Files
Abstract
The architecture of the firm involves determination of a boundary that encompasses the functions
managed by the firm. The past decade has seen substantial reorganization of firms where
vertical or horizontal integration has been unbundled into weaker forms of collaborations including
value chains and networks. This observation has forced a re-conceptualization of the
boundaries of the firm to incorporate such collaborations. These collaborations are virtual and
highly dynamic. They emerge and persist when two conditions are met. First, they must enable
generation of greater value than might be attained through independent operation and anonymous
transactions through markets. Second, the resulting growth must be shared with
members in a way that retains their participation. Each of these conditions can be verified only
if performance of the collaboration can be established. This paper recognizes the need for such
“metrics of performance”. While conceptual approaches have been studied in the management
literature, this paper considers from theoretic perspectives these issues and derives measures of
the performance of the overall collaboration as well as of the participating enterprises. The paper
presents a framework that can be applied to both vertical and horizontal collaborations as
found in supply chains and networks. The paper offers suggestions on empirical methods for
estimation of measures derived.