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Abstract
The architecture of the firm involves determination of a boundary that encompasses the functions managed by the
firm. The past decade has seen substantial reorganization of firms where vertical or horizontal integration has been
unbundled into weaker forms of collaborations including value chains and networks. This observation has forced a
re‐conceptualization of the boundaries of the firm to incorporate such collaborations. These collaborations are
virtual and highly dynamic. They emerge and persist when two conditions are met. First, they must enable
generation of greater value than might be attained through independent operation and anonymous transactions
through markets. Second, the resulting growth must be shared with members in a way that retains their
participation. Each of these conditions can be verified only if performance of the collaboration can be established.
This paper recognizes the need for “metrics of performance” that are by necessity operationally feasible to
measure. While conceptual approaches have been studied in the management literature, this paper considers from
theoretic perspectives these issues and derives measures of the performance of the overall collaboration as well as
of the participating enterprises. The paper presents a framework that can be applied to both vertical and horizontal
collaborations as found in supply chains and networks. The paper offers suggestions on empirical methods for
estimation of measures derived.