Modularity | Papers

Do modular products lead to modular organizations?

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 multifaceted 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.

Hoetker, G., "Do modular products lead to modular organizations?", Strategic Management Journal, Vol. 27, No. 6, June, 2006, pp. 501-518. View and download

Modularity and the impact of buyer-supplier relationships on the survival of suppliers

Modularity in product design and flexible supply chains is increasingly common in buyer–supplier relationships. Although the benefits of supply chain flexibility and component modularity for end-product manufacturers are accepted, little is known about their impact on suppliers. We advance the literature on modularity by exploring how three aspects of a supplier’s relationships with its customers affect the supplier’s survival: duration of buyer–supplier relationships, autonomy from customers, and links to prominent buyers. We compared the effects of these aspects of buyer–supplier relationships for low- and high-modularity components. Using data on U.S. carburetor and clutch manufacturers from 1918 to 1942, we found that suppliers of high-modularity components benefited more from autonomy provided by potential customers, whereas suppliers of low-modularity components benefited more from ties to higher status customers. Both benefited from autonomy generated by existing customers. Thus, relationships that require trust and extensive sets of inter-firm routines, as do those for low-modularity components, led to both greater relationship benefits and greater constraints.

Hoetker, G., Swaminathan, A., Mitchell, W., "Modularity and the impact of buyer-supplier relationships on the survival of suppliers", Management Science, Vol. 53, No. 2, 2007, pp. 171-191. View and download