Divide and rule : firm boundaries in the aircraft engine industry.
This thesis investigates the changing boundaries of the firm. Drawing on a study of the
aircraft engine industry, it explores the managerial choices faced by firms in the
development of complex products. The thesis builds on the literature on the resourcebased
view of the firm, and studies on inter-firm division of labour. It integrates
comparative quantitative analysis and case study methods.
The thesis shows that despite the increasing use of collaborative agreements, aircraft
engine manufacturers maintain a broad and deep set of in-house technological
capabilities. Collaborative agreements are used to complement in-house technological
capabilities and as a means to maintain systems integration capabilities. The thesis also
shows that the aircraft engine industry is characterised by (a) increasing product
modularization, often entailing a greater division of labour across firms at the product
level, and (b) active co-ordination by engine manufacturers at the technological level.
These two phenomena demonstrate that the technological boundaries of the firm differ
fundamentally from the boundaries of the firm as defined by make-buy decisions.
Outsourcing of components does not necessarily entail outsourcing technologies.
These findings challenge current managerial prescriptions that suggest that firms should
focus on a few technological capabilities. They also challenge the literature that argues
that modularity should inform product design as well as firms' technology bases.
The thesis proposes a framework to analyse the boundaries of firms developing
complex products. Focusing on their role as systems integrators, it identifies two key
dimensions of systems integration: synchronic and diachronic. Synchronic systems
integration refers to the range of in-house technological capabilities of engine
manufacturers required to set the concept design, decompose it, co-ordinate the network
of suppliers, and re-compose the engine within a given product architecture.
Diachronic systems integration refers to engine manufacturers' capabilities to envisage
different paths of product architectures to meet evolving customer and regulatory