The main purpose of this chapter is to develop further the treatment of the concept of architecture by dealing with what is called the corporate dimension of the enterprise architecture. It presents a way to employ this concept (the corporate or business dimension is used here interchangeably) through a methodology that defines what is called the market architecture, and how to design, operate, and sustain the enterprise architecture aligned to its specific market architecture.
Top2. Background
In the introduction of the ‘Handbook of New Institutional Economics’ (published in 2008), Ménard & Shirley (2008) remind us that Ronald Coase’s query (firstly shown in Coase, 1937) as to why some transactions are done in markets and other in firms/enterprises seems deceptively simple. They argue that an important achievement of the New Institutional Economics- NIE in the years since Coase asked that question is to show how complex both question and answer really are. After that, these authors present a brief summary of Claude Ménard’s chapter in that handbook as follows:
Claude Menard’s chapter explores how command, control and cooperation might give firms an advantage over markets and argues that we must understand the internal costs of firms as well as transaction costs if we want to explain when they have an advantage over markets. Menard explores the many different ways of organizing activities that fall between the polar choices of vertically integrating the transaction into a firm or conducting trades on the spot market. NIE differs from traditional economics not just by peering into the black box of the firms; it also opens the black box of markets. Menard points out that to a new institutionalist markets are not costless, identical, or immediate; they are diverse in their costs because they vary in how they are organized, the rules that support them, and how those rules are enforced.
This brief summary can be considered an adequate starting point for this chapter. First, because it shows there are a variety of ways of organizing economic activities; second, because reveals that markets are diverse, and vary in how they are organized and supported; and, finally, because it gives a reason to believe that for enterprises to deal with such heterogeneous business environments they should have flexible tools to emerge, operate and sustain its activities in such diverse conditions.
And that is why the concept of enterprise architecture (as a flexible organizing tool) fits adequately in such conditions. So, this chapter presents a way to employ this concept (the corporate or business dimension is used here interchangeably) through a methodology that defines what is being called here as the market architecture, and how to design, operate and sustain enterprise architecture aligned to its specific market architecture.
Top3. Market Architecture
This chapter begins with a proposition related to the use of the enterprise architecture and market architecture concepts in this book:
To be properly designed, to function adequately, and to sustain its activities, an enterprise’s architecture should be aligned to the market architecture of its main business environment, and also to the market architectures of its subsidiary business environments.