Explaining Organisational Boundaries with Complexity and Dynamics

This paper extends D’Aveni’s hypercompetition concept based on the core competencies’ approachby means of the addition of an institutional economic explanation. In this process it is demonstratedthat the hypercompetitive conduct of economic protagonists in addition to the core competenceapproach can be explained by means of the differing levels of markedness of the contingency factors ofdynamics and complexity. The transmission of the markedness of environmental variables to the twoprevailing alternative forms of conduct in the area of hypercompetition – indirect, cooperative, marketbasedand direct, hierarchical confrontational coordination – occurs whilst reverting to institutional economics(property rights approach, transaction costs theory and their dynamic extension by Langlois &Robertson). The aforementioned three approaches shall be inspected as to whether they provide an authoritativebasis for assessing conduct under the premise based on D’Aveni’s concept of hypercompetitionthat dynamics and complexity are (increasingly) marked in a horizontal direction and(increasingly) less marked in a vertical direction. The analyses demonstrate that the contrary markednessor development of dynamics and complexity lead to equally contrary statements per indirect, cooperativemarket-based or direct, hierarchical confrontational behaviour in a horizontal and verticaldirection: companies shall tend to expand in a horizontal direction and concentrate vertically.