The central focus of this concluding chapter is on the growth process of the firm regarded as the result of the interplay between capability, transaction and scale–scope aspects. Management's ability to exploit the advantage provided by organisational coordination of the foregoing three aspects and to limit the negative effects of informational hazards and other counteracting forces are fundamental elements in understanding differences in the revealed performance of firms and their opportunity for growth. However, the firm's performance does not depend solely on managerial abilities, but also on the interplay among the various basic conditions and decision-making mechanisms.

This chapter is structured as follows. Section 6.1 deals with the various forms of the firm's growth: diversification, vertical and horizontal expansion. Section 6.2 focuses on diversification and flexible production. Section 6.3 outlines the cross-linked effects, in the growth process, between development of capabilities, arrangement of transactions and design of the operational scale. So tight-meshed are the links between these three aspects of the organisational coordination of the firm that they can be considered as three faces of the same analytical problem. We shall see that the analysis of the links between these three aspects offers a possible solution to the ‘Cournot dilemma’ on the incompatibility between increasing returns and competition. The final section 6.4 discusses the strengths and weaknesses that favour and hamper the expansion of the boundaries of business organisations.