Decentralization and contracting out: A new pattern for internal and external boundaries of the firm

Guillaume Chanson and Bertrand Quelin
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Guillaume Chanson: PRISM Sorbonne - Pôle de recherche interdisciplinaire en sciences du management - UP1 - Université Paris 1 Panthéon-Sorbonne

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Abstract: This paper is devoted to the pattern of activity within large companies, through the two criteria of decentralization and contracting out. Our goal is to understand whether the determinants are identical for both internal and external boundaries of the firm. One literature stream contributes to the analysis of the internal structure and organization of divisional companies, studying the functions assigned to headquarters or divisions. Another part of the literature has focused on the boundaries of the firm issues and the firm's core activities. Few works are at the junction of these two traditions. This study builds on an empirical study dedicated to the book publishing industry. Our analysis leads to discuss determinants of internal and external borders. We show that functions or activities with high potential of economies of scale are mainly centralized and internalized. On reverse, those related to core business and non-programmable functions are mostly at divisional level and contracted out.

Keywords: Boundaries of the firm; Centralization; Contracting out; Central services (search for similar items in EconPapers)
Date: 2013-12
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Citations: View citations in EconPapers (2)

Published in European Management Journal, 2013, 31 (6), pp.602-612. ⟨10.1016/j.emj.2013.02.002⟩

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Journal Article: Decentralization and contracting out: A new pattern for internal and external boundaries of the firm (2013)
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Persistent link: https://EconPapers.repec.org/RePEc:hal:journl:hal-01026132

DOI: 10.1016/j.emj.2013.02.002

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