The Effects of Technological Change on the Boundaries of Existing Firms
2006
This chapter explores the reciprocal relationship between technological innovation and
the boundaries of the firm, and the paths in which firm boundaries might be expected
to follow under different circumstances. It argues that while one might follow Langlois
(2003) in believing that there will be a tendency for large, vertically-integrated firms to
become less common in the technological environment that is currently unfolding, other
tendencies will also be afoot, leading to a spectrum of different types of inter- and intrafirm
relationships. This includes the creation of new giant enterprises whose evolution
in the early 20th century was described by Chandler (1962, 1977) as the imposition of a
‘visible hand’ to reduce uncertainties in market-based relationships.
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