Fingerprints of the Visible Hand. Chandlerian Organizations and their Inward Looking Malaise

This paper investigates the relationships between firm organization attributes, namely a structure á la Chandler, and their inward looking or “exploitation” attitude in R&D and innovation. We argue that because of sunk costs and learning processes an inward looking behavior is a consequence of increases in firm size. However, it is also produced by an organizational model based on hierarchical managerial decisions, typical of the Chandlerian firms, that is not directly related to size. We find that the US States populated by larger firms show a higher share of patent self-citations normalized by their share of world patents. Even after controlling for firm size, a proxy for the extent of firm divisionalization in the States exhibits a significant effect on patent self-citations normalized by patent shares. This supports our point that the inward looking behavior of the Chandlerian firms is not just a consequence of size, but also of the Chandlerian organizational model. Among other things, this suggests that “exploration”, which leads to the opening of new innovation trajectories, requires not only small firms, but also different organizational setups and decision processes.Patents, Self-citations, Chandlerian Firm, Inward looking, Inertia

Chandlerian Firms vs. Entrepreneurship

This paper employs an original dataset for 146 US metropolitan areas to test some propositions that characterize two different models of organizing firms and industries: the managerial firm, epitomized by the work of Alfred Chandler, and the entrepreneurial system, recently highlighted by many authors. We discuss the reasons why, compared to the entrepreneurial systems, the Chandlerian world entails a lower spread of managerial salaries, greater product diversification, and a greater degree of products “exploitation” vs “exploration”. If there are knowledge spillovers, the entrepreneurial model produces higher expected managerial salaries. By providing systematic evidence about their characteristics, our study contributes to our understanding of the nature, the comparative advantages, and the potential division of labor between the two models.Chandlerian Firms, Entrepreneurship, Diversification, Technology

Highlighting the importance of testing in the product development process

A product development is not a linear process of “design-build-test”; rather, the design process and the testing process are closely integrated throughout the product development process. The main objective of this paper is to understand how testing is integrated into the product development process and how that effects the product development processes in companies. This paper reports case studies in UK based manufacturing companies where physical testing are essential activities but key concern in reducing design time and cost. Based on these case studies, this paper proposes a product development process framework that highlights the importance of testing and it’s intertwined nature with design activities

Modularity and Innovation in Complex Systems

The problem of designing, coordinating, and managing complex systems has been central to the management and organizations literature. Recent writings have tended to offer modularity as, at least, a partial solution to this design problem. However, little attention has been paid to the problem of identifying what constitutes an appropriate modularization of a complex system. We develop a formal simulation model that allows us to carefully examine the dynamics of innovation and performance in complex systems. The model points to the trade-off between the destabilizing effects of overly refined modularization and the modest levels of search and a premature fixation on inferior designs that can result from excessive levels of integration. The analysis highlights an asymmetry in this trade-off, with excessively refined modules leading to cycling behavior and a lack of performance improvement. We discuss the implications of these arguments for product and organization design.

Are More Frequent Releases Always Better? Dynamics of Pivoting, Scaling, and the Minimum Viable Product

Using the system dynamics methodology, we model the minimum viable product (MVP) approach to product development and examine the impact of release frequency, planning practices and committed reengineering capacity on software development outcomes. We leverage the organizational learning, Lean Startup, and Agile methodology literature to form the underpinnings of the model and measure outcomes using cumulative market cost of failing to meet market wants and cumulative engineering cost. While shorter release cycles are better in general for achieving market fit, the relationship is moderated by planning delays and committed reengineering capacity. We show that reducing the extent of pivot in each iteration may be better for firms. Firms instead should iterate moderately and not radically during any particular release. Counter intuitively, planning delays are beneficial by reducing overreaction to spurious market signals. Finally, we discuss implications of our findings for future research on learning and planning amongst entrepreneurial firms

Testing in the incremental design and development of complex products

Testing is an important aspect of design and development which consumes significant time and resource in many companies. However, it has received less research attention than many other activities in product development, and especially, very few publications report empirical studies of engineering testing. Such studies are needed to establish the importance of testing and inform the development of pragmatic support methods. This paper combines insights from literature study with findings from three empirical studies of testing. The case studies concern incrementally developed complex products in the automotive domain. A description of testing practice as observed in these studies is provided, confirming that testing activities are used for multiple purposes depending on the context, and are intertwined with design from start to finish of the development process, not done after it as many models depict. Descriptive process models are developed to indicate some of the key insights, and opportunities for further research are suggested

Improving overlapping between testing and design in engineering product development processes

Testing components, prototypes and products comprise essential, but time consuming activities throughout the product development process particularly for complex iteratively designed products. To reduce product development time, testing and design processes are often overlapped. A key research question is how this overlapping can be planned and managed to minimise risks and costs. The first part of this research study investigates how a case study company plans testing and design processes and how they manage these overlaps. The second part of the study proposes a significant modification to the existing process configuration for design and testing, which explicitly identifies virtual testing, that is an extension to Computer Aided Engineering which mirrors the testing process through product modelling and simulation, as a distinct and significant activity used to (a) enhance and (b) replace some physical tests. The analysis shows how virtual testing can mediate information flows between overlapping (re)design and physical tests. The effects of virtual testing to support overlap of test and (re)design is analysed for the development phases of diesel engine design at a case study company. We assess the costs and risks of overlaps and their amelioration through targeted virtual testing. Finally, using the analysis of the complex interactions between (re)design, physical and virtual testing, and the scope for replacing physical with virtual testing is examined

The role of testing in the engineering product development process

Testing is essential in developing a successful complex engineering product. System level integration and testing can use between 25 and 50% of development resources. External factors such as legislation and customer requirements drive essential testing whilst internal factors such company experience, affordability and organizational practice frame the overall testing plan. The main objective of this paper is to understand how testing is integrated into the product development process and how different types of testing are scheduled across the stages of product development. The paper reports a case study in a diesel engine company where the balance of virtual and physical testing is a key concern in reducing design time and costs. The importance of dependencies across components, subsystems and tests is highlighted and a model using Design Structure Matrices proposed. Of particular interest are requirements analysis and FMEA stages where testing is planned and resourced Integrating physical and virtual testing is more than process optimization of time and cost. It contributes to recasting the design process in response to change, both in new customer requirements and contingently in design changes which arise during product development

What exactly is Product Modularity? The answer depends on who you ask

'Product modularity' has recently experienced a significant increase in interest in the academic literature. While the concept of product modularity is used across a wide range of academic research areas, substantial variations exist in the ways in which the concept is described and interpreted. In this paper, I develop a framework to represent the similarities and differences that appear across these variations of the concept of product modularity. Next, through an extensive literature search I construct a set of 85 references representing the use of product modularity in the engineering and management literature over the past 30 years (1975–2006). With help of the framework I then analyze the use and interpretation of product modularity in every reference in the set. The analysis demonstrates that the product modularity concepts taken together really encompass a bundle of product characteristics rather than a single condition, and individual research areas exhibit certain preferences in which they define and operationalize product modularity. I conclude with some recommendations for future research. Overall, this paper strives to provide a vocabulary to improve cross-disciplinary understanding of product modularity