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"Do Modular Products Lead To Modular Organizations?"

Glenn Hoetker

 

First Author :

Glenn Hoetker
Business Administration
University of Illinois at Urbana-Champaign
1206 S. Sixth Street, M/C 706
Champaign, IL 61820
USA

ghoetker@uiuc.edu

http://www.business.uiuc.edu/faculty/hoetker.html

 
 
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.
 
 
Keywords :
 
Modularity; Buyer-supplier relationships; Knowledge based theory of the firm; Transaction cost economics; Management of innovation
 
 
Manuscript Received : 2002
Manuscript Published : 2002
 
 
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