How Modular-to-Integral Product Architecture Changes Affected an Industry’s Structure and Competition

다국어 초록 (Multilingual Abstract)

Much of the research dealing with the relationships between product architecture and industry structure change suggests one evolutionary direction - as products tend to change from integral to modular form, industry tends to change from integrated to disintegrated form. Given much research focuses on the predominant evolutionary direction, of particular interest to this study is the processes by which modular-to-integral product architecture change shapes industry’s competitive structure. We empirically test Schilling’s theoretical model of interfirm product modularity with an unusual case of de-modularization of a dominant design in a mature industry. We find that the model fully explains the direction of the process, but only partially its beginning and final outcome. Through careful study of the case we identify conditions favorable for the start of the process, and specify detailed mechanisms through which the de-modularization resulted in a nearmonopoly position of the attacking firm. The results suggest that the product architecture simultaneously represents a firm’s decision variable and shapes the firm’s competitive environment, and the relative weight between them is determined by contextual circumstances.

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