Time for a New View? The view on firm boundaries within the context of IoT

Abstract: Master Thesis in Innovation and Industrial Management, University of Gothenburg – School of Business, Economics and Law, Spring Term 2016 Authors: Amanda Thielemann & Johanna Ojala Supervisor: Johan Brink Title: Time for a new view? The view on firm boundaries within the context of IoT. Background and problem: Transformation driven by Internet-of-things (‘IoT’) is dramatically changing the prerequisites for business strategy and competition. The decision on what to makeor- buy, i.e. where to put firm boundaries, is being reviewed as a result. Existing, grounded theories on firm boundaries; the transaction-cost-economics, the resource-based view and collaborative view(s), stem from a time of more stability than the dynamic environment IoT creates. Hence, it becomes questionable whether firms can base their make-or-buy decisions in such theories today, when set in the context of IoT. Purpose: The purpose of this study is to investigate how well existing theories can explain firm boundaries within the context of IoT, or if new or modified explanations are needed. The purpose will be fulfilled through answering the following research question: How well can traditional theories on firm boundaries explain how firms view their boundaries within the context of IoT-driven transformation? Method: The explorative purpose of this study will be fulfilled through a qualitative research strategy, with a cross-industry, multiple case-study design, based on semi-structured interviews with seven large, established companies. The sample includes Swedish companies that were selected based on their size, maturity and industry. Research implications: The study presents the existing firm boundary theories lack of explanatory power when set in the context of IoT. The collaborative view(s), where increased emphasis is put on the firm ecosystem, has proven the most helpful, but with some modifications needed. In addition, the results have given indications toward a new theory on firm boundaries and a push toward further research in the area. Practical implications: First, companies are recommended to establish a questioning attitude toward their previous focus (core) and challenge their previous view on boundaries as well as industrial boundaries when set in the context of IoT. Companies should take a more outside-in approach, where external actors are viewed as a source of competitive advantage and considered to a greater extent within make-or-buy decisions when trying out new IoT-related solutions.