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Are carmakers on the wrong track? Too much outsourcing in an imperfect-modular industry can be harmful

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  • Vincent Frigant

Abstract

Over the past few years, research into modular production – also known as modularity – has largely portrayed this approach is one way of increasing outsourcing. At the same time, empirical studies have often focused on industries that are associated with a pure form of modularity. This paper considers the case of the automobile industry, where modularity has demonstrably developed an imperfect form. Based on a literature review covering the automobile industry and modularity, we will show that a strategy of excessive outsourcing can be criticised because of the risks associated with opportunistic behaviour or the loss of absorptive capacities, and due to problems surrounding the long term fall in production costs. The conclusion looks at the suitability of the choices made by Western carmakers, which seem to differ from those made by Toyota.

Suggested Citation

  • Vincent Frigant, 2011. "Are carmakers on the wrong track? Too much outsourcing in an imperfect-modular industry can be harmful," International Journal of Manufacturing Technology and Management, Inderscience Enterprises Ltd, vol. 22(4), pages 324-343.
  • Handle: RePEc:ids:ijmtma:v:22:y:2011:i:4:p:324-343
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    Cited by:

    1. Petr Pavlínek & Jan Ženka, 2016. "Value creation and value capture in the automotive industry: Empirical evidence from Czechia," Environment and Planning A, , vol. 48(5), pages 937-959, May.
    2. Vincent FRIGANT (GREThA), 2011. "French mega-suppliers’ trajectories during the modular era: some evidences on Faurecia, Valeo and Plastic Omnium," Cahiers du GREThA 2011-20, Groupe de Recherche en Economie Théorique et Appliquée.
    3. Lampón, Jesús F. & Cabanelas, Pablo & Frigant, Vincent, 2017. "The new automobile modular platforms: from the product architecture to the manufacturing network approach," MPRA Paper 79160, University Library of Munich, Germany.
    4. Vincent FRIGANT (GREThA, CNRS, UMR 5113) & Stéphanie PERES (Bordeaux Sciences Agro, INRA, ISVV, USC 1320 GAIA) & Stéphane VIROL (GREThA, CNRS, UMR 5113), 2012. "How do SMEs to rise at the top of the supply chain? An econometric exploration of the French auto industry (In French)," Cahiers du GREThA 2012-16, Groupe de Recherche en Economie Théorique et Appliquée.
    5. Dodourova, Mariana & Bevis, Keith, 2014. "Networking innovation in the European car industry: Does the Open Innovation model fit?," Transportation Research Part A: Policy and Practice, Elsevier, vol. 69(C), pages 252-271.
    6. Vincent FRIGANT (GREThA, CNRS, UMR 5113), 2011. "Three uncertainties looming over the European auto industry," Cahiers du GREThA 2011-34, Groupe de Recherche en Economie Théorique et Appliquée.

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