The management of organizational boundaries: A case study

Abstract

This paper aims at understanding organizational boundaries in their different dimensions : internal and external, horizontal and vertical, static and dynamic. It first gives a definition of the phenomenon : a boundary is a potential or actual mechanism that rarefies or regulates flows between two heterogeneous spaces, and makes these flows visible. It then formulates three propositions : 1. There are no such things as « natural boundaries ». Organizational boundaries are the result of decisions about capability units that are always debated. 2. Once established, boundaries tend to be stable and to become entrenched. 3. Even when they are entrenched, boundaries remain debatable. When controversies intensity, strategies aiming at changing the boundaries develop, and strategies aiming at maintaining them develop in response. A case study allows a discussion of these propositions. The selected case is the Air Traffic Management industry in Europe. The authors have been working on it for more than ten years. The main points this article makes are the following: The concept of capability unit is related to the idea that there are no such things as « natural » boundaries. When managers define a boundary, be it internal or external, they think of a capability, and this is done in a context of causal ambiguity. Boundaries are the object of a decision and are always debatable and debated. They induce a rarefaction of the financial, informational, and other flows, and this rarefaction can vary in intensity over time. Once defined, boundaries tend to sediment and become entrenched. In such a process, the asynchrony of decisions made in different areas, such as technology, human resources, and organization of sub-activities, plays a key role. As the environment evolves, controversies concerning the perimeter of the capability units may intensify and some actors may develop strategies aimed at changing the boundaries. These strategies will pertain to the boundaries of a few capability units, or to a large set of boundaries. In the latter case, the strategy, which can be characterized as “architectural”, would be developed by an actor with a particular status. This actor would belong to several organizational fields and would therefore not be constrained by the same symbolic boundaries as actors who belong to one field alone. Such a strategy entails a willingness to impose synchrony to other actors in the industry. The dynamics of displacing the boundaries relies on two processes, competition and cooperation, combined in a coopetitive approach.