Chapter 4: Organization between Organizations
INTRODUCTION As noted in Chapter 1, nowadays a theory of the firm should include an account of the boundaries of the firm and inter-organizational relationships (IORs). After the analysis of the firm in Chapter 3, the present chapter turns to IORs. There is an enormous literature on that, and a complete survey would go too far. The focus here is on the fundamentals related to theory of the firm. First comes a discussion of the boundaries of the firm. Second a discussion of the sources of innovation in IORs, in particular the effects of cognitive distance, absorptive capacity, and the duration of relationships. The chapter proceeds with an analysis of the governance of collaboration, and the role of trust and of intermediaries. Next, taking all this into account, the analysis goes beyond dyads of firms to consider effects of the structure of multiple interacting organizations, of the position of an organization in such a structure, and of the strength and content of ties. A central issue here is a debate on the strengths and weaknesses of strong ties. The analysis ends with an attempt to integrate a variety of apparently contradictory effects. Next to theoretical analysis, much evidence will be presented, from a variety of empirical studies. Some of the text is derived from Nooteboom (2004b). BOUNDARIES OF THE FIRM This section gives a summary of the basic principle proposed here concerning the boundaries of the firm and the need to collaborate between firms, especially from the perspective of innovation....
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