Firm Boundaries

Firm boundaries refer to the limits a company sets around its activities, resources, and decision-making processes to determine what tasks it handles internally and what it outsources or collaborates on. These boundaries help a firm decide which functions, such as manufacturing, customer service, or research, are kept in-house and which are contracted out to external organizations. Clear boundaries enable a company to operate efficiently, manage risks, control quality, and focus on its core competencies while leveraging external expertise when appropriate.