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Systems integration: a core capability of the modern corporation

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  • Michael Hobday
  • Andrew Davies
  • Andrea Prencipe
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    Abstract

    Many of the world's leading firms are developing a new model of industrial organization based on systems integration. Rather than performing all productive tasks in-house, companies are building the capabilities to design and integrate systems, while managing networks of component and subsystem suppliers. This article illustrates how systems integration evolved from its military, engineering-based, origins in the 1940s and 1950s to a modern-day strategic capability across a wide variety of sectors. Taking a resource-based view of the firm, the article shows how systems integration capabilities underpin the way high-technology companies compete by moving selectively up- and downstream in the marketplace through the simultaneous "twin" processes of vertical integration and disintegration. Systems integrators of capital goods move downstream into service-intensive offerings to expand revenue streams and increase profitability. By contrast, producers of high-volume components and consumer goods use systems integration capabilities to exploit upstream relationships with input suppliers. In both cases, strategic options and capabilities are shaped by the life cycle of each product. The article develops a clearer understanding of systems integration, arguing that it now represents a core capability of the modern high-technology corporation. Copyright 2005, Oxford University Press.

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    Bibliographic Info

    Article provided by Oxford University Press in its journal Industrial and Corporate Change.

    Volume (Year): 14 (2005)
    Issue (Month): 6 (December)
    Pages: 1109-1143

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    Handle: RePEc:oup:indcch:v:14:y:2005:i:6:p:1109-1143

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    Cited by:
    1. fiorenza belussi & silvia rita sedita & alessia sammarra, 2010. "Learning At The Boundaries In An “Open Regional Innovation System”: A Focus On Firms’ Innovation Strategies In The Emilia Romagna Life Science Industry," "Marco Fanno" Working Papers 0113, Dipartimento di Scienze Economiche "Marco Fanno".
    2. Mulotte, L. & Dussauge, P. & Mitchell, W., 2013. "Does pre-entry licensing undermine the performance of subsequent independent activities? Evidence from the global aerospace industry, 1944-2000," Open Access publications from Tilburg University urn:nbn:nl:ui:12-4860069, Tilburg University.
    3. Vincent Frigant & Jean-Bernard Layan, 2009. "Géographie d'une industrie automobile modulaire : le cas des équipementiers français en Europe de l'Est," Revue d'économie régionale et urbaine, Armand Colin, vol. 0(4), pages 711-737.
    4. Marie CORIS (GREThA UMR CNRS 5113) & Vincent FRIGANT (GREThA UMR CNRS 5113) & Yannick LUNG (GREThA UMR CNRS 5113), 2009. "Organizational change and institutional diversity (In French)," Cahiers du GREThA 2009-23, Groupe de Recherche en Economie Théorique et Appliquée.
    5. Nathalie Lazaric & Valerie Merindol & Sylvie Rochhia, 2011. "Changes in the French Defence Innovation System: New Roles and Capabilities for the Government Agency for Defence," Industry and Innovation, Taylor & Francis Journals, vol. 18(5), pages 509-530.
    6. Björkdahl, Joakim, 2009. "Technology cross-fertilization and the business model: The case of integrating ICTs in mechanical engineering products," Research Policy, Elsevier, vol. 38(9), pages 1468-1477, November.
    7. Andreas Reinstaller, 2011. "The Modularity of Technology and Organisations. Implications for the Theory of the Firm," WIFO Working Papers 398, WIFO.
    8. Martin Borowiecki & Bernhard Dachs & Doris Hanzl-Weiss & Steffen Kinkel & Johannes Pöschl & Magdolna Sass & Thomas Christian Schmall & Robert Stehrer & Andrea Szalavetz, 2012. "Global Value Chains and the EU Industry," wiiw Research Reports 383, The Vienna Institute for International Economic Studies, wiiw.
    9. Stephan Scheuner, 2011. "Understanding the organizational integration of subcontracted tasks in inter-firm projects," RePAd Working Paper Series UQO-DSA-wp2802011, Département des sciences administratives, UQO.
    10. Vincent FRIGANT (GREThA), 2007. "Between Internationalisation and Proximity: the internationalisation process of automotive first tier suppliers," Cahiers du GREThA 2007-13, Groupe de Recherche en Economie Théorique et Appliquée.
    11. Gil, Nuno & Tether, Bruce S., 2011. "Project risk management and design flexibility: Analysing a case and conditions of complementarity," Research Policy, Elsevier, vol. 40(3), pages 415-428, April.
    12. Sarah Guillou & Nathalie Lazaric & Christian Longhi & Sylvie Rochhia, 2009. "The French defence industry in the knowledge management era: A historical overview and evidence from empirical data," Post-Print hal-00457550, HAL.
    13. Mulotte, L., 2013. "Do experience effects vary across governance modes? Evidence from new product introduction in the global aerospace industry, 1948–2000 (Online first)," Open Access publications from Tilburg University urn:nbn:nl:ui:12-5905829, Tilburg University.
    14. Gil, Nuno & Miozzo, Marcela & Massini, Silvia, 2012. "The innovation potential of new infrastructure development: An empirical study of Heathrow airport's T5 project," Research Policy, Elsevier, vol. 41(2), pages 452-466.
    15. Cécile Ayerbe & Nathalie Lazaric & Michel Callois & Mitkova Liliana, 2014. "The new challenges of organizing intellectual property in complex industries:," Post-Print halshs-00974973, HAL.
    16. Vincent FRIGANT, 2013. "Une comparaison de l’internationalisation des chaînes d’approvisionnement automobiles allemande et française," Cahiers du GREThA 2013-09, Groupe de Recherche en Economie Théorique et Appliquée.
    17. Freddi, Daniela, 2009. "The integration of old and new technological paradigms in low- and medium-tech sectors: The case of mechatronics," Research Policy, Elsevier, vol. 38(3), pages 548-558, April.

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