Abstract: “Successful firms determine vertical boundaries of their organizations by ensuring alignment among their firm structure, competitive strategies and external environment. How to configure vertical boundaries of an organization is a very complex problem and deciding the best approach to configuring the vertical boundaries of an organization is a central concern of strategic management theory. Current literature is mainly leaded by Transaction Costs Economics and focus primarily on advantages of internalizing an activity within firm boundaries. No single theory can explain stand-alone how to structure vertical boundaries of a firm although many researches have been conducted. More effort should be devoted to integrate theories to achieve a more complete and useful theoretical foundation for managerial decision making. An integrated model including leading perspectives and contextual attributes of firms should be developed to better understand how the vertical boundaries of a firm are confi”

Keywords: Firm boundaries, transaction costs economics, resource-based view, real options, neoclassical economy