The determinants of the vertical boundaries of the construction firm

In the last few years, transaction cost economics has become a popular theory within the construction research community. This approach has been singularly applied as a means to explain and predict phenomena concerning the construction firm, including its vertical boundaries. However, this is at a time when the chief proponents of transaction costs are urging researchers to take a pluralistic stance in relation to the theory of the firm. The aim of this paper is to develop a pluralistic approach to the vertical boundaries of the construction firm. In order to achieve this, an integrative framework is described, based on the development of the efficient boundaries problem and the capabilities approach to vertical integration. Specifically, this framework draws on the complementary strengths of transaction cost economics and the resource-based view. It is concluded that the potential relative merits of theoretical pluralism, in terms of the vertical boundaries of the construction firm, are sufficient grounds to motivate empirical testing of the predictions associated with the integrative framework of vertical integration presented.