The formal literature on ﬁrm boundaries has assumed that ex post conﬂicts are resolved through bargaining. In reality, parties often simply exercise their decision rights. We develop a model, based on shading, in which the use of authority has a central role. We consider two ﬁrms deciding whether to adopt a common standard. Nonintegrated ﬁrms may fail to coordinate if one ﬁrm loses. An integrated ﬁrm can internalize the externality, but puts insufﬁcient weight on employee beneﬁts. We use our approach to understand why Cisco acquired StrataCom, a provider of new transmission technology. We also analyze delegation.