A Decision Model for Configuration of Firm Boundaries in the Network Economy

Advances in telecommunications and E-business technologies are enabling rapidly changing firm boundaries and large-scale reorganization of business processes. Business processes consist increasingly of information that is, or can be, digitized and transmitted from and to virtually anywhere in the world. Thus, the procedural and geographical barriers to outsourcing of business processes have been substantially reduced, if not eliminated. This reengineering of the business processes is enabling the reorganization of the corporation and its business model, and may eventually help realize the virtual enterprise. However, there are barriers to proper analysis of the business process outsourcing decision. These barriers include transaction cost, opportunistic behavior (risk), and sunk costs considerations. Addressing these inherent barriers, this paper proposes a bias-free reengineering tool to aid in E-business process outsourcing decisions