MODULARITY, INFORMATION TECHNOLOGY OUTSOURCING SUCCESS, AND BUSINESS PERFORMANCE

We propose a model to explain success in large scale, complex outsourcing arrangements. The work is based on a field study of current outsourcing practice and review of literature. The model links outsourcing success to modularity and firm level performance. Data collected from a survey of Chief Information Officers and other senior managers supports our hypotheses. In particular, we observe the effect of outsourcing success on business performance. Modularity has a direct effect on business performance. In addition, outsourcing success mediates the effect of modularity on business performance. Novel conceptualization and operationalization of architectural modularity, is a contribution to empirics and theory. Outsourcing success is seen to be associated with firm level performance, within the boundary conditions of large, multifunction, multiyear IT outsourcing initiatives. The results show several characteristics of “transformational” outsourcing that goes beyond cost reduction, and addresses firm level performance

Limits to Modularity: A Review of the Literature and Evidence from Chip Design

This working paper has been prepared as part of the East-West Center's research project on Globalization of Knowledge Work: Why is Chip Design Moving to Asia. In this paper, Dieter assesses what we know about the limits to modularity and their impact on firm organization and industry structure. He focuses on evidence form chip design, drawing on interview on 2002 and 2003 with a sample of 60 companies and 15 research institutions that are involved in chip design in the US, Taiwan, Korea, China and Malaysia. It is summarized "stylized" propositions of the modularity literature that are well-established, as well as predictions that are controversial. In addition, important limits to modularity and relevant management responses were reviewed.

A review of modular strategies and architecture within manufacturing operations

This paper reviews existing modularity and modularization literature within manufacturing operations. Its purpose is to examine the tools, techniques, and concepts relating to modular production, to draw together key issues currently dominating the literature, to assess managerial implications associated with the emerging modular paradigm, and to present an agenda for future research directions. The review is based on journal papers included in the ABI/Inform electronic database and other noteworthy research published as part of significant research programmes. The research methodology concerns reviewing existing literature to identify key modular concepts, to determine modular developments, and to present a review of significant contributions to the field. The findings indicate that the modular paradigm is being adopted in a number of manufacturing organizations. As a result a range of conceptual tools, techniques, and frameworks has emerged and the field of modular enquiry is in the process of codifying the modular lexicon and developing appropriate modular strategies commensurate with the needs of manufacturers. Modular strategies and modular architecture were identified as two key issues currently dominating the modular landscape. Based on this review, the present authors suggest that future research areas need to focus on the development and subsequent standardization of interface protocols, cross-brand module use, supply chain power, transparency, and trust. This is the first review of the modular landscape and as such provides insights into, first, the development of modularization and, second, issues relating to designing modular products and modular supply chains

Organising new product development Knowledge hollowing-out and knowledge integration

The paper analyses the organization of the new product development process at FIAT from a resource-based perspective. The focus is on organizational resources for integrating dispersed specialist knowledge required in the development of complex products. The analysis shows how the application of a resource-based perspective is able to uncover negative long-term effects of outsourcing on the knowledge base (hollowing out), despite beneficial short-term effects on cost.New product development, FIAT Auto, knowledge integration systems integration, modularity, knowledge hollowing-out, resource-based view

Beyond product architecture: Division of labour and competence accumulation in complex product development

This paper considers the trade-off between leveraging external sources of innovation by outsourcing design and engineering activities and the ability to develop internal product development competences. The trade-off arises because the division of labor within and across firms' boundaries has a crucial role in shaping competence development processes, especially because the division of labor also influences opportunities for learning by doing. In new product development projects, learning by doing appears to be both a key determinant of competence development and a difficult-to-substitute form of learning. While the division of development tasks is often considered as guided by product architecture, we show that by decoupling the decisions concerning the product architecture and the allocation of development tasks, firms can realize the benefits of outsourcing such tasks while developing new internal competences. Drawing on a longitudinal case study in the automotive industry, we also identify a new organizational lever for shaping competence development paths and for designing firm boundaries. This lever consists in alternating different task allocation schemes over time for different types of development projects. We show why this is a novel solution, what its underlying logic is, and how it enables alleviating the trade-off between the benefits of leveraging external sources of innovation and the opportunities for competence development provided by in-house design and engineering. We discuss implications for theories of organizational boundary design and innovation management.innovation management; organizational boundaries; outsourcing; product architecture; modularity; new product development; template process; automotive industry; Fiat

Technological potential of logistics service providers and the relationship dynamics.

Notre papier porte sur plusieurs résultats d'une enquête effectuée auprès des prestataires logistiques français. L'idée défendue est que l'effort technologique des prestataires de services logistiques contribue à la performance de la relation et plus généralement de la chaîne logistique dans sa globalité. Etre innovant semble constituer un indicateur d'autonomie et de capacité à copiloter les flux. L'effort technologique apparaît ainsi comme une trajectoire stratégique de différenciation pertinente pour les prestataires logistiques.logistic, service providers

THE ROLE OF ARCHITECTURE MODULARITY FOR BUSINESS PROCESS OUTSOURCING – DEVELOPING A RESEARCH MODEL

Recent developments force companies to rethink their value creation model and open themselves to other companies, which results in a shift from the traditional matrix or functional design to a more modular organization design. For example, even traditional banks open themselves and allow the ser-vices of specialized companies, to be integrated into their organization. Through this modular design, it is very easily possible to do it the other way around and conduct the outsourcing of certain business processes. The question that arises from this is whether and how the modularity of a firm’s architecture, consisting amongst others of the modularity of its business processes and its underlying IT support infrastructure, influences the incentive to outsource certain business processes. As a research-in-pro-gress paper, this manuscript develops a model of the multidimensional concept of modularity and links it causally to the determinants of a selective business process outsourcing (BPO) decision

Improving outcomes in outsourced product development: a joint consultant-client perspective

Although firms increasingly outsource front end product development activities to production suppliers or design consultants, this practice has received little scholarly attention. The few existing academic studies report high failure rates but generally present only the client firms’ view of the causes. Our first results from in-depth interviews of both clients and consultants give a richer picture of enablers of success and causes of failure. We confirm some previous findings(internal divisions within the client, “poor communication” between parties),identify new ones (inadequate client capabilities, failure to transfer design intent), and combine them into a comprehensive model of outsourced product development that includes negotiating project scope, continuously managing expectations, and carefully re-integrating the design output into the client’s operations. Finally, we classify several types of client dependency (need for new ideas, extra capacity, or specific technical expertise) and highlight the particular hazards associated with each