Change, Coordination, and Capabilities
AbstractEmpirical studies on coordination of economic activities focused on the two polar cases of governance mode, namely vertical integration and market exchanges. Whether firms should be vertically integrated or lever market exchanges in the face of change is, however, debated. Two positions have emerged. Some scholars argue that the vertically integrated firm is the appropriate mode of coordination when change occurs, while market exchanges are more appropriate for dealing with stable contexts (Teece, 1996). On the other hand, Harrigan (1984, 1985) contends that firms should rely on market exchanges when technological change renders upstream capabilities obsolete. Based on two case studies of the aircraft engine industry, this paper introduces the concept of systems integration as the primary coordination mechanism in-between markets and hierarchies that firms employ to cope with change. The focus is on multitechnology settings. Multitechnology, multicomponent products intensify the coordination efforts for firms developing them and therefore provide a vantage point to study coordination modes in the face of technological change. The paper argues that systems integration, as a coordination mechanism, comprises a set of different technological and organizational skills, ranging from component assembly through the understanding and integration of the technological disciplines underlying a product, to project management. It shows that from a competitive point of view, systems integration is most appropriately understood as knowledge integration. Systems integrating firms are understood as those organizations that set up the network of actors involved in the industry and lead it from an organizational and technological viewpoint.
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Bibliographic InfoPaper provided by SPRU - Science and Technology Policy Research, University of Sussex in its series SPRU Working Paper Series with number 120.
Length: 23 pages
Date of creation: 01 Aug 2004
Date of revision:
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technological change; systems integration; knowledge integration; vertical integration; market exchanges;
Find related papers by JEL classification:
- O33 - Economic Development, Technological Change, and Growth - - Technological Change; Research and Development; Intellectual Property Rights - - - Technological Change: Choices and Consequences; Diffusion Processes
- L22 - Industrial Organization - - Firm Objectives, Organization, and Behavior - - - Firm Organization and Market Structure
This paper has been announced in the following NEP Reports:
- NEP-ALL-2005-05-07 (All new papers)
- NEP-INO-2005-05-07 (Innovation)
- NEP-NET-2005-05-07 (Network Economics)
Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.:
- Argyres, Nicholas S., 1995. "Technology strategy, governance structure and interdivisional coordination," Journal of Economic Behavior & Organization, Elsevier, vol. 28(3), pages 337-358, December.
- Stefano Brusoni, 2003. "Authority in the Age of Modularity," SPRU Working Paper Series 101, SPRU - Science and Technology Policy Research, University of Sussex.
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