Chapter

The Effects of Technological Change on the Boundaries of Existing Firms

Paul L. Robertson and Gianmario Verona

in Flexibility and Stability in the Innovating Economy

Published in print April 2006 | ISBN: 9780199290475
Published online May 2006 | e-ISBN: 9780191603495 | DOI: http://dx.doi.org/10.1093/0199290474.003.0008
 The Effects of Technological Change on the Boundaries of Existing Firms

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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 intra-firm 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.

Keywords: industrial dynamics; technological innovation; boundaries of firms; visible hand; vertical integration; relationships of firms

Chapter.  10905 words.  Illustrated.

Subjects: Economic Systems

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