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Complementarities among capability, transaction and scale-scope considerations in determining organisational boundaries

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  • Mario Morroni
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    Abstract

    The purpose of this paper is to discuss the conditions under which capability, transaction and scale considerations interact in determining organisational boundaries. I will argue that this interaction contributes to explaining the individual firms performance and growth whenever cognitive competence is limited, radical uncertainty is present, some inputs and processes are indivisible and complementary, and some relevant knowledge is tacit, non-transmittable and characterised by set-up processes with high fixed costs. Under the above conditions, which are becoming increasingly important with the spread of the knowledge-based economy, the growth of the firm can be regarded as a consequence of managerial ability to set a strategy that exploits the mutually reinforcing advantages provided by the organisational coordination of capabilities, transactions and scale of processes, while limiting counteracting forces deriving from errors of strategy that are due to cognitive inertia and myopia, unclear allocation of rights and responsibilities, errors in identifying aims, imprecision in performance measuring, difficulty in focusing incentives, influence activities and problems of internal communication.

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    Bibliographic Info

    Paper provided by Dipartimento di Economia e Management (DEM), University of Pisa, Pisa, Italy in its series Discussion Papers with number 2006/58.

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    Date of creation: 01 Jan 2006
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    Handle: RePEc:pie:dsedps:2006/58

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    Keywords: transactions; scale; scope; capabilities;

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    Cited by:
    1. Fanti, Luciano & Gori, Luca, 2010. "Child policy solutions for the unemployment problem," Economics Letters, Elsevier, Elsevier, vol. 109(3), pages 147-149, December.
    2. Lorenzo Corsini & Pier Mario Pacini & Luca Spataro, 2010. "Workers' Choice on Pension Schemes: an Assessment of the Italian TFR Reform Through Theory and Simulations," Discussion Papers, Dipartimento di Economia e Management (DEM), University of Pisa, Pisa, Italy 2010/96, Dipartimento di Economia e Management (DEM), University of Pisa, Pisa, Italy.
    3. Lorenzo Corsini & Elisabetta Olivieri, 2008. "Technological Change and the Wage Differential between Skilled and Unskilled Workers: Evidence from Italy," Discussion Papers, Dipartimento di Economia e Management (DEM), University of Pisa, Pisa, Italy 2008/73, Dipartimento di Economia e Management (DEM), University of Pisa, Pisa, Italy.
    4. Luciano Fanti & Luca Gori, 2008. "PAYG pensions and economic cycles: exogenous versus endogenous fertility," Discussion Papers, Dipartimento di Economia e Management (DEM), University of Pisa, Pisa, Italy 2008/75, Dipartimento di Economia e Management (DEM), University of Pisa, Pisa, Italy.
    5. Manuela Gussoni - Andrea Mangani, 2009. "The impact of public funding for innovation on firms' R&D investments: Do R&D cooperation and appropriability matter?," Discussion Papers, Dipartimento di Economia e Management (DEM), University of Pisa, Pisa, Italy 2009/90, Dipartimento di Economia e Management (DEM), University of Pisa, Pisa, Italy.
    6. Luca Gori, 2009. "Endogenous fertility, family policy and multiple equilibria," Discussion Papers, Dipartimento di Economia e Management (DEM), University of Pisa, Pisa, Italy 2009/79, Dipartimento di Economia e Management (DEM), University of Pisa, Pisa, Italy.
    7. Luciano Fanti & Luca Gori, 2011. "On economic growth and minimum wages," Journal of Economics, Springer, Springer, vol. 103(1), pages 59-82, May.
    8. Luciano Fanti & Luca Gori, 2009. "Endogenous fertility, endogenous lifetime and economic growth: the role of health and child policies," Discussion Papers, Dipartimento di Economia e Management (DEM), University of Pisa, Pisa, Italy 2009/91, Dipartimento di Economia e Management (DEM), University of Pisa, Pisa, Italy.
    9. Luciano Fanti & Luca Gori, 2012. "Endogenous Lifetime in an Overlapping-Generations Small Open Economy," FinanzArchiv: Public Finance Analysis, Mohr Siebeck, Tübingen, Mohr Siebeck, Tübingen, vol. 68(2), pages 121-152, June.
    10. Luciano Fanti & Luca Gori, 2009. "Longevity, fertility and PAYG pension systems sustainability," Discussion Papers, Dipartimento di Economia e Management (DEM), University of Pisa, Pisa, Italy 2009/77, Dipartimento di Economia e Management (DEM), University of Pisa, Pisa, Italy.

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