Organisations Are Defined By Boundaries Commerce Essay


Generally, when people are talking about boundaries, whether it is about interpersonal boundaries or boundaries at work, sometimes it can be difficult to clearly understand the concept as it is not a tangible thing. In other words, boundaries are something that we cannot see or touch (Heracleous, 2004). However, just as it is a intangible factor, it neither means that it does not exist nor it is unimportant. Boundaries come into places when an employee or a department interfaces with another employee or department (Lamont & Molnar, 2002). A general definition of a boundary is a concept which tells people to realise where their responsibilities or rights end and where another person's responsibilities or rights starts. Boundaries exist when people are talking about separating space, setting limits, defining appropriate behaviour, or building up a sense of autonomy etc. In such cases, people are actually talking about boundaries (Glucksmann, 2005). Therefore, boundaries are often used to distance or distinguish different things from each other. However, for business firms, organisational boundary is closely associated with forming the firms' organisational structures (Aldrich & Herker, 1977). It is a concept that has been receiving more and more attentions in the business world. Traditionally, as the given question stated, many organisations are defined by their organisational boundaries in order to define their ways of operations, culture, and organisational structures (Elias & Scotson, 1994). Many theories about organisational boundaries have been developed ever since, including the four types of boundaries suggested by Ashkenas et al (2002). However, because the concept of organisational boundaries received more interest and along with the rapid development in the subject of social science, it has attracted renewed interest from academics and the public. The term of Boundaryless Organisations has been encouraged by the researchers and academic authors. They provided arguments which support the idea of boundaryless organisations will enjoy the benefit of business efficiency and effectiveness (Ashkenas, et al, 2002). Therefore, this essay will firstly discuss the four types of boundaries suggested by Ashkenas et al (2002) and why these boundaries are important for modern businesses. This is followed by discussion of the boundaryless organisations. Why the interest of organisational boundary has been renewed and why it is encouraged by the academics. Finally, a conclusion to the original question will be made.

Organisations are Defined by Boundaries

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Four Types of Organisational Boundaries

Organisational boundaries have always been existed in the business environment, and have been used by firms for different purposes. They will also continue to exist in organisations. These boundaries can be set between functions so that employees understand their responsibilities and focus on particular tasks; they can also be placed between management and employees so that people realise the right and influences of different levels of authority (Bowker & Star, 2000). What is more, as suggested by Ashkenas et al (2002), boundaries also exist between people who play different roles in a operation process, such as between employees, end customers, suppliers and other third parties that are involved. Also, if people are facing geographical difference, then they will be working in different time zones and under different working conditions and cultures, thus more boundaries are likely to be created. The ultimate goal of having organisational boundaries in a business is to creating organisational rules and environments which can separate employees, functions, and operations in a way that improves the organisation's performance (Ashkenas, et al, 2002). In other words, organisational boundaries allow people to focus on their specialised areas and make necessary distinctions. Thus organisations may end up in chaos, which is not a desirable thing (Hernes, 2003). Ashkenas et al (2002) has suggested that there are four basic types of boundaries which have been used by most of the organisations.

Firstly, there are vertical boundaries. By setting vertical boundaries, an organisation will create different internal layers within the business. Things like rooms, floors and ceiling will make people aware of different level of status, authority, responsibility, right and privilege etc. In other words, it will create a hierarchical structure for the business (Ashkenas et al, 2002). Usually, members belong to the top layer of the hierarchy have the most power to control and manager the members belong to the lower layers. The more middle layers the organisations have between the top and bottom layer, the organisation's vertical boundary is more intensive. Often, a person's level of authority can be presented by their title and ranks (Marchington et al, 2005). The Albert Sloman Library of the University of Essex's vertical boundaries can be a good example, which can be illustrated as figure 1. As it shows, there is a clear presentation of vertical boundaries between these employees with different level of power and authority.

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Figure 1, Vertical Boundaries of Albert Sloman Library

(Source: Albert Sloman Library, the University of Essex website)

Secondly, horizontal boundaries also exist. They are boundaries between people at the same level of the hierarchy, but are given different responsibilities and daily tasks. As explained by Ashkenas et al (2002, p10): "If vertical boundaries are floors and ceilings, horizontal boundaries are walls between rooms." The purpose of setting horizontal boundaries is to manage possible conflict between employees' specialised areas. Often in an organisation, people are giving different tasks across in the same department but no one is in charge of each other. Again, take ASL of the University of Essex as an example, Sandra Deroy and Claire Cannings are both under the title of Principle Library Assistant, they both have the same level of power and authority. However, Sandra's daily task is to find obscure publications, whereas Claire is required to perform cataloguing each day. One thing that needs to be pointed out is even they are giving different tasks, they both contribute to the overall goal of the library - improve the library's efficiency (Source: Albert Sloman Library, the University of Essex website).

The third type of boundary suggested by Ashkenas et al (2002) is called external boundaries. These boundaries are used by organisations to distinguish between internal business and the external world - often refers to suppliers, customers and other third parties such as accounting agencies and government agencies etc. Traditionally, many organisations set clear external boundaries by applying legal , visual or psychological factors. Such as internal worker uniforms, identifications signs, entrance permission and so on. In some cases, such external boundaries will make employees feel they belong as a bundle and become more committed to their jobs. On the other hand, it could be harmful to the business as it pushes outsiders away and reduce the level of communication with some stakeholders, who also have interests in the business and are engaged to make contributions (Araujo et al, 2003).

Finally, there are geographic boundaries. These boundaries exist when organisations have different brunches at different places or are operating in different markets. Geographic boundaries sometimes could be unavoidable due to factors such as different cultures across countries or logistics issues. However, due to the rapid development of information technology and transportation, the level of geographic boundaries has been gradually reduced (Ashkenas et al, 2002).

Why Boundaries are important

During the 20th century, many organisations enjoyed rapid growths and their business structures and strategies started to become more complicated due to massive capital investment and production were involved. Many organisations aimed at further expansion in order to gain more competitive advantages such as economies of scale and increasing the marginal profits (Santos & Eisenhardt, 2005). With this goal, organisations looked for ways to better manage their human resources and capitals. In order to do this, organisations separated tasks and required each employee to accomplish a piece of work which contributes to the final goal. Therefore, everyone knew what they needed to do and level of power and authority was clearly defined - a hierarchy with different layers was built (Marchington et al, 2005). When the organisations started running, each member of the organisation is like different pieces of parts who do their own things but together drive the big wheel rolling. Furthermore, because employees are required to focus on specific tasks, they gain great experience and will finally become specialised in those areas, which provided important values to the organisations by contributing their knowledge and experiences (Holmstrom & Roberts, 1998). Because such specialisation existed in employees' knowledge and experience, organisations had to carefully manage these workers and departments in order to allow them to look at the same direction, in other words, to enable workers to work towards the same organisational goals. Products will not be properly produced if people do not contribute what is needed. Unnecessary contributions will only slow the business process down (Richard, 1998). Therefore, the organisations emphasized on management strategies in order to better manage the business. According to Ashkenas et al (2002), size, role clarity, specialisation and control were the four major factors which allowed the success of those organisations during the 20th century. Therefore, an effective organisational structure was what the organisations were looking for. Then the four boundaries suggested by Ashkenas et al (2002) became the crucial factors which offered the organisations the key to an effective business structure which they desired. Therefore, organisational boundaries were very important for defining any organisation, as they enabled organisations to make differentiate and integrate different groups, as well as helping organisations to gain better internal and external control of the business (Flemimg & Spicer, 2004). More importantly, they define what are inside and what are outside of the organisation, and the status of employees define who control and manage the organisation (Nippert-Eng, 2003).

The Boundaryless Organisation

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Due to the rapid changes in the business environment such as technology development and increasing globalisation, organisations were having to face structural changes as well. As stated by Paulsen and Hernes (2003, p22): "Mergers, acquisitions, restructuring, strategic alliances, and other forms of (re)organising result in the creation of new or different organisational forms and structural change." Such changes will have direct influences on the organisational boundaries, so that these boundaries have to be redefined and rebuilt. For example, employees may be allocated to different departments and given different tasks and responsibilities, or they find themselves have to work with new group members etc. All these will force employees learn and be aware of new organisational boundaries. Managers will feel challenged as having to communicate and negotiate across the boundaries that are being newly defined and created, and having to go through the process of transiting from old to new identities (Ashkenas et al, 2002). In such cases, organisational boundaries will to some extent make the restructuring more complicated and difficult. The four factors that allowed organisations to be successful in the 20th century do not offer much benefit to the organisations today (size, role clarity, specialisation and control). Instead, Ashkenas et al (2002) suggested four "new" factors that make organisations successful: speed, flexibility, integration and innovation.

Nowadays, because the business environment changes more rapidly than before, along with the quick change in customers demand and expectations for products and services, organisations are required to seize business opportunities more quickly than ever (Alvesson & Willmott, 2003). That is the requirement of speed. Large corporations with more intensive boundaries find it more difficult to change their strategies or production lines than small business firms. Their goal is to try to keep the advantages of being a large organisation, but to respond more quickly to the market environment. In order to take actions more quickly, they need to reduce organisational boundaries (Ashkenas, 2002). Also, flexibility is vital for moving quickly, organisations always need to be prepared for any changes. Employees have to be able to perform multiple tasks, learn broader knowledge and skills in order to react in different situations. "Role clarity can constrain flexibility - people locked into specific roles and responsibilities become unwilling to jump in at a moment's notice and do whatever is needed." (Ashkenas et al, 2002, p7). It is unlikely that organisations with no flexibility will be able to compete with flexible organisations as their abilities are limited. Integration requires the whole organisation to produce collaborative performance towards the organisational goal as a whole. Compared with specialisation which breaks tasks into pieces and employees with different skills specialise in each piece, and the management collects the pieces and put them together afterwards, integration is a ways of the organisation as a whole move forward together at the same time. By doing so, the organisation will be able to allocate the resources more quickly, efficiently and effectively, which creates more advantages for the business in today's business environment (Marshall, 2003). Again, it suggests that boundaries will constraint the development of the organisation, thus need to be reduced. Finally, the term of innovation is not new to any modern businesses today, it has no doubt become one of the most important factor which benefits organisations the most: more business opportunities, more competitive advantages, better R&D, more innovative development, differentiations and so on. Especially in today's business environment where technology drives most of the changes, and today's newest development will be quickly outdated in a very short period of time. Continuous innovation is encouraged in every modern organisations. However, innovations are very closely associated with creativity and techniques such as brainstorming. Employees need to be encouraged to break limited space to think and see more widely (Ashkenas, et al, 2002). Under the traditional organisational structure, employees' behaviour and motivations are strictly controlled by the management, thus innovation would be very limited. Therefore, vertical, horizontal, external and geographic boundaries could all be constraints for organisations to make changes in order to seize business opportunities or to restructure the business (Ashkenas, et al, 2002).

As discussed in the previous section, vertical boundaries provides clear level of authority and define employees' status. However, in today's management theories, workers feel unvalued and unmotivated due to little involvement, thus they will not be committed to their jobs. Horizontal boundaries separates tasks at the same level, at the same time it creates conflicts and communication issues between employees. External boundaries will make the organisation's customer, suppliers and stakeholders to feel they are "blocked out" of the organisation, while they all have interest in the organisation's performance. Also, there is not enough communication between the organisation and its consumer, thus makes it difficult to find out consumers' real desire and result in failure of meeting the consumers' demand. Finally, due to the development of technology and transportation, geographic boundaries started to disappear (Ashkenas et al, 2002). Firms started to realise the necessity of crossing these boundaries. They started to learn and respect different cultures in order to improve local branches' performances. These are also the reason why the term "boundaryless organisation" has attract more attention (Ashkenas et al, 2002, Hirschhorn & Gilmore, 1992)

Sears and Wal-Mart can be taken as two examples of the old and modern businesses. Sear started as the old fashioned organisation, which had a strategy based on organisational structure and control. It applied very intensive boundary level to the organisation. With top management all gathered at Chicago headquarters, where all the important decisions are made, and tasks were then allocated to the brunches and employees. It gained great success as the organisation gained strong competitive advantages through size, role clarity, specialisation and control. However, in the 1980s, the business environment changed: due to the increasing competitiveness in the supermarket industry, customers were expecting good quality products with lower prices. Customers' preference of shopping changed as well, no more order and wait, they were looking for products that they could spot in the stores. Then Sears' organisational boundaries started to make negative effects. Unable to change quickly made the company to loss many business opportunities, specialisation limited employees and departments' ability to react to different customers requirements, lost many customers because products are not in place, too little flexibility turned out to be costly and so on. The situation only turned around when Sears finally decided to change their focus to customer-oriented strategies. Vertical boundaries were flattened by giving out responsibilities and authorities to store managers; external boundaries were reformulated by identifying and serving customers demand; and geographic boundaries were reduced by allocating the decision-making power to store managers at different places. By doing so, Sears was able to restructure the organisation and to be a continuous success in the supermarket industry. On the other hand, Wal-Mart is a supermarket which applied the new success factors from the beginning. Details are as stated by Ashkenas et al (2002, p8): " find out what customers wanted and provide it quickly, at lower cost than any competitor/ This meant designing fast, flexible processes for gathering and using consumer and competitive intelligence." The intensive communication strategy that has been carried out each week allowed the organisation to obtain the most updated information about customers' needs and preference of shopping. Store managers can make decisions on their own and are all able to perform multiple tasks. Thus Wal-Mart's success is based on the boundaryless concept of organisational structure (Example resource: Ashkenas et al, 2002). By removing these boundaries, organisations will be able to adopt new strategies and ways of operation more quickly and smoothly, which inturn lead to better business performances (Panteli, 2003).

However, it does not mean that organisations are encouraged to remove all the boundaries across the whole company. Because organisations do not exist without boundaries. Boundaries are there to direct employees of their behaviour and ways of thinking, they are the basic definition of an organisation (Hirschhorn & Gilmore, 1992). According to Ashkenas et al (2002, p3): "Without them (boundaries), organisations would be disorganised. People would not know what to do. There would be no differentiation of tasks, no coordination of resource and skills, no sense of direction." Rather, it is suggested that while boundaries are necessary, organisations should try to set permeable boundaries which can allow the business to change, move and adopt new innovations more quickly and smoothly (Taylor, 2004). Boundaries should not be used as barriers to limit and control things either within or outside of the organisation. Therefore, the term "boundaryless" is not referred to as no boundaries at all, it encourages organisational to inject move lifeblood into the business, and make the boundaries more flexible, permeable and movable (Paulsen & Hernes, 2003).


To sum up, no matter it is for giant corporations or small business firms, organisational boundaries always exist and they are necessary factors to define the organisation, create rules and cultures, direct employees behaviour, make sense of the business and so on. Different types of boundaries play different roles in an organisation. By setting these boundaries, firms gain absolute control of the organisation from decision making to employee responsibilities and behaviour. It allowed the firms to be successful in the 20th century (Ashekenas et al, 2002). However, as the business environment continuously changed, organisations were engaged in changing their structures. With new success factors, boundaries provided many negative effects to the restructuring process of organisations. Many academic researchers discussed the "boundaryless organisations", and encouraged firms to reduce the organisational boundaries (Paulsen & Hernes, 2003). Nowadays, speed to respond to different situations, continuous innovation, flexibility and integration are key to businesses' successes. By reducing the level of organisational boundaries, firms will be able to gain these benefits. Too many boundaries will only make organisations to loss business opportunities, customers and their reputations (Ashkenas et al, 2002). However, it does not mean organisations do not need boundaries. Many authors suggested that boundaries are still important in the "boundaryless organisations". Organisations will not be formed without boundaries. After all, boundaries define the basic of an organisation by separating different groups of employees, departments, authorities, business cultures and so on (Panteli, 2003). Therefore, organisations are required to be able to appropriately decide how much organisational boundaries they need in order to achieve the greatest potential of the business (Ashkenas et al, 2002).