[DSRP Evidence](https://dsrpevidence.org/)

# Boundary choice interdependency: evidence from the construction industry

## Details

**Authors** Brahm, Francisco and Tarziján, Jorge

**Year** 2013

**Publisher** Industrial and Corporate Change

**Kind of work** article

**Discipline** Business & Management

**Secondary disciplines** Economics

**Applied** false

[Read it at the publisher](https://doi.org/10.1093/icc/dts038) 
10.1093/icc/dts038

## In authors' words

### What they set out to do (purpose)

To test whether a firm's decisions about where its boundaries lie in different stages of production depend on one another, as the theory of the firm holds.

### Who or what was studied (sample)

About 59% of construction projects in the Chilean housing sector, 2005 to 2009.

### How they did it (methods)

Econometric analysis of joint boundary choices (design, development and construction) across projects. Details not read.

### What they found (results)

Integrating design with construction raises the likelihood of integrating development (ownership) with construction, and the reverse also holds. The effect is large. Of three candidate mechanisms (coordination, transaction hazard, production), the production effect is the most important, driven by aligning investment incentives so firms can develop capabilities together.

## Commentary

### In short

Using data on Chilean housing projects, the study shows that a firm's decisions about which stages of a project to perform in-house are linked rather than independent, mainly because integration aligns incentives to build capabilities.

### Response

The finding bears on distinctions (the firm/market boundary drawn at each stage), systems (a project as a whole made of stages, with the firm's scope as a grouping of parts) and relationships (one boundary decision conditioning another). The fit is fairly direct for the claim that boundary choices are mutually dependent. It is weaker for perspectives, which the study does not address. Only the abstract and landing pages were read, and the authors' name is given as initials on the sources consulted.

**Patterns it shows** D, S, R

Shows the structure is there

**Added** 2026-10-22

**How to cite this** Brahm, Francisco and Tarziján, Jorge (2013). Boundary choice interdependency: evidence from the construction industry. Industrial and Corporate Change.