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Modular Production Networks in Electronics: The Nexus between Management and Economics Research

Author

Listed:
  • Byron Gangnes

    () (Department of Economics, University of Hawaii at Manoa)

  • Ari Van Assche

    (Department of Economics, University of California at Santa Cruz)

Abstract

In the last two decades, the electronics industry has evolved from a vertically integrated in-dustry to a vertically segmented one. This transformation has often been attributed to the modularization of electronic products. In this paper, we argue that the degree of modularity is an active choice variable for a firm. As a result, it is necessary to focus on the underlying fac-tors that drive both modularity and the organization of production. This provides insights into the transformation taking place in global electronics production, with vertical fragmentation, horizontal consolidation, and the growth of Asian electronics production.

Suggested Citation

  • Byron Gangnes & Ari Van Assche, 2004. "Modular Production Networks in Electronics: The Nexus between Management and Economics Research," Working Papers 200405, University of Hawaii at Manoa, Department of Economics.
  • Handle: RePEc:hai:wpaper:200405
    Note: Also Singapore Management University Economics and Statistics Working Paper 21-2004, September 2004
    as

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    File URL: http://www.economics.hawaii.edu/research/workingpapers/WP_04-5.pdf
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    References listed on IDEAS

    as
    1. Langlois, Richard N., 2002. "Modularity in technology and organization," Journal of Economic Behavior & Organization, Elsevier, vol. 49(1), pages 19-37, September.
    2. Lowe, Nichola & Kenney, Martin, 1999. "Foreign Investment and the Global Geography of Production: Why the Mexican Consumer Electronics Industry Failed," World Development, Elsevier, vol. 27(8), pages 1427-1443, August.
    3. Hart, Oliver & Moore, John, 1990. "Property Rights and the Nature of the Firm," Journal of Political Economy, University of Chicago Press, vol. 98(6), pages 1119-1158, December.
    4. John McLaren, 2000. ""Globalization" and Vertical Structure," American Economic Review, American Economic Association, vol. 90(5), pages 1239-1254, December.
    5. Timothy J. Sturgeon, 2002. "Modular production networks: a new American model of industrial organization," Industrial and Corporate Change, Oxford University Press, vol. 11(3), pages 451-496, June.
    6. Joseph E. Stiglitz & Shahid Yusuf, 2001. "Rethinking the East Asian Miracle," World Bank Publications, The World Bank, number 13969, June.
    7. Dieter Ernst, 2003. "How Sustainable are Benefits from Global Production Networks? Malaysia's Upgrading Prospects in the Electronics Industry," Economics Study Area Working Papers 57, East-West Center, Economics Study Area.
    8. Pol Antras & Elhanan Helpman, 2004. "Global Sourcing," Journal of Political Economy, University of Chicago Press, vol. 112(3), pages 552-580, June.
    9. David L. Hummels & Dana Rapoport & Kei-Mu Yi, 1998. "Vertical specialization and the changing nature of world trade," Economic Policy Review, Federal Reserve Bank of New York, issue Jun, pages 79-99.
    10. Dieter Ernst, 2002. "Global Production Networks in East Asia's Electronics Industry and Upgrading Perspectives in Malaysia," Economics Study Area Working Papers wp44, East-West Center, Economics Study Area, revised Oct 2003.
    11. Boy Luthje, 2002. "Electronics Contract Manufacturing: Global Production and the International Division of Labor in the Age of the Internet," Industry and Innovation, Taylor & Francis Journals, vol. 9(3), pages 227-247.
    12. 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, January.
    13. Ashish Arora & Andrea Fosfuri & Alfonso Gambardella, 2004. "Markets for Technology: The Economics of Innovation and Corporate Strategy," MIT Press Books, The MIT Press, edition 1, volume 1, number 0262511819, January.
    14. repec:hrv:faseco:4784029 is not listed on IDEAS
    15. Shahid Yusuf, 2003. "Innovative East Asia : The Future of Growth," World Bank Publications, The World Bank, number 15158, June.
    16. Gene M. Grossman & Elhanan Helpman, 2002. "Integration versus Outsourcing in Industry Equilibrium," The Quarterly Journal of Economics, Oxford University Press, vol. 117(1), pages 85-120.
    17. Ulrich, Karl, 1995. "The role of product architecture in the manufacturing firm," Research Policy, Elsevier, vol. 24(3), pages 419-440, May.
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    Citations

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    Cited by:

    1. Vincent Frigant, 2007. "L'impact de la production modulaire sur l'approfondissement de la Division Internationale des Processus Productifs (DIPP)," Revue d'économie politique, Dalloz, vol. 117(6), pages 937-961.
    2. Vincent Frigant, 2007. "Between Internationalisation and Proximity: the internationalisation process of automotive first tier suppliers," Post-Print hal-00257463, HAL.

    More about this item

    Keywords

    Modularity; electronics; outsourcing; contract manufacturing; East Asia;

    JEL classification:

    • L14 - Industrial Organization - - Market Structure, Firm Strategy, and Market Performance - - - Transactional Relationships; Contracts and Reputation
    • L23 - Industrial Organization - - Firm Objectives, Organization, and Behavior - - - Organization of Production
    • L63 - Industrial Organization - - Industry Studies: Manufacturing - - - Microelectronics; Computers; Communications Equipment

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