Skip to Main Content
HBS Home
  • About
  • Academic Programs
  • Alumni
  • Faculty & Research
  • Baker Library
  • Giving
  • Harvard Business Review
  • Initiatives
  • News
  • Recruit
  • Map / Directions
Faculty & Research
  • Faculty
  • Research
  • Featured Topics
  • Academic Units
  • …→
  • Harvard Business School→
  • Faculty & Research→
Publications
Publications
  • 2020
  • Working Paper
  • HBS Working Paper Series

Come Together: Firm Boundaries and Delegation

By: Laura Alfaro
  • Format:Print
  • | Language:English
  • | Pages:68
ShareBar

Abstract

We develop an incomplete-contracts model to jointly study firm boundaries and the allocation of decision rights within them. Integration has an option value: it gives firm owners authority to delegate or centralize decision rights, depending on who can best solve problems that may arise in the course of course of an uncertain production process. To examine the evidence, we construct measures of vertical integration and delegation for thousands of firms in different countries and industries. In line with the model’s predictions, we find that input value and supplier uncertainty play a key role in shaping both integration and delegation choices.

Keywords

Integration; Delegation; Uncertainty; Real Options; Supply Assurance

Citation

Alfaro, Laura. "Come Together: Firm Boundaries and Delegation." Harvard Business School Working Paper, No. 21-050, October 2020.

About The Author

Laura Alfaro

General Management
→More Publications

More from the Author

    • 2022
    • Faculty Research

    Distributional Consequences of Monetary Policy Across Races: Evidence from the U.S. Credit Register

    By: Laura Alfaro, Ester Faia and Camelia Minoiu
    • AEA Papers and Proceedings

    Undisclosed Debt Sustainability

    By: Laura Alfaro and Fabio Kanczuk
    • March 2022 (Revised March 2022)
    • Faculty Research

    El Salvador: Launching Bitcoin as Legal Tender

    By: Laura Alfaro, Carla Larangeira and Ruth Costas
More from the Author
  • Distributional Consequences of Monetary Policy Across Races: Evidence from the U.S. Credit Register By: Laura Alfaro, Ester Faia and Camelia Minoiu
  • Undisclosed Debt Sustainability By: Laura Alfaro and Fabio Kanczuk
  • El Salvador: Launching Bitcoin as Legal Tender By: Laura Alfaro, Carla Larangeira and Ruth Costas
ǁ
Campus Map
Harvard Business School
Soldiers Field
Boston, MA 02163
→Map & Directions
→More Contact Information
  • Make a Gift
  • Site Map
  • Jobs
  • Harvard University
  • Trademarks
  • Policies
  • Accessibility
  • Digital Accessibility
Copyright © President & Fellows of Harvard College