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Authority in the Age of Modularity

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Abstract

This paper builds upon on-going research into the organisational implications of 'modularity'. Advocates of modularity argue that the Invisible Hand of markets is reaching activities previously controlled through the Visible Hand of hierarchies. This paper argues that there are cognitive limits to the extent of division of labour: what kinds of problems firms solve, and how they solve them, set limits to the extent of division of labour, irrespective of the extent of the market. This paper analyses the cognitive limits to the division of labour relying on an in-depth case study of engineering design activities. On this basis, this paper explains why co-ordinating increasingly specialised bodies of knowledge, and increasingly distributed learning processes, requires the presence of knowledge integrating firms even in the presence of modular products. Such firms, relying on their wide in-house scientific and technological capabilities, have the 'authority' to identify, propose, and implement solutions to complex problems. In so doing, they co-ordinate networks of suppliers of both components and specialised competencies.

Suggested Citation

  • Stefano Brusoni, 2003. "Authority in the Age of Modularity," SPRU Working Paper Series 101, SPRU - Science Policy Research Unit, University of Sussex Business School.
  • Handle: RePEc:sru:ssewps:101
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    File URL: http://www.sussex.ac.uk/spru/documents/sewp101.pdf
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    References listed on IDEAS

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    1. Radner, Roy, 1992. "Hierarchy: The Economics of Management," Journal of Economic Literature, American Economic Association, vol. 30(3), pages 1382-1415, September.
    2. Arora, Ashish & Gambardella, Alfonso, 1994. "The changing technology of technological change: general and abstract knowledge and the division of innovative labour," Research Policy, Elsevier, vol. 23(5), pages 523-532, September.
    3. Anna Grandori, 1997. "Governance Structures, Coordination Mechanisms and Cognitive Models," Journal of Management & Governance, Springer;Accademia Italiana di Economia Aziendale (AIDEA), vol. 1(1), pages 29-47, March.
    4. Ashish Arora & Alfonso Gambardella & Enzo Rullani, 1997. "Division of Labour and the Locus of Inventive Activity," Journal of Management & Governance, Springer;Accademia Italiana di Economia Aziendale (AIDEA), vol. 1(1), pages 123-140, March.
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    Cited by:

    1. Susan Helper & Mari Sako, 2010. "Management innovation in supply chain: appreciating Chandler in the twenty-first century," Industrial and Corporate Change, Oxford University Press, vol. 19(2), pages 399-429, April.
    2. Bongo Adi & Kenneth Amaeshi & Suminori Tokunaga, 2005. "Rational Choice, Scientific Method and Social Scientism," Method and Hist of Econ Thought 0509001, University Library of Munich, Germany.
    3. Andrea Prencipe, 2004. "Change, Coordination, and Capabilities," SPRU Working Paper Series 120, SPRU - Science and Technology Policy Research, University of Sussex.
    4. 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.
    5. Virginia Acha & Lucia Cusmano, 2005. "Governance and co-ordination of distributed innovation processes: patterns of R&D co-operation in the upstream petroleum industry," Economics of Innovation and New Technology, Taylor & Francis Journals, vol. 14(1-2), pages 1-21.

    More about this item

    Keywords

    modularity; division of labour limits; knowledge integrating firms;

    JEL classification:

    • L2 - Industrial Organization - - Firm Objectives, Organization, and Behavior
    • O3 - Economic Development, Innovation, Technological Change, and Growth - - Innovation; Research and Development; Technological Change; Intellectual Property Rights

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