_____________________________________________________________________________________ A Decision Model for Configuration of Firm Boundaries in the Network Economy _____________________________________________________________________________________ Raymond A. Patterson 1 and Erik Rolland 2 1 School of Business, Accounting and Management Information Systems 4-30E Business Building The University of Alberta Edmonton, AB, Canada T6G-2R6 Phone: 780-492-5826 Fax: 780-492-3325 e-mail: Ray.Patterson@ualberta.ca 2 The A. Gary Anderson Graduate School of Management University of California Riverside, CA 92521 Phone: (909) 787-3694 Fax: (909) 787-3970 Erik.Rolland@ucr.edu Date: May 10, 2002 _____________________________________________________________________________________ Abstract. Advances in telecommunications and E-business technologies are enabling rapidly changing firm boundaries and large-scale reorganization of business processes. Business processes consist increasingly of information that is, or can be, digitized and transmitted from and to virtually anywhere in the world. Thus, the procedural and geographical barriers to outsourcing of business processes have been substantially reduced, if not eliminated. This reengineering of the business processes is enabling the reorganization of the corporation and its business model, and may eventually help realize the virtual enterprise. However, there are barriers to proper analysis of the business process outsourcing decision. These barriers include transaction cost, opportunistic behavior (risk), and sunk costs considerations. Addressing these inherent barriers, this paper proposes a bias-free reengineering tool to aid in E-business process outsourcing decisions. _____________________________________________________________________________________ Key words: E-business, reengineering, E-business process outsourcing, organizational structures