Which Of The Following Changes Has Resulted In The Shifting Of Organizational Boundaries

INTRODUCTION

1 The notion of boundaries involves a paradox. On the one mitt, information technology is omnipresent in the social sciences (Lamont & Molnar, 2002), and in particular in management science; on the other hand, information technology is rarely elaborated as such, and in its various dimensions. In management, vertical boundaries have been investigated via the study of make or buy decisions, horizontal boundaries via the study of alliances or mergers and acquisitions. At the micro level, a firm'south internal boundaries have been most often studied through the idea of « spanning boundaries » in cognition management or innovation (Nonaka, 1994; Chocolate-brown & Duguid, 2001 ou Miller & al., 2007). More than recently, what Lamont and Molnar (2002: 168) phone call « symbolic boundaries » (i.east. categories actors agree upon and employ to define reality) have been explored in research on boundary objects (Carlile, 2002; Osterlund & Carlile, 2005).

2 It is hit to observe that these studies are not in dialogue with each other. Thus, although the title of Araujo, Dubois and Gadde's paper (2003) is « The multiple boundaries of the firm », the authors, equally they brand explicit, focus exclusively on vertical boundaries. In contrast, Santos and Eisenhardt (2005) concentrate on the external boundaries of the firm, those that carve up the firm from its environment, at the expense of internal boundaries. There is nevertheless a conceptual and applied link betwixt boundaries of dissimilar kinds. An internal boundary can become an external one, for example when it is decided to transform a sectionalisation into a business unit, and this unit is afterwards sold; conversely, an external boundary can become an internal one, for instance when a corporation acquires a firm that is transformed into an internal division, but at the same time given autonomy inside the organization. In add-on, the notion of boundary refers to multiple dimensions, symbolic and social (issues of identity), as well as others involving for example technology, power or space. The mode these dimensions interact remains in bang-up office unexplored, even though, as noted by Santos and Eisenhardt (2005: 505), « the written report of organizational boundaries is foundational ».

3 The present paper thus aims at exploring the multiple dimensions of boundaries and their interactions, besides equally the interdependence between boundaries of different kinds. This volition exist done through the discussion of three propositions drawn form the scientific literature and the field research on boundaries:

iv

1. There are no such matter as « natural boundaries ». Organizational boundaries are the result of decisions nigh capability units that are always debated.
2. Once established, boundaries tend to be stable and to go entrenched.
3. Even when they are entrenched, boundaries remain debatable. When controversies ascend, strategies aimed at changing the boundaries develop, and strategies aimed at maintaining them develop in response.

five We shall discuss these propositions on the basis of a example study on which we have worked for 10 years, that of the Air Traffic Management (ATM) industry in Europe.

6 In the first part of the paper, we will investigate the theoretical foundations of the notion of boundaries, relying of course on the literature related to organizational boundaries, but also to ecological, geographical and historical boundaries. We volition then explicate our methodology, and afterwards broach the case report itself. Finally, earlier the conclusions, we volition hash out the propositions in the low-cal of the case study.

THEORETICAL ISSUES OF THE NOTION OF BOUNDARY

7 We will kickoff attempt to define boundaries, and then draw three theoretical propositions.

The definition of boundaries

8 Numerous studies dealing with boundaries do non define precisely their object. What makes the separation betwixt two divisions of the same firm, or between this firm and its surround? A simple definition borrowed from biology can be useful: a boundary is « the regulation of flows across heterogeneous space. » (Cadenasso et alii, 2003: 757). More than precisely, a purlieus can be divers as a machinery that potentially or actually rarefies or regulates flows between two heterogeneous spaces, and makes these flows visible. Inside the boundaries, dominance can be exercised and flows of exchanges are less visible. Beyond boundaries, flows are regulated and are more than visible. But a boundary can be activated at some moments, and inactivated at others. Moreover, the rarefaction and regulation of flows across a boundary, as well as their visibility, are a matter of caste and depend on the calibration at which they are analyzed: « […] the perception of a boundary as abrupt or gradual volition depend on the grain size at which the boundary is existence measured or modeled; a boundary that appears abrupt at a coarse grain size may appear gradual at a fine grain size. » (Strayer et al., 2003: 726).

The decision of boundaries

ix Different theoretical perspectives may help sympathize the delineation of organizational boundaries. Transaction cost analysis emphasizes the importance of assets specificity and the frequency of transactions. Economies of calibration and scope are said to define a minimum efficient size of the system. Knowledge-based theories (Kogut & Zander, 1992) also provide insights into the structuring of organizational boundaries. These different perspectives make it possible to assess existing situations and to show that they are sub-optimal in consideration of transaction costs, scale and scope economics, or the available knowledge basis. They do not, yet, illustrate with precision where organizational boundaries would and should be drawn. In practice, placing external and internal boundaries is more explicable with reference to a capability approach. When managers are told of transaction costs, they enquire themselves: « what role do firm capabilities play in this arroyo to firm boundaries? » As noted by Barney (1999: 138), when they get the answer: « very little », they are puzzled. Of course, when placing a boundary, managers take into account factors of economic efficiency. But they as well consider other variables, such every bit the control of administrative costs and the bargaining power of unions (Sako, 2006), and yet others, connected to ability, competences and identity (Santos and Eisenhardt, 2005). Confronted with this multifariousness of factors, managers must decide on boundaries in a context of causal ambiguity (Lippman & Rumelt, 1982; Powell & al., 2006). They brilliant together different activities within a same purlieus co-ordinate to similarities, and « yoke » them (Abbott, 1995), creating what Jacobides and Wintertime (2005) call « institutional packages ». They thus try to grouping activities in a package superior to the sum of the activities themselves. In that sense, in line with Richardson's distinction between activities and capabilities, we speak of « adequacy units ». Inside their boundaries, and insofar equally no transaction gives rise to a monetary exchange within the unit, capability units might exist seen as gratis transaction zones (Baldwin, 2008). In other words, transactions operate in an environment of cross-subsidization. The very unit capability, out of market transactions, favors production: « Stable clusters of connections are required for production processes, which is essentially why firms accept boundaries. » (Potts, 2001: 424). Therefore, boundaries are decided upon by managers (the link between organization-boundaries and conclusion has been analysed by Ahrne & Brunsson, 2010). They are defined according to multiple and diverse variables that may human action independently from each other. Hence, a decision nigh purlieus is always subject to discussions and controversies. We can therefore codify a first proposition:

x Proposition ane. At that place is no such thing as a « natural » organizational boundary. Organizational boundaries derive from decisions made by managers and regarding capability units, which are always debatable.

Boundaries of dissimilar kinds tend to pile up and to re produce themselves

xi As outcomes of decisions, boundaries tend to pile up and reproduce themselves. Geographers speak of « intrenchment » or « entrenchment » (Hartshorne, 1936; Minghi, 1963). Within the purlieus of a capability unit of measurement, the technology used can be different from the one used exterior; an identity is shared, and the same categories employed. In the case of science, Gieryn (1999) speaks of a boundary-work relying on expulsion (a work of differentiation from outside), on expansion earlier the boundary is set (trying to develop new activities in the unit), and on the protection of autonomy. This entrenchment has been observed and analyzed by economists at the level of exchange flows within and across boundaries: boundaries reduce these flows (McCallum, 1995; Anderson & Van Wincoop, 2003).

12 Entrenchment has besides to do with the visibility of flows and exchanges (Chevalier, 2004). Inside a capability unit, a tissue of cantankerous-subsidizations is not visible as such, even if actors have an idea of what they are. Every boundary displacement makes them visible, entirely or partly, and is therefore tricky. This is a reason why boundaries tend to exist stable and reproduce themselves.

thirteen Equally Jacobides (2006: 157) rightly noted, incentives tin can exacerbate the problem: decided within existing boundaries, they reinforce parochial, narrow attitudes and amplify compartmentalization.

14 Finally, the asynchrony of multiple decisions fabricated within a adequacy unit is too part of the entrenchment dynamics. The step of technological change is not synchronous with that of staff turnover. When deciding upon a new engineering, one takes into account the inertia affecting other dimensions of the organization and one hesitates to shake existing boundaries. And once a decision has been made apropos technology, information technology has an outcome on subsequent decisions regarding staff and organization. As a consequence, asynchrony of decisions leads to a stabilization of boundaries.

15 Hence proposition 2:

xvi Suggestion 2. Once a decision determining boundaries has been made, boundaries of different kinds (technological, organizational) tend to pile up, become entrenched, and reproduce themselves.

The displacement of boundaries

17 The dynamics of reproduction of boundaries is counterbalanced past a dynamics aiming at displacing them. Technology, organizational activities and capabilities, customers and suppliers are all continuously irresolute. Existing boundaries are progressively deinstitutionalized, i.east. their legitimacy is eroded (Oliver, 1991). A boundary misalignment tin can occur between actors belonging to the same organizational field; some proceed operating at the national level, while others become international actors (Greenwood & Suddaby, 2006). Debates ascend concerning where the boundaries are to be placed in order to define the optimal capability units. A game of strategic interactions develops. Some actors prefer strategies that destabilize existing boundaries; in response, others follow re-stabilizing strategies (Depeyre & Dumez, 2009). The actors that aim at destabilizing existing boundaries can proceed in two different ways, by trying to change either just their own boundaries, or those of the entire industry. In the latter case, they think they are in a position to play an architectural role for the whole industry (Jacobides & Billinger, 2006; Jacobides, Knudsen & Augier, 2006). To do so, they tin can use contest (e.thousand. by entering new markets or acquiring competitors), or cooperation (due east.g. by establishing alliances or joint ventures), or they tin can try to combine competition and cooperation in practicing coopetition (Brandenburger & Nalebuff, 1996; Bengtsson & Kock, 1999; Bengtsson & al., 2010; Depeyre & Dumez, 1010). In response, other actors tin can try to defend established boundaries or readapt them a minima to optimize the existing capability units. In such a game, the external and internal "asset orchestrations" (Helfat, 2007), i.east. the dynamics of internal and external, horizontal and vertical boundaries, are interdependent. The cosmos of an internal vertical boundary can assist establish a horizontal alliance between two firms, ane that is vertically integrated and the other non. In such a case, the cosmos of a vertical purlieus is a condition for the displacement of a horizontal boundary. 1 can thus realize how of import it is to take into account the different kinds of boundaries and their multiple dimensions when analyzing the dynamics of boundaries.

18 Proffer 3. Even when they are entrenched, boundaries remain debatable. When controversies increase, strategies aiming at changing the boundaries develop, and strategies aiming at maintaining them develop in response.

METHODOLOGY

19 The authors of this paper have been working on the Air Traffic Direction industry for twelve years (1998-2010). Their aim has been to sympathise the dynamics of restructuration of the European ATM. They have focused on the strategies of the different actors: European institutions, fellow member states, service providers (be they public endemic or privatized), users (airline companies), technical systems providers, aircraft manufacturers. During the menstruum, documents have been systematically analyzed and interviews have been conducted, as shown in the following nautical chart:

Interviews	1998-2010
International organizations (Eurocontrol, European Commission, European parliament, etc.)	59
National Regulators	xiv
Service providers (controllers, control centers, etc.)	xx
Users (airline companies, airlines associations)	12
Systems suppliers	18
Aircraft Manufacturers	7
Total	130

20 Interviews lasted effectually two hours; they were sometimes extended by the visit of an Air Traffic Control Middle or the operations center of an airline company, for example. The sampling was non conceived as a statistical ane. The aim was saturation in the perspective of grounded theory.

21 Authors also interacted with actors in the industry by taking part in technical and scientific reports for the European Commission and Eurocontrol, equally shown in the following chart:

Studies
European Committee	Study on Economic Regulation of Air Traffic 2001 Management Services
Eurocontrol Experimental Heart Technical and Scientific Written report	Revolutionary versus Evolutionary Strategies: 2002 The Future of Air Traffic Management Service Provision
Eurocontrol Experimental Heart Technical and Scientific Report	Giving Substance to European Functional 2002 Airspace Blocks
European Commission	Study on the Implementation Rules of Eco- 2003 nomic Regulation within The Framework of the Implementation of the Unmarried European Sky
Eurocontrol Experimental Center	Institutional Evolution of Air Traffic Man- 2007 agement: Intergrating the Perspectives on Industrial, Organization, Economics and Law, Institutionalism

22 The scientific approach was abductive (David, 2000), and shut to « systematic combining » (Dubois and Gadde, 2002: 554), « a process where theoretical framework, empirical fieldwork, and example assay evolve simultaneously [...]. » The starting time series of interviews was structured by « orienting theory », which « but tells united states of america in the virtually general terms what data we are likely to need at the point of assay » (Whyte, 1984: 118). The ii elements were those identified by Whyte: « actors and their relationships » and « events », in connectedness with the European Air Traffic Management restructuring process. This kickoff series of interviews (72) was treated in a grounded theory fashion (Locke, 2001; Dumez, 2004). Interviews were coded in a double, independent, style by both authors. The coding allow important themes emerge, like sedimentation of boundaries and cantankerous-subsidization. The example study was redirected (Dubois & Gadde, 2002: 556) in accord.

23 Later, interviews were structured in ii parts. The beginning one remained open, and followed primitive orienting theory (actors, relationships, events of the European ATM industry restructuring process). The second ane was used to test propositions that derived from the coding. Piore (2006) shows that interviews tin can be used to test ideas coming from previous steps of the research development. The aim was to « generate surprises » and to identify « patterns », or what Hedstrøm and Swedberg (1998; see too Depeyre & Dumez, 2007) call « social mechanisms ». These mechanisms were related to the institution and dynamics of boundaries.

24 The newspaper as information technology stands is the issue of « matching », i.e. « going back and forth between framework, data sources, and analysis » (Dubois & Gadde, 2002: 556). This led to the conception of propositions that were discussed throughout the instance report development. Locke (2001) has highlighted the fact that the classic structure of papers (review of literature, presentation of the information, word) does not give a adept business relationship of the way grounded theory and abduction develop. Yin (2003) has in plough suggested that a case study that leads to theoretical propositions tin can be written the other manner around: such rewriting is a good test for the consistency of the fashion the written report was conducted. That is precisely what we did in this paper.

25 The theory of boundaries being the starting point of the writing, a instance-written report approach appears to exist appropriate approach to sympathise the various dimensions of the dynamics of boundaries for three master reasons (Ragin & Becker, 1992; Yin, 2003): first, observed changes are complex, and causal dynamics and the actors' motives are difficult to specify; 2d, the analysis includes an historical dimension; and third, what is looked for is theory development, i.e. a process by which a theoretical framework is discussed through the employ of information and extended by means of such a discussion (Greenwood & Suddaby, 2006). The case is an instrumental one, in the sense of Pale (1994).

26 The choice of the case was directed towards an manufacture rather than towards a unmarried organization. Indeed, merely an industry tin can demonstrate a complete gear up of boundaries of different kinds. Air Traffic Management is especially interesting from this perspective for at last 2 reasons. Starting time, insofar equally national boundaries actually play an important function in ATM, boundaries are not only metaphoric. 2d, the ATM industry exhibits the entire set of boundaries: national, organizational, technical, jurisdictional, symbolic (Beyer, 2008; Dumez & Jeunemaître, 2001; Grushka-Cockayne, De Reyck & Degraeve, 2008).

27 Let united states of america now turn to the presentation of the case.

THE CASE STUDY: BOUNDARIES AND CAPABIL ITY UNITS

28 When commercial aviation was developed, a decision was made at the international level and on the basis of Grotius'due south theory on the liberty of the seas: the sky would exist free; except in time of war or crisis, no country would exist able to prohibit admission or fix a toll. A priori, national boundaries should non play whatsoever role in that manufacture. The Chicago Convention, signed in 1944, establishes yet that each land is in accuse of guaranteeing the prophylactic of the heaven over its territory, specially to avert collisions (Mendes de Leon, 2007). Moreover, each state has the right to let aircraft pay for the cost of this essential service. In the Usa, passengers pay a taxation that is explicitly added to the ticket price. In Europe, airline companies pay route charges calculated on the basis of the weight of the shipping and the route followed. Each country has organized its ain control system. Each has designed a network of beacons that permit pilots and controllers to draw routes and know exactly where the aircraft is at sure times, a radar system that allows controllers to follow the shipping, a telecom system between pilots and controllers, a weather condition data organization, a rescue system for cases of a crash or other problems, and control centers. When an aircraft crosses a national boundary, it more often than not leaves i control system and enters some other. The pilot takes leave of the controller of the country she is leaving and greets that of the state she is entering. Since VHF frequencies are saturated, and since it takes fourth dimension to leave and to indicate entry in a new airspace, national boundaries rarefy flows. The traffic flow is therefore rarefied by boundaries that are in no way natural, but upshot from the organization of capability units decided at the national level.

29 Every bit mentioned before, routes accept been designed through a network of beacons, and sectors have been established on the basis of these routes and their crossings, then as to balance the piece of work of the controllers. When aircraft wing up and down on crossing routes, sectors are small. This is for example the case with the very complicated Chartres sector in French republic: North/South routes cantankerous W/East (transatlantic) routes as aircraft fly down and up approaching or leaving the Paris airports. When aircraft follow simple routes at high altitude, sectors tin be much wider. At dark, when the traffic is low-cal, unlike sectors might exist regrouped. During the solar day, they are progressively degrouped as the traffic increases. Sectors cannot be besides minor. As already observed, when an shipping leaves a sector, it must betoken that to the respective controller, and it must signal its entry to the controller of the new sector. That takes time. The sector is thus the basic capability unit and the boundaries separating these units rarefy flows and operate as a constraint for the growth of traffic.

xxx Sectors are managed at the level of a command eye for the management of both human being resources (controllers work in teams) and technical resource (maintenance of computer systems). When centers are big, they are usually divided into 2 rooms. Small countries have set upwardly one control center, large countries several. A few centers could probably manage the entire European upper airspace and be footloose (a middle set up in Republic of ireland could manage the German airspace). Large countries, however, take chosen to build several centers in the interest of safety. Indeed, if one eye shuts downwards for a technical reason or because of a controllers' strike, some other one can manage at least office of the traffic. What Americans phone call « pork butt » issues take besides played a role, since local politicians take strongly lobbied to have and continue centers in their expanse. Boundaries take besides been superposed and entrenched because of public procurement: each country has defined its own requirements for the technological system information technology needed, and has acquired or developed information technology for its centers. These systems take to compute the flying data in guild to back up the controllers' work.

31 Each airline visitor announces its flight plans. Flying plans are then analyzed by the arrangement, which must exist able to forecast when a flying will enter a sector at a certain altitude, ascending or descending. Systems include a safety net whereby the risk of collision betwixt two flights is signaled to the controller. France, for example, has developed its own organisation with teams of engineers who vest to the national administration. At the same time, Thales, a French firm, adult a system for other countries (Danemark, Eire, Sweden). A specific system being developed for each country, interoperability in Europe has been a big problem, dealt with by Eurocontrol and the European Committee and so that the boundaries between systems do non excessively rarefy flows (Dumez & Jeunemaître, 2001).

32 To sum up, the Air Traffic Direction industry cumulates boundaries. At the lowest level, the smallest capability unit, boundaries divide the sectors controllers are in charge of. And then there are the boundaries that ascertain control centers and yoke a series of sectors, each with its teams of controllers and maintenance. Since, with very few exceptions, sectors are divers and control centers built at the national level, national boundaries superpose themselves to those of sectors, while at the same time determining them. Public procurement of technical systems and the recruitment of controllers are decided asynchronously on a national ground and thus reinforce the entrenchment of boundaries on a national basis.

THE Contend About THE BOUNDARIES

33 At the end of the 1990s, the deregulation of commercial aviation and the development of the hubs and spokes system induced a traffic growth and the ATM organization reached a state of saturation; flying delays exploded and their price increased considerably. Airline companies tried to contain their costs and asked for a decrease in road charges. The ensuing argue concerned the arrangement of capability units and the fragmentation of the European ATM. Equally stated in the theoretical section, organizational boundaries are primarily capability unit of measurement boundaries. They are determined through a balancing betwixt economies of scale and scope, on the one hand, and diseconomies (costs of control, safety, etc.) on the other. This is confirmed by our example report. As regards for case the engineering, information technology is clearly sub-optimal that each country asks for the development of a specific system (or, like France, develops its own). At the same fourth dimension, the development of a unique system at the European level entails a risk. The optimal situation would probably be a contest between a maximum of two or three systems. The same could be said of the route design and the setting upward of control centers at a national level. The probability for that level to provide the optimal balancing of economies and diseconomies is low. A comparison with the United States is always difficult, simply gives nevertheless a broad idea: the traffic there is far college than in Europe, still the number of control centers is far lower, and the cost of a controlled flight hour is 62% junior to that in Europe. For historical reasons, national boundaries as sedimentation of political, organizational and technological boundaries accept been entrenched around sectors and command centers. Although the optimum cannot be adamant with precision, the capability units are clearly sub-optimal.

34 This entrenchment has as well to do with the visibilization and opacification of fiscal flows (cantankerous-subsidization inside the boundaries). Organizational boundaries opacify some money transfers (within boundaries, some activities invisibly finance others), while at the boundary itself flows are made visible [2]. Cross-subsidization is the 2nd chemical element of the economics of boundaries, the first existence the design of capability units. Innovation can be promoted by a certain opacity of the financial transfers betwixt traditional and new activities within a capability unit, but cross-subsidization can besides strongly inhibit modify. In the ATM industry, the same organization (the national service provider) ordinarily manages upper and lower airspace. Information technology would, however, be more than efficient to specialize control centers for the upper and the lower airspace, and to reduce the number of control centers managing the upper airspace (one or two big centers could probably suffice for the whole European upper airspace).

35 Controlling the upper airspace is far less costly than controlling the lower 1. Thus, when Denmark, Republic of finland, Kingdom of norway and Sweden decided to explore the cosmos of a private visitor to manage a mutual center to command their merged upper airspace, it turned out that its cost would be substantially inferior to that of centers specialized in lower airspace control. The new purlieus stemming from the creation of the private company would have prohibited the cross-subsidization of lower airspace control by upper airspace command. The « yoking » (Abbott, 1995) of both controls in the same organization conceals the cross-subsidization. The same phenomenon is mutual in Europe. The flights past American airlines over Europe in the upper airspace without landing there partly cross-subsidize the control of lower airspace used by European airlines. Cross-subsidization induced past existing boundaries is a factor of stability. Hence, as before long as a boundary is discussed, the actors benefiting from the cross-subsidization mobilize themselves in order to maintain the status quo. In contrast, other actors tin can at the same time have a directly interest in change.

THE DYNAMICS OF BOUNDARIES

36 Some actors attempt to change boundaries when they think new ones would be more efficient. In the ATM industry, two actors, Boeing and the European Commission, attempted to play an architectural role.

37 Since the 1990s, Boeing has been exploring the systems that could be integrated in the cockpits to improve ATM. At present, ATM is not an industry Boeing is part of, except in connection with the embarked systems, which constitute their only common boundary. Boeing's trouble is to sell aircraft, and ATM can be a bottleneck for this activeness. The diagnosis made by Boeing is that actors within the industry are not able to innovate radically, fifty-fifty though radical innovation is what is needed. Suppliers of systems and hardware such equally radars and command centers (eastward.yard. Lockheed Martin, Thales or Raytheon) try to sell the systems they have on the shelf, and are reluctant to piece of work on a radical innovation which, for example, would be based on the massive utilize of satellite technology. In other words, the actors in the industry are locked in entrenched boundaries, and tend to consider the future with the eyes of the past. Only an external actor – an outsider – can help introduce new solutions. As one such thespian, Boeing has stressed two dimensions: technological and operational boundaries and organizational boundaries. Concerning the former, it considers that sectors represent the main bottleneck. Thus, Boeing's engineers accept been working on the concept of a « seamless space » that would break down the boundaries. Apropos the latter, organizational dimension, Boeing has tried to group all the actors of the industry to ascertain the requirements of the needed technological and operational system. Information technology created a Working Together Team (WTT) [3] with the goal of spanning present boundaries between shipping manufactures, service providers, systems suppliers, controllers, and airlines. Boeing had in listen non only the American, merely likewise the European state of affairs: aircraft wing over both continents and the embarked systems and procedures had to be the same on both sides of the Atlantic. European actors like Eurocontrol or Thales took role in the WTT.

38 Two points must be highlighted in this connection. Boeing introduced itself as an outsider operating outside the traditional boundaries defining the manufacture, and therefore in a position to redesign more efficiently these boundaries. To the extent that it does not compete with the actors of the manufacture, it tin can stimulate amidst them the cooperation that is needed. Nevertheless, the projection failed and, in 2004, Boeing airtight down the ATM subsidiary it had gear up iv years before (half of the engineers were still appointed to Boeing's R&D unit, Phantom Works, and went on working on ATM, as if Boeing had become a semi-dormant company in the manufacture).

39 The European Commission is the other actor that has been trying to play an architectural role in the industry, by attempting to change the existing boundaries. The official role of the Commission is to excogitate and advise integrative policies between the Union member states. The Commission took an initiative for the ATM in 2000 with the Unmarried European Sky. At the time the project was launched, competition was identified equally the main factor for changing boundaries. The idea was to describe a separation between the upper airspace and the lower airspace, and to merge all national upper airspace into a unmarried European one. And so a competitive bid would have been organized for the service provision in this unique upper airspace. At that place would not accept been competition in the market place (since it is not thinkable that an aircraft could choose betwixt 2 air traffic command systems), but rather competition for the market (the contract would be awarded to the service provider that made the best offer according to specified requirements, and the provider would be given a monopoly position for a limited period of time). Progressively, the approach evolved, and cooperation supplanted competition.

40 One of the Single European Sky elements focused on interoperability, to make certain that the different systems used in Europe could communicate with each other. Another element created the concept of Functional Airspace Blocks (FABs), aimed at promoting cooperation between countries in order to define capability units spanning boundaries. Great britain and Eire, France and Switzerland, Spain and Portugal, for example, have entered into talks to create such blocks.

41 Thus, an actor that plays an architectural part, the European Commission (jointly with the Council and Parliament) created a framework to make possible the transformation of boundaries. Subsequently, actors belonging to the industry developed cooperative strategies that effectively modified the boundaries. These strategies have been offensive and defensive. For instance, when Kingdom of denmark, Finland, Norway and Sweden tried to elaborate a joint project, they did and then feeling threatened past the offensive projects of the German service provider. Similarly, controllers themselves take presented a projection called MOSAIC, which groups different service providers in key Europe (Benelux, France, Germany), with the goal of responding to the threat of privatization or of group by pairs. In short, cooperative projects are stimulated by a climate of actual or potential competition.

DISCUSSION

42 The present discussion will be structured in two parts. First, we will return to the three propositions. Second, we will present 4 methodological principles for the study of organizational boundaries.

43 The commencement proposition states that organizational boundaries are never "natural", but that they are determined by decisions that take into account transaction costs, and economies of scale and scope on the one hand, and, on the other hand, diseconomies of different kinds, non economical factors such as power or identity, also every bit the benefits and costs of opacity and transparency in designing the best practical capability unit. Our case study substantiates such proposition. The displacement of boundaries in the ATM manufacture with the goal of widening the scope of the adequacy units conspicuously seems to improve the functioning of the manufacture, inducing economies in maintenance and the evolution of large technological systems, every bit well every bit a better operational efficiency.

44 In practice, however, the optimum in placing the boundaries is difficult to make up one's mind. This difficulty illustrates the notion of causal ambiguity developed past Resource-Based View theorists (Barney, 1999). Should Europe get in the management of a unique service provider, akin to the Federal Aviation Authority in the Unites States ATM system? Or should it include a few big service providers that would both compete and cooperate with each other? In the absenteeism of a "natural" path to follow, decisions take to exist made in order to restructure the manufacture.

45 According to the 2d proffer, once the decisions take been made, boundaries tend to sediment and become entrenched. This phenomenon tin be explained by the multiple dimensions of the activities and dimensions involved (technological, organizational, relational, and so forth), combined with the asynchrony of the decisions related to them. The fact that the French and the German air traffic controls decided to develop a new technological arrangement at dissimilar times reinforced the purlieus separating the two capability units. As boundaries are not natural and tend to exist entrenched, they are debatable and even controversial. This tin lead to a alter in boundaries (3rd proposition). Periodically, controversies become increasingly intense. Regarding the European ATM, the stop of the 1990s was such a period because of a growing number of delayed flights. A alter in the status of some actors (every bit when DFS in Federal republic of germany, NATS in the United Kingdom, and Swisscontrol in Switzerland were corporatized or privatized; Push button & McDougall, 2006) triggered a shift in symbolic boundaries (Lamont et Molnar, 2002). Other actors (Boeing, the European Commission) thought they could play an architectural role; such a role consisted partly in irresolute their own boundaries, simply more securely in defining a framework that would allow other actors in the industry to transform theirs.

46 Our analysis does not event in a general theory of boundaries. Rather, it leads to the formulation of 3 propositions, which are (in line with our abductive approach) at the same fourth dimension a result and a starting betoken for new studies. Four methodological principles can be formulated to conduct new research programmes on organizational boundaries.

When analyzing boundaries, all types have to be taken into business relationship.

47 Araujo, Dubois & Gadde (2003) or de Santos and Eisenhardt (2005) give precious insights on boundaries but they focus on only one type. They thus cannot demonstrate how boundaries can transform themselves in dynamics. For case, the French ATM organization is vertically integrated, with a unit of engineers specialized in designing and building technological systems for France. If a vertical boundary is established (by transforming this unit into a subsidiary), the vertical internal purlieus would hands go an external 1 (if the subsidiary is eventually sold to a private firm such as Thales or Lockheed Martin). If the unit is maintained relatively autonomous after the conquering by a private house, the boundary becomes an horizontal internal one. When studying boundaries, it is necessary to examine various types at the same time: internal and external, horizontal and vertical, technical and symbolic.

When analyzing the dynamics of boundaries, the coo petitive dimension must exist taken into account.

48 Our case report illustrates the fact that the study of the dynamics of boundaries must exist put in relation with the literature on coopetition (Yami, Castaldo, Dagnino & Le Roy, 2010), since the dynamics of boundaries entails complex combinations of cooperation and competition. In our case, the European Commission evolved from a competitive approach to a cooperative one. At the very beginning, the idea was to promote competition between national service providers to brand the boundaries modify more than efficiently. Afterward, cooperation was favored in the form of interoperability of technical systems, and of FABs for the operational dimension. In fact, the Commission used a coopetitive approach; cooperation amongst small players, small and big players, and big players develops in a climate of potential competition. It is because competition looks credible in the future that cooperation develops. And the development of cooperation can be a precondition of the development of competition.

49 At the organizational level, moving a boundary tin can favor cooperation and competition. The privatization of public organizations has ofttimes led to this kind of evolution: erstwhile internal units have been vertically separated, and have experienced competition subsequently (Cox, Harris & Parker, 1999). The creation of a vertical separation can too accept an impact on horizontal boundaries, and make alliances possible. If, for example, the French ATM wants to enter into an alliance with its German counterpart, its vertically integrated structure is an obstacle, every bit the French technological system is designed by teams belonging to the French arrangement, while the High german organization turns to the marketplace to larn its own system. The cosmos of a vertical boundary inside the French organisation makes the alliance easier, since the institution of such boundaries tin favor the abolition of horizontal ones.

When analyzing boundaries, two dimensions are im portant: the rarefaction of flows (financial, informa tional, cloth, etc.) and their visibilization.

fifty Inside boundaries, flows are invisible. They become visible when they cross boundaries and when transactions occur (as seen by Baldwin, 2008). Within boundaries, cross-subsidization is general (Chevalier, 2004). Every establishment or displacement of a boundary visibilizes certain flows and opacifies others. In our example, the condition for the Europeanization of the sky would exist the institution of a boundary separating the upper and the lower airspace. This separation would brand visible the current cantankerous-subsidization between both, a situation in which flights in the upper airspace finance landings and accept-offs.

When analyzing boundaries, the asynchrony of deci sions must be taken into account.

51 Inside organizations, which are divers by their boundaries, numerous types of decisions are made, and they are related to many dimensions. Each type of decision has its ain clock. And clockspeeds (Fine, 1998) are unlike. Existing boundaries constitue a frame for decision-making and, in render, the asynchrony of the decisions reinforces existing boundaries. In order to alter boundaries, decisions must be resynchronized. This resynchronization power is one dimension of the architectural ability of some actors (Jacobides & Billinger, 2006; Jacobides, Knudsen & Augier, 2006). Our case illustrates that betoken. In 2004, the Single European Sky was adopted for four years, and was assessed in 2008, at the end of this period. A new pace (Unmarried European Sky 2) was voted in 2009, and will be assessed in 2013. Actors are obliged to elaborate their decisions within this synchronized framework. The European Commission has launched in parallel a project, SESAR, which prepares the technological shift twenty years ahead (a very similar project to the one Boeing was working on between 2001 and 2004; not surprisingly, Boeing'due south teams of Phanton Works have got contracts with SESAR). Such long term horizon is a means to brand boundaries evolve.

52 The chart below presents the methodology proposed to analyze the dynamics of boundaries:

Determining the adequacy units Dynamics of boundary stabilization Dynamics of purlieus change

Economic analysis Decision sedimentation asynchrony controversies Architectural actors Actors of the industry

Economies of scale and telescopic, diseconomies Visibilization/opacification of the flows and exchanges (especially fiscal) A hierarchical role player determines the perimeter of the capa bility unit in a context of causal ambiguity, taking also into business relationship non economical factors Sedimentation of unlike kinds of boundaries Asynchrony of the decisions affecting the multiple dimen sions of boundaries (technology, human resources, etc.) Beingness not « natural », boundaries are debatable Strategy of imposed synchrony and of designing coopetition Coopetitive game and redesigning of the capability units

Decision

53 Our case study has shown how fruitful it is to analyze dissimilar types of boundaries (internal, external, horizontal, vertical) and their different dimensions (technology, system, etc.) in a synoptic way.

54 We would beginning like to highlight some notions our analysis of boundaries has put forth. The concept of capability unit is related to the thought that there are no such things equally « natural » boundaries that could be determined, for example, by transaction costs or economies of scale and scope. When managers identify an internal or an external boundary, they think of a capability, and this is done in a context of causal ambiguity. Boundaries are the object of a decision, and are as such always debatable and debated. Moreover, they induce a rarefaction of the flows (financial, informational, and others), and the intensity of this rarefaction can itself evolve over time. Once determined, the boundaries tend to sediment and become entrenched. In that process, they asynchrony of decisions made in multiple dimensions (touching for example on technology, human resources, or the arrangement of sub-activities) plays a central role. As the surround evolves, controversies concerning the perimeter of the capability units may intensify, and some actors may develop strategies aimed at changing the boundaries. These strategies may pertain to the boundaries of a few capability units, or to a big fix of boundaries. In the latter instance, the strategy for transforming boundaries may exist described equally "architectural, " and is developed by an actor with a particular status. Such an actor, for example Boeing, belongs simultaneously to several organizational fields, and is non constrained by the same symbolic boundaries as the actors only belonging to one field. The architectural strategy entails a will to impose synchrony to other actors in the industry. The dynamics of displacing the boundaries relies on 2 processes, competition and cooperation, that may come up together in a coopetitive arroyo.

55 The chart above illustrates these dissimilar points.

56 In our view, the case of the European ATM industry shows the necessity of considering an extended set up of boundaries (external, internal, horizontal, vertical, symbolic), as well every bit their dynamics (e.1000. a vertical internal boundary may become an external i, thus allowing for a modification of horizontal boundaries). The richness of the instance satisfies the condition of "conceptual variety" (Weick, 2007). Yet information technology also presents some limitations. One of them is the absence of price competition in the industry, which prevents usa from more fully examining the usual link betwixt the market and the boundaries. Some other is the fact that ATM is a network manufacture where capability units are deeply interdependent. The boundary result is partly adamant by these item features of the case, and any generalization has to be made with circumspection. Other studies are therefore required to test and enrich the approach (multidimensional and dynamic). In particular, situations in which a capability unit of measurement is designed should be studied with an ethnographic methodology. This methodology would throw light on the processes through which managers ascertain the boundaries of capability units in a context of causal ambivalence, and would thereby help elucidate and flesh out the tertiary proposition, according to which, even when entrenched, boundaries remain debatable, and implicated in strategies aimed at changing and maintaining them.

Notes

• [1]

  This paper has benefited from discussions within an Aegis Group on organizational boundaries. Nosotros thank the members of the group for their stimulating comments. A previous version of this newspaper was presented at the Cristo (now PACTE), Grenoble. We also give thanks the two bearding reviewers. Lastly, we thank Eurocontrol for its support.

• [2]

  « Bookkeeping is an attribute of all legal, formal organizations and the organizations' accounts maintain boundaries by measuring financial flows across these boundaries and by establishing which resources do or practise not vest to the organization. » (Brunsson, 2006, p. 18)

• [iii]

  This form of system had been used to develop the 777, one of the biggest successes in the history of the commercial aviation. The Working Together Team grouped the customers, Boeing's engineers and the future suppliers, and mobilized computer aided pattern (Benson 1994; 1995; 1996).

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