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The Value and Costs of Modularity: A Cognitive Perspective

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Author Info

  • Stefano Brusoni

    ()
    (CESPRI and CRORA, Bocconi University)

  • Luigi Marengo

    ()
    (Università di Teramo)

  • Andrea Prencipe

    ()
    (Università G. D’Annunzio di Pescara, and SPRU, University of Sussex)

  • Marco Valente

    ()
    (Università dell’Aquila, and DRUID, Aalborg Univ)

Abstract

This paper discusses the issue of modularity from a problem-solving perspective. Modularity is in fact a decomposition heuristic, through which a complex problem is decomposed into independent or quasi-independent sub-problems. By means of a model of problem decomposition, this paper studies the trade-offs of modularity: on the one hand finer modules increase the speed of search, but on the other hand they usually determine lock-in into sub-optimal solutions. How effectively to balance this trade-off depends upon the problem environment and its complexity and volatility: we show that in stationary and complex environments there exists an evolutionary advantage to over-modularization, while in highly volatile – though “simple” – en- vironments, contrary to usual wisdom, modular search is inefficient. The empirical relevance of our findings is discussed, especially with reference to the literature on system integration.

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File URL: http://www.sussex.ac.uk/spru/documents/sewp123.pdf
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Bibliographic Info

Paper provided by SPRU - Science and Technology Policy Research, University of Sussex in its series SPRU Working Paper Series with number 123.

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Length: 23 pages
Date of creation: 30 Aug 2004
Date of revision:
Handle: RePEc:sru:ssewps:123

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Related research

Keywords: modularity; problem solving; complex systems;

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References

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  1. Marengo, Luigi, et al, 2000. "The Structure of Problem-Solving Knowledge and the Structure of Organizations," Industrial and Corporate Change, Oxford University Press, vol. 9(4), pages 757-88, December.
  2. Marengo, Luigi & Dosi, Giovanni, 2005. "Division of labor, organizational coordination and market mechanisms in collective problem-solving," Journal of Economic Behavior & Organization, Elsevier, vol. 58(2), pages 303-326, October.
  3. Brusoni, Stefano & Prencipe, Andrea, 2001. "Unpacking the Black Box of Modularity: Technologies, Products and Organizations," Industrial and Corporate Change, Oxford University Press, vol. 10(1), pages 179-205, March.
  4. Giovanni Dosi & Daniel Levinthal & Luigi Marengo, 2002. "The Uneasy Organizational Matching Between Distribution of Knowledge, Divisionof Labor and Incentive Governance," LEM Papers Series 2002/26, Laboratory of Economics and Management (LEM), Sant'Anna School of Advanced Studies, Pisa, Italy.
  5. Carliss Y. Baldwin & Kim B. Clark, 2000. "Design Rules, Volume 1: The Power of Modularity," MIT Press Books, The MIT Press, edition 1, volume 1, number 0262024667, December.
  6. Herbert A. Simon, 1996. "The Sciences of the Artificial, 3rd Edition," MIT Press Books, The MIT Press, edition 1, volume 1, number 0262691914, December.
  7. Langlois, Richard N. & Robertson, Paul L., 1992. "Networks and innovation in a modular system: Lessons from the microcomputer and stereo component industries," Research Policy, Elsevier, vol. 21(4), pages 297-313, August.
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Citations

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Cited by:
  1. Koen Frenken & Stefan Mendritzki, 2012. "Optimal modularity: a demonstration of the evolutionary advantage of modular architectures," Journal of Evolutionary Economics, Springer, vol. 22(5), pages 935-956, November.
  2. Sylvie Geisendorf, 2010. "Searching NK Fitness Landscapes: On the Trade Off Between Speed and Quality in Complex Problem Solving," Computational Economics, Society for Computational Economics, vol. 35(4), pages 395-406, April.
  3. Andreas Reinstaller, 2011. "The Modularity of Technology and Organisations. Implications for the Theory of the Firm," WIFO Working Papers 398, WIFO.
  4. Tommaso Ciarli & Riccardo Leoncini & Sandro Montresor & Marco Valente, 2008. "Technological change and the vertical organization of industries," Journal of Evolutionary Economics, Springer, vol. 18(3), pages 367-387, August.
  5. Gil, Nuno, 2007. "On the value of project safeguards: Embedding real options in complex products and systems," Research Policy, Elsevier, vol. 36(7), pages 980-999, September.
  6. Leonardo Bargigli, 2005. "The limits of modularity in innovation and production," KITeS Working Papers 176, KITeS, Centre for Knowledge, Internationalization and Technology Studies, Universita' Bocconi, Milano, Italy, revised Sep 2005.
  7. Guido Fioretti, 2005. "Credit Rationing and Internal Ratings in the face of Innovation and Uncertainty," Finance 0504021, EconWPA.

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