Organizational Performance of a Firm in a Modular Business Network

The organizational capabilities to interact with others have been greatly improved as a result of modern information and communications technologies: Nowadays a company can maintain more relationships with more companies at much lower costs than before. What impact does this increased interaction capability have on the company\u27s choice to perform tasks itself or to \u27outsource\u27 such tasks to others (the trade-off between \u27make\u27 or \u27buy\u27)? Business network theory places the company in a \u27business network\u27, a web of business partners linked together in a flexible way to produce different outputs depending on the customer requirements. Previous research suggests that such business networks require modularization of the products, the processes and the firm in order to be effective. Firms would be able to share their core capabilities and therefore can respond faster, and more effective, to different requirements. Are business networks indeed more dynamic and more \u27agile\u27 than other forms of inter-organizational co-operation like alliances, joint-ventures or markets? More precisely, what is the impact of the structure of a business network on the performance of the participating actor organizations? The objective of this study is to define and understand this relationship: business network structure and organizational performance. In this Research in Progress Paper we present our preliminary set of hypotheses and our testing instrument, a management game called the Business Networking Game that simulates modular business networks

Evolution of Supply Chain Collaboration: Implications for the Role of Knowledge

Increasingly, research across many disciplines has recognized the shortcomings of the traditional “integration prescription” for inter-organizational knowledge management. This research conducts several simulation experiments to study the effects of different rates of product change, different demand environments, and different economies of scale on the level of integration between firms at different levels in the supply chain. The underlying paradigm shifts from a static, steady state view to a dynamic, complex adaptive systems and knowledge-based view of supply chain networks. Several research propositions are presented that use the role of knowledge in the supply chain to provide predictive power for how supply chain collaborations or integration should evolve. Suggestions and implications are suggested for managerial and research purposes

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.

Problem solving and the co-ordination of innovative activities

In the context of increasingly globalized markets, ever more complex supply chains and international manufacturing networks, corporate decision-making processes involve more and more actors, variables and criteria. This is a challenge for corporate head quarters. Many have argued that the role once attributed to the integrated innovative organisation and its R&D laboratories is increasingly associated with the functioning of networks of specialised innovators. The aim of this paper is to argue that the role of large firms may have changed, but it is far from disappeared. It looks at the interplay of increasing knowledge specialisation, the development of products of increasing complexity that perform a widening range of functionalities, and the emergence and diffusion of new design strategies for both products and organisations, namely modularity. The emergence of modularity as a product and organisational design strategy is clearly connected to recent trends in organisational design. Modularity would allow the decoupling of complex artifacts into simpler, self-contained modules. Each module would, at the extreme, become the sole business of a specialised trade. This paper builds upon the idea that there are cognitive limits to this process of modularisation: what kinds of problems firms solve, and how they solve them, set limits to the extent of division of labour among firms. We draw implications of such limits for both management and economic theory.large firms, knowledge specialisation, complex products, modularity,

Improving supply chain management in construction: what can be learned from the aerospace industry?

In order to provide for controllable delivery, reliable lead times and efficient customer response, lean manufacturing and platform assembly practices play an important role in supply chains in the aerospace industry. The adoption of lean manufacturing practices ensures an efficient delivery of products to the market. Benefits from the development of platform strategies are a more reliable materials supply and an improved logistics control. The aerospace industry is characterized by a small number of major global players and many small ones. A major part of the design and production has been contracted out to suppliers. In this paper the basic similarities and differences between the construction and aerospace industry and supply chains are analysed. A comparative study of aerospace and construction supply chains is presented to indicate and discuss the applicability of supply chain management concepts to construction, and the improvement potential of these concepts regarding supply chain management in construction. It is concluded that in particular the practice of platform assembly is a fruitful concept to be applied in the construction industry

Strategic perspectives on modularity

In this paper we argue that the debate on modularity has come to a point where a consensus is slowly emerging. However, we also contend that this consensus is clearly technology driven. In particular, no room is left for firm strategies. Typically, technology is considered as an exogenous variable to which firms have no choices but to adapt. Taking a slightly different perspective, our main objective is to offer a conceptual framework enabling to shed light on the role of corporate strategies in the process of modularization. From interviews with academic design engineers, we show that firms often consider product architecture as a critical variable to fit their strategic requirements. Based on design sciences, we build an original approach to product modularity. This approach, which leaves an important space for firms' strategic choices, proves also to seize a large part of the industrial reality of modularity. Our framework, which is a first step towards the consideration of strategies within the framework of modularity, gives an account for the diversity of industrial logics related to product modularization.product modularity ; corporate strategy ; technological determinism

Digitalization and Innovation

Developments in digital technology offer new opportunities to design new products and services. However, creating such digitalized products and services often creates new problems and challenges to firms that are trying to innovate. In this essay, we analyze the impact of digitalization of products and services on innovations. In particular, we argue that digitalization of products will lead to an emergence of new layered product architecture. The layered architecture is characterized by its generative design rules that connect loosely coupled heterogeneous layers. It is pregnant with the potential of unbounded innovations. The new product architecture will require organizations to adopt a new organizing logic of innovation that we dubbed as doubly distributed innovation network. Based on this analysis, we propose five key issues that future researchers need to explore.innovation, innovation, product architecture, design rules

Modularization Assessment of Product Architecture

Modularization refers to the opportunity for mixing-and-matching of components in a modular product design in which the standard interfaces between components are specified to allow for a range of variation in components to be substituted in a product architecture. It is through mixing-and-matching of these components, and how these components interface with one another, that new systems are created. Consequently, the degree of modularization inherent in a system is highly dependent upon the components and the interface constraints shared among the components, modules, and sub-systems. In this paper, a mathematical model is derived for analyzing the degree of modularization in a given product architecture by taking into consideration the number of components, number of interfaces, the composition of new-to-the-firm (NTF) components, and substitutability of components. An analysis of Chrysler windshield wipers controller suggests that two product architectures may share similar interface constraints, but the opportunity for modularization of one module is significant higher than the other due to the higher substitutability of its components and lower composition of NTF components.Product architecture, modularization, substitutability, new product development

Vertical sub-contracting relationships strategy, the Airbus First-tier suppliers\' coordination

This paper analyzes the transformations of industrial vertical relationships, and more particularly the duality of the coordination modes within new industrial architectures. The paper aims to characterize relationship between the architect and the first-tier suppliers according to the strategic degree of their competence. Two models of coordination arm\'s length and systems integration coexist within the same industrial architecture. The recourse to one or the other varies according to the policy of purchase and the strategic degree of the sub-contracted subsystems. Thus we will analyze the system of subcontracting of Airbus by focusing to the importance of the purchasing policy. The argumentation articulates in two parts. The first one considers the vertical subcontracting relationships in the framework of complex productions, by insisting on organizational aspects. The second one analyses the transformation of the \"Airbus\" productive system by focusing on purchasing process and the emergence of new First-tier supplier’s coordination modes.NAModularity – Systems Integration – Strategic competences – Purchasing Strategy – First Tier Suppliers – Airbus

The Mirroring Hypothesis: Theory, Evidence and Exceptions

The mirroring hypothesis predicts that the organizational patterns of a development project (e.g. communication links, geographic collocation, team and firm co-membership) will correspond to the technical patterns of dependency in the system under development. Scholars in a range of disciplines have argued that mirroring is either necessary or a highly desirable feature of development projects, but evidence pertaining to the hypothesis is widely scattered across fields, research sites, and methodologies. In this paper, we formally define the mirroring hypothesis and review 102 empirical studies spanning three levels of organization: within a single firm, across firms, and in open community-based development projects. The hypothesis was supported in 69% of the cases. Support for the hypothesis was strongest in the within-firm sample, less strong in the across-firm sample, and relatively weak in the open collaborative sample. Based on a detailed analysis of the cases in which the mirroring hypothesis was not supported, we introduce the concept of actionable transparency as a means of achieving coordination without mirroring. We present examples from practice and describe the more complex organizational patterns that emerge when actionable transparency allows designers to 'break the mirror.'Modularity, innovation, product and process development, organization design, design structure, organizational structure, organizational ties