Redefining the boundaries of the firm: the role of 4PLs

Purpose – The purpose of this paper is to analyse the specific valuable partnership between human capital-intensive firms (HCIFs) and fourth-party logistics (4PLs), and in particular, to explore the way boundaries of HCIFs are changing as a consequence of the growing importance of 4PLs. Design/methodology/approach – The paper represents the viewpoints of the authors as far as the role of 4PLs in the changing boundaries of HCIFs is concerned. It is based on a literature review, especially on the analysis of the recent works on organizational boundaries developed by Garicano, Santos and their co-authors. It establishes the prerequisites on the actors of the phenomenon and provides a knowledge-based conceptual framework to understand their dynamic relationship. Findings – The authors show that the relationship between a HCIF and a 4PL represents a balance of power between two partners based on the co-specialized human capital provided by each of them. From four main propositions, the authors explain that the...

[1]  Kathleen M. Eisenhardt,et al.  Special Issue: Frontiers of Organization Science, Part 2 of 2: Organizational Boundaries and Theories of Organization , 2005, Organ. Sci..

[2]  G. Becker,et al.  Human Capital: A Theoretical and Empirical Analysis with Special Reference to Education, Third Edition , 1993 .

[3]  D. Teece.  Profiting from technological innovation: Implications for integration, collaboration, licensing and public policy , 1993 .

[4]  Anne-Claire Pache,et al.  When Worlds Collide: The Internal Dynamics of Organizational Responses to Conflicting Institutional Demands , 2010 .

[5]  Luis Garicano,et al.  FIRMS‘ BOUNDARIES AND THE DIVISION OF LABOR: EMPIRICAL STRATEGIES , 2003 .

[6]  G. Paché,et al.  Strategy dynamics in the logistics industry: a transactional center perspective , 2007 .

[7]  J. Mincer.  Investment in Human Capital and Personal Income Distribution , 1958, Journal of Political Economy.

[8]  Luis Garicano,et al.  Hierarchies and the Organization of Knowledge in Production , 2000, Journal of Political Economy.

[9]  O. Hart,et al.  Property Rights and the Nature of the Firm , 1988, Journal of Political Economy.

[10]  O. Williamson.  The Economic Institutions of Capitalism: Firms, Markets, Relational Contracting , 1985 .

[11]  Paul R. Milgrom,et al.  The Economics of Modern Manufacturing: Technology, Strategy, and Organization , 1990 .

[12]  Luis Garicano,et al.  Matching Problems with Expertise in Firms and Markets , 2010 .

[13]  Sanford J. Grossman,et al.  The Costs and Benefits of Ownership: A Theory of Vertical and Lateral Integration , 1986 .

[14]  B. Klein,et al.  Vertical Integration, Appropriable Rents, and the Competitive Contracting Process , 1978, The Journal of Law and Economics.

[15]  C. Prahalad,et al.  The core competence of the corporation’, Harvard Business Review, Vol. pp. . , 1990 .

[16]  P. V. Laarhoven,et al.  Third‐Party Logistics: Is There a Future? , 1999 .

[17]  G. Paché,et al.  La dynamique des canaux de distribution: approches théoriques et ruptures stratégiques , 2008 .

[18]  C. Prahalad,et al.  The Core Competence of the Corporation , 1990 .

[19]  Luis Garicano,et al.  The Knowledge Economy at the Turn of the Twentieth Century: The Emergence of Hierarchies , 2006 .

[20]  K. Eisenhardt,et al.  Constructing Markets and Shaping Boundaries: Entrepreneurial Power in Nascent Fields , 2009 .

[21]  Erik Brynjolfsson,et al.  Intangible Assets: Computers and Organizational Capital , 2002 .

[22]  Filipe M. Santos.  The coevolution of firms and their knowledge environment , 2003 .

[23]  Kevin J. Murphy,et al.  Relational Contracts and the Theory of the Firm , 1997 .

[24]  Luis Garicano,et al.  Hierarchical sorting and learning costs: Theory and evidence from the law , 2005 .

[25]  Lester C. Thurow,et al.  INVESTMENT IN HUMAN CAPITAL , 2016 .

[26]  R. Posner,et al.  Intelligence Failures: An Organizational Economics Perspective , 2005 .

[27]  Luigi Zingales,et al.  The Influence of the Financial Revolution on the Nature of Firms , 2001 .

[28]  J.G.A.J. van der Vorst,et al.  A classification of logistic outsourcing levels and their impact on service performance: Evidence from the food processing industry , 2010 .

[29]  Margaret M. Blair,et al.  Ownership and Control: Rethinking Corporate Governance for the Twenty-first Century , 1997 .

[30]  G. Paché,et al.  La dynamique des canaux de distribution , 2008 .

[31]  E. Penrose.  The theory of the growth of the firm twenty-five years after , 1960 .

[32]  Stefano Brusoni,et al.  The Limits to Specialization: Problem Solving and Coordination in ‘Modular Networks’ , 2005 .

[33]  Jacques Crémer,et al.  Language and the Theory of the Firm , 2007 .