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JOURNAL OF MANAGEMENT POLICY AND PRACTICE
Coordination Costs and Firm Boundaries: A Tale of Two Supply
Chains in the Apparel Industry
Author(s): Scott Wallace, Brian T. Kench, Barb Mihm
Citation: Scott Wallace, Brian T. Kench, Barb Mihm, (2012) "Coordination Costs and Firm Boundaries: A Tale of Two Supply Chains in the Apparel Industry," Journal of Management Policy and Practice, Vol. 13, Iss. 3, pp. 47 - 65
Article Type: Research paper
Publisher: North American Business Press
Abstract:
The transaction costs literature emphasizes the role of firm boundaries in addressing incentives of parties to engage in rent seeking behavior. The focus on the potential for “hold-up” in the presence of transaction-specific investments implicitly assumes that production and coordination problems have been solved a priori. Drawing from the capabilities literature, this paper looks at the role organization plays in reducing these costs. It argues that many of the hold-up problems associated with “temporal specificity” can be more accurately characterized as issues of suboptimal coordination. A case study examining alternative organizational arrangements in fast fashion is presented in illustrating the importance of firm boundaries in addressing coordination problems.
