The latest century has witnessed two major transformations of the
business landscape through which the boundaries of firms were modified
substantially. The first was the establishment of the large-scale
integrated hierarchies, like the Ford Motor Company, in the beginning of
the 20th century. The second was the disintegration of these
hierarchies at the end of the same century. In both cases, the objective
of the boundary movement was to improve the opportunities for
innovative redesign. Because the strategic approaches to achieve this
objective were quite different, the interplay between innovative
redesign and changes of the boundaries of firms deserves further
exploration. This article is based empirically on previous research on
these two types of transformations. The information from these studies
is used to formulate seven propositions concerning the interplay between
innovative redesign and corporate boundaries. Three main findings
spring from this study. First, the boundaries of firms are multifaceted.
In addition to the ownership boundary, it is demonstrated that
influence boundaries and awareness boundaries are central in innovative
redesign. Second, corporate boundaries are dynamic. The study shows that
sometimes they function as buffers in relation to other firms, while in
other situations, they serve as bridges. Third, for the individual
firm's boundary setting, two issues appear to be critical: one concerns
the trade-off between specialization and integration, and the other
relates to the interaction between the internal capabilities of the firm
and those that are accessible from business partners. [PUBLICATION
ABSTRACT]