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Do Modular Products Lead to Modular Organizations?

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  • Hoetker, Glenn

    (U of Illinois at Urbana-Champaign)

Abstract

The tacit assumption that increased product modularity is associated with advantageous increases in organizational modularity underlies much of the literature on modularity. Previous empirical investigations of this assumption, few in number, have faced numerous confounding factors and generated conflicting results. I build a causal model for the relationship between product and organizational modularity, which I test using a distinctive empirical setting that controls for confounding factors present in previous studies. I find support for only part of the assumed relationship, showing that modularity is a more multi-faceted concept than previously recognized. In particular, increased product modularity enhances reconfigurability of organizations more quickly than it allows firms to move activities out of hierarchy. The paper contributes to the emerging stream of research that focuses on the previously under-appreciated costs of designing and maintaining a modular organization.

Suggested Citation

  • Hoetker, Glenn, 2002. "Do Modular Products Lead to Modular Organizations?," Working Papers 02-0130, University of Illinois at Urbana-Champaign, College of Business.
  • Handle: RePEc:ecl:illbus:02-0130
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    File URL: http://www.business.illinois.edu/Working_Papers/papers/02-0130.pdf
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    Cited by:

    1. Caridi, Maria & Pero, Margherita & Sianesi, Andrea, 2012. "Linking product modularity and innovativeness to supply chain management in the Italian furniture industry," International Journal of Production Economics, Elsevier, vol. 136(1), pages 207-217.
    2. Andreas Reinstaller, 2012. "Modularity and its Implications for the Theory of the Firm," Chapters,in: Handbook on the Economics and Theory of the Firm, chapter 32 Edward Elgar Publishing.
    3. Glenn Hoetker & Anand Swaminathan & Will Mitchell, 2007. "Modularity and the Impact of Buyer-Supplier Relationships on the Survival of Suppliers," Management Science, INFORMS, pages 178-191.
    4. Moeen, Mahka & Somaya, Deepak & Mahoney, Joseph T., 2011. "Supply Portfolio Concentration in Outsourced Knowledge-Based Services," Working Papers 11-0106, University of Illinois at Urbana-Champaign, College of Business.
    5. Gebauer, Judith & Mahoney, Joseph T., 2013. "Joining Supply and Demand Conditions of IT Enabled Change: Toward an Economic Theory of Inter-firm Modulation," Working Papers 13-0100, University of Illinois at Urbana-Champaign, College of Business.
    6. Erica Fuchs & Randolph Kirchain, 2010. "Design for Location? The Impact of Manufacturing Offshore on Technology Competitiveness in the Optoelectronics Industry," Management Science, INFORMS, pages 2323-2349.
    7. Cheng, Liang-Chieh (Victor), 2011. "Assessing performance of utilizing organizational modularity to manage supply chains: Evidence in the US manufacturing sector," International Journal of Production Economics, Elsevier, vol. 131(2), pages 736-746, June.
    8. Sanchez, Ron & Mahoney, Joseph T., 2012. "Modularity and Economic Organization: Concepts, Theory, Observations, and Predictions," Working Papers 12-0101, University of Illinois at Urbana-Champaign, College of Business.
    9. Ron Sanchez & Joseph T. Mahoney, 2013. "Modularity and economic organization: concepts, theory, observations, and predictions," Chapters,in: Handbook of Economic Organization, chapter 20 Edward Elgar Publishing.
    10. Andreas Reinstaller, 2011. "The Modularity of Technology and Organisations. Implications for the Theory of the Firm," WIFO Working Papers 398, WIFO.
    11. Andrea Szalavetz, 2010. "The Hungarian automotive sector – a comparative CEE perspective with special emphasis on structural change," EIIW Discussion paper disbei182, Universitätsbibliothek Wuppertal, University Library.
    12. Richard Gentry & Heather Elms, 2009. "Firm Partial Modularity and Performance in the Electronic Manufacturing Services Industry," Industry and Innovation, Taylor & Francis Journals, pages 575-592.
    13. repec:kap:jmgtgv:v:21:y:2017:i:2:d:10.1007_s10997-016-9353-5 is not listed on IDEAS
    14. Vermeulen, Ben & De Kok, Ton, 2013. "A value network development model and implications for innovation and production network management," MPRA Paper 51393, University Library of Munich, Germany.
    15. Aric Rindfleisch & Kersi Antia & Janet Bercovitz & James Brown & Joseph Cannon & Stephen Carson & Mrinal Ghosh & Susan Helper & Diana Robertson & Kenneth Wathne, 2010. "Transaction costs, opportunism, and governance: Contextual considerations and future research opportunities," Marketing Letters, Springer, vol. 21(3), pages 211-222, September.
    16. Marlo Raveendran & Phanish Puranam & Massimo Warglien, 2016. "Object Salience in the Division of Labor: Experimental Evidence," Management Science, INFORMS, pages 2110-2128.

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