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Problem solving and the co-ordination of innovative activities

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In the context of increasingly globalized markets, ever more complex supply chains and international manufacturing networks, corporate decision-making processes involve more and more actors, variables and criteria. This is a challenge for corporate head quarters. Many have argued that the role once attributed to the integrated innovative organisation and its R&D laboratories is increasingly associated with the functioning of networks of specialised innovators. The aim of this paper is to argue that the role of large firms may have changed, but it is far from disappeared. It looks at the interplay of increasing knowledge specialisation, the development of products of increasing complexity that perform a widening range of functionalities, and the emergence and diffusion of new design strategies for both products and organisations, namely modularity. The emergence of modularity as a product and organisational design strategy is clearly connected to recent trends in organisational design. Modularity would allow the decoupling of complex artifacts into simpler, self-contained modules. Each module would, at the extreme, become the sole business of a specialised trade. This paper builds upon the idea that there are cognitive limits to this process of modularisation: what kinds of problems firms solve, and how they solve them, set limits to the extent of division of labour among firms. We draw implications of such limits for both management and economic theory.

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File URL: http://www.sussex.ac.uk/Units/spru/publications/imprint/sewps/sewp93/sewp93.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 93.

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Length: 32 pages
Date of creation: 01 Jun 2003
Date of revision:
Handle: RePEc:sru:ssewps:93

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Keywords: large firms; knowledge specialisation; complex products; modularity;

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  1. 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, Elsevier, vol. 21(4), pages 297-313, August.
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  10. Achilladelis, Basil & Schwarzkopf, Albert & Cines, Martin, 1990. "The dynamics of technological innovation: The case of the chemical industry," Research Policy, Elsevier, Elsevier, vol. 19(1), pages 1-34, February.
  11. Langlois, Richard N & Cosgel, Metin M, 1993. "Frank Knight on Risk, Uncertainty, and the Firm: A New Interpretation," Economic Inquiry, Western Economic Association International, Western Economic Association International, vol. 31(3), pages 456-65, July.
  12. Mowery,David C. & Rosenberg,Nathan, 1991. "Technology and the Pursuit of Economic Growth," Cambridge Books, Cambridge University Press, Cambridge University Press, number 9780521389365.
  13. Ashish Arora & Alfonso Gambardella & Enzo Rullani, 1997. "Division of Labour and the Locus of Inventive Activity," Journal of Management and Governance, Springer, Springer, vol. 1(1), pages 123-140, March.
  14. Steinmueller, W Edward, 2000. "Will New Information and Communication Technologies Improve the 'Codification' of Knowledge?," Industrial and Corporate Change, Oxford University Press, vol. 9(2), pages 361-76, June.
  15. D'Adderio, Luciana, 2001. "Crafting the virtual prototype: how firms integrate knowledge and capabilities across organisational boundaries," Research Policy, Elsevier, Elsevier, vol. 30(9), pages 1409-1424, December.
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