The Definition of Firm Boundaries and Its Impact on Sustainability

Luis Armando Lujan Salazar, Gonzalo Maldonado Guzman

Abstract


The way in which the boundaries of a firm are defined also determines its responsibilities. Besides the firm’s goals of profitability and survival, there are implications beyond its physical boundaries, such as sustainability. There are several definitions of the boundaries of a firm, each one with its own implications. Considering external resources related to the firm may allow decision makers to take responsibility for what takes place beyond its frontiers. Because firms are not isolated, sustainability goes beyond the boundaries of the firm and requires incorporating external factors.

The relation of a firm with its external factors can be established in several dimensions; one of them is considering the relation of the firm with its environment. In this study, we reviewed literature on firm boundaries and found out that the boundaries, limits, and responsibilities of firms are not sharply defined. An interesting point is that the boundaries of the firm can be expanded to account for external resources and the impact of the firm’s activities, so that the firm may take steps to reduce its green footprint and contribute to sustainability from the perspective of the triple bottom line, which includes economic, social, and environmental aspects.


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DOI: https://doi.org/10.5539/jms.v7n2p126

Copyright (c) 2017 Luis-Armando Lujan-Salazar

License URL: http://creativecommons.org/licenses/by/4.0

Journal of Management and Sustainability   ISSN 1925-4725 (Print)   ISSN 1925-4733 (Online)   E-mail: jms@ccsenet.org

 

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