the firm choice to make vs. buy, there has been little study about the choice between make, buy or ally. In this paper we investigate how firms choose among make, buy or make together when they have to organize a particular transaction. In particular we develop theory-based hypothesis that link the theoretical determinants of firm’s boundaries to the governance choice. In order to test such hypothesis we operationalize the main constructs in measurable variables and we collect information for that. The final sample represents 4316 mergers and acquisitions, alliances, and divestitures announced and completed by 88 of the first-ranked 100 members of the 2000…