Discussion: View Thread

ICC SI – The Power of Modularity Today: 20 Years of "Design Rules”

  • 1.  ICC SI – The Power of Modularity Today: 20 Years of "Design Rules”

    Posted 08-08-2020 14:50

     

    Call for Papers for a Special Issue of

    Industrial and Corporate Change

     

    The Power of Modularity Today: 20 Years of "Design Rules"

     

    Submission Deadline:  March 31st 2021.

     

     

    Guest Editors

     

    Stefano Brusoni:  ETH Zürich

    Joachim Henkel:  Technical University of Munich (TUM)

    Michael Jacobides: London Business School (LBS)

    Samina Karim:  Northeastern University

    Alan MacCormack:  Harvard Business School (HBS)

    Phanish Puranam:  INSEAD

    Melissa Schilling:  New York University (NYU)

     

    This year marks 20 years since Carliss Baldwin and Kim Clark (2000) published their landmark book, "Design Rules – The Power of Modularity."  In that time, the book has had a profound impact on organization theory, competitive strategy, and innovation research, as well as on technical studies of system architecture and performance. The theory of modular design and industrial evolution, as presented by the authors, has been used to analyze and explain a multitude of different phenomena, ranging from the structure of organizations, the design of technical artifacts, competition within and across industry boundaries, to the ability to create and capture economic value through innovation.

     

    Organizational studies have drawn extensively on the concepts presented in "Design Rules" in a variety of ways.   Modularity theory helps to explain why and how the boundaries of the firm are designed (Brusoni et al., 2001; Jacobides and Billinger, 2006; Baldwin, 2008) as well as the internal structure of organizations (Sanchez and Mahoney, 1996; Brusoni and Prencipe, 2001; Langlois, 2002; MacCormack et al., 2006; 2012; Karim, 2006; Puranam 2018). Scholars have explored the "mirroring hypothesis" (Henderson and Clark, 1990; Sanchez and Mahoney, 1996; MacCormack et al, 2014; Colfer and Baldwin, 2016; Tee, 2019), which conjectures that the "organizational ties within a project, firm, or group of firms (e.g., communication, collocation, employment) will correspond to the technical dependencies in the work being performed".  Scholars have also fruitfully applied the tool of design structure matrices highlighted in the book to the study of organizational and technical designs, as well as the degree of alignment between them (Browning, 2001; Sosa et al, 2004; Eppinger and Browning, 2012; Sosa et al, 2103; Baldwin et al., 2014).

     

    Relatedly, although from a different perspective, Baldwin and Clark's theory of modularity has informed research on industry structure, in particular on the vertical integration and disintegration of industries (Jacobides, 2005; Fixson and Park, 2008; Luo et al., 2012; Kapoor, 2013), the division of labor between firms (Schilling, 2000; Sturgeon, 2002), as well as the nature of business ecosystems and strategies for platform competition (Gawer and Cusumano, 2002; Iansiti and Levien, 2004; Baldwin, 2012; Waltl et al., 2012; Parker et al, 2016; Jacobides et al., 2018; Cusumano et al, 2019).

     

    In the field of strategy research, scholars have employed the concept of modularity to explain different business models (Aversa et al., 2015), competitive dynamics in industries (Garud and Kumaraswamy, 1993), varying levels of product variety (Matutes and Regibeau, 1988; Garud and Kumaraswamy, 1995), and the development of organizational capabilities (Jacobides, 2006).

     

    With respect to the study of innovation, "Design Rules" built upon earlier contributions on the design of complex systems, developing a more comprehensive framework upon which future work could be based. Beginning with the decomposition and development of technical systems (Simon, 1962; Parnas, 1972; Arthur, 2009), scholars have shown how modularity facilitates innovation (Langlois and Robertson, 1992; Baldwin and Clark, 2006a; Baldwin et al., 2014) and user innovation in particular (von Hippel and Finkelstein, 1979; Baldwin and von Hippel, 2011); but can also invite competitive imitation (Pil and Cohen, 2006; Ethiraj and Levinthal, 2008).  Researchers have shown how the concept of modularity can be used strategically in new product development (Ulrich and Eppinger, 1994; Ulrich, 1995; Krishnan and Ulrich, 2001; MacCormack, 2001; Tee, 2019; Windrum et al., 2019), knowledge management (Carlile, 2004), and the process of technological search (Fleming, 2001).  Finally, work has explored the subtle interplay between modularity and intellectual property, investigating its impact on a firm's ability to capture value from innovation (Jacobides et al., 2006; Quan and Chesbrough, 2010; Henkel et al., 2013; Baldwin and Henkel, 2015).

     

    Today, 20 years after the book was first published, the sequel, "Design Rules: Volume 2: How Technology Shapes Organizations" is nearing completion, with the manuscript published as a series of working papers by Professor Baldwin.  Hence this represents the perfect time to take stock of developments in the field, gathering contributions motivated by the original work, and that use its theoretical and empirical underpinnings to bring new insights and evidence to bear on related topics.

     

    Goals of the Special Issue

     

    This Special Issue of Industrial and Corporate Change aims to collect current research building directly or indirectly upon the theories and empirical evidence introduced in "Design Rules: Vol. 1."  Submissions should relate to modularity and its implications for organization, strategy, innovation, system design, and other topics that fit the scope of Industrial and Corporate Change.  Contributions are welcome using a variety of methodological approaches, including theoretical, empirical, case study and archival research.  Possible areas of focus include, but are not limited to:

     

    A)      Organizational Design

    B)      Competitive Strategy and Game Theory

    C)      Industry Ecosystems and Platforms

    D)      Industry Evolution and Dynamics

    E)       The Management of Innovation and Technology

    F)       New Product (and Service) Development

    G)     System Architecture, Design and Evolution

    H)      Manufacturing, Operations and Supply Chain Management

     

    Deadline, Submission and Review Process

     

    Submissions should be prepared in accordance with ICC's author guidelines found on the website.

     

    The guest editors will screen submissions to ensure appropriate scope and relevance.  Manuscripts that pass this initial screen will be sent to reviewers on an accelerated timeline.  Manuscripts that do not pass this screen will be eligible for submission to a regular issue of ICC.

     

    Submission Deadline:  January 31st 2021.

    Reviewer Comments to Authors:  April 31st 2021.

    Deadline for Final version of Paper:  July 31st 2021.

    Anticipated Publication Date:  Fall 2021.


    References:

    Arthur, W.B., 2009. The nature of technology: What it is and how it evolves. Simon and Schuster.

    Aversa, P., Haefliger, S., Rossi, A. and Baden-Fuller, C., 2015. From business model to business modelling: Modularity and manipulation. Advances in Strategic Management, 33(1), pp.151-185.

    Baldwin, C.Y., 2008. Where do transactions come from? Modularity, transactions, and the boundaries of firms. Industrial and corporate change, 17(1), pp.155-195.

    Baldwin, C.Y., 2012. Organization design for business ecosystems. Journal of Organization Design, 1(1).

    Baldwin CY, Clark KB. 2000. Design Rules, Volume 1: The Power of Modularity. MIT Press: Cambridge, MA.

    Baldwin, C.Y. and Clark, K.B., 2003. Managing in an age of modularity. Managing in the modular age: Architectures, networks, and organizations, 149: 84-93.

    Baldwin, C.Y. and Clark, K.B., 2006a. The architecture of participation: Does code architecture mitigate free riding in the open source development model?. Management Science, 52(7), pp.1116-1127.

    Baldwin, C.Y. and Clark, K.B., 2006b. Modularity in the design of complex engineering systems. In Complex engineered systems (pp. 175-205). Springer, Berlin, Heidelberg.

    Baldwin, C.Y. and Henkel, J., 2015. Modularity and intellectual property protection. Strategic management journal, 36(11), pp.1637-1655.

    Baldwin, C., MacCormack, A. and Rusnak, J., 2014. Hidden structure: Using network methods to map system architecture. Research Policy, 43(8), pp.1381-1397.

    Baldwin, C.Y. and Woodard, C.J., 2009. The architecture of platforms: A unified view. Platforms, markets and innovation, 32.

    Baldwin, C. and Von Hippel, E., 2011. Modeling a paradigm shift: From producer innovation to user and open collaborative innovation. Organization science, 22(6), pp.1399-1417.

    Browning, T.R., 2001. Applying the design structure matrix to system decomposition and integration problems: a review and new directions. IEEE Transactions on Engineering management, 48(3), pp.292-306.

    Brusoni, S., Prencipe, A. (2001). Unpacking the black box of modularity: technologies, products and organizations. Industrial and Corporate Change, 10(1), 179-205.

    Brusoni, S., Prencipe, A. and Pavitt, K., 2001. Knowledge specialization, organizational coupling, and the boundaries of the firm: why do firms know more than they make?. Administrative science quarterly, 46(4), pp.597-621.

    Carlile, P.R., 2004. Transferring, translating, and transforming: An integrative framework for managing knowledge across boundaries. Organization science, 15(5), pp.555-568.

    Colfer, L.J. and Baldwin, C.Y., 2016. The mirroring hypothesis: theory, evidence, and exceptions. Industrial and Corporate Change, 25(5), pp.709-738.

    Cusumano, M A., A Gawer, and D B. Yoffie. 2019.  The Business of Platforms: Strategy in the Age of Digital Competition, Innovation, and Power. Harper Business.

    Eppinger, S.D. and Browning, T.R., 2012. Design structure matrix methods and applications. MIT press.

    Ethiraj SK, Levinthal D, Roy R. 2008. The Dual Role of Modularity: Innovation and Imitation. Management Science 54(5): 939-955.

    Fixson SK, Park, JK. 2008. "The power of integrality: linkages between product architecture, innovation and industry structure," Research Policy 37(8): 1296-1316.

    Fleming, L., 2001. Recombinant uncertainty in technological search. Management science, 47(1), pp.117-132.

    Garud R, Kumaraswamy A. 1993. Changing competitive dynamics in network industries: An exploration of sun microsystems' open systems strategy. Strategic Management Journal 14: 351-369.

    Garud R, Kumaraswamy A. 1995. Technological and organizational designs for realizing economies of substitution. Strategic Management Journal 16: 93-109.

    Gawer A. and Cusumano, M.  2002.  Platform Leadership.  Harvard Business School Press, Boston, MA.

    Henderson R. M. Clark K. B. (1990), 'Architectural innovation: the reconfiguration of existing product technologies and the failure of established firms,' Administrative Science Quarterly, 35(1), 9–30.

    Henkel, J., Baldwin, C.Y. and Shih, W., 2013. IP modularity: Profiting from innovation by aligning product architecture with intellectual property. California management review, 55(4), pp.65-82.

    Iansiti, M. and Levien, R., 2004. The keystone advantage: what the new dynamics of business ecosystems mean for strategy, innovation, and sustainability. Harvard Business Press.

    Jacobides, M.G., 2005. Industry change through vertical disintegration: How and why markets emerged in mortgage banking. Academy of Management Journal, 48(3), pp.465-498.

    Jacobides, M.G., 2006. The architecture and design of organizational capabilities. Industrial and Corporate Change, 15(1), pp.151-171.

    Jacobides, M.G. and Billinger, S., 2006. Designing the boundaries of the firm: From "make, buy, or ally" to the dynamic benefits of vertical architecture. Organization science, 17(2), pp.249-261.

    Jacobides, M.G., Cennamo, C. and Gawer, A., 2018. Towards a theory of ecosystems. Strategic Management Journal, 39(8), pp.2255-2276.

    Jacobides, M.G., Knudsen, T. and Augier, M., 2006. Benefiting from innovation: Value creation, value appropriation and the role of industry architectures. Research policy, 35(8), pp.1200-1221.

    Karim, S.  2006.  Modularity in organizational structure: the reconfiguration of internally developed and acquired business units, Strategic Management Journal, Vol 27, Issue 9: 799-823.

    Kapoor, R., 2013. Persistence of integration in the face of specialization: How firms navigated the winds of disintegration and shaped the architecture of the semiconductor industry. Organization Science, 24(4), pp.1195-1213.

    Krishnan, V. and Ulrich, K.T., 2001. Product development decisions: A review of the literature. Management science, 47(1), pp.1-21.

    Langlois, RN. 2002. Modularity in technology and organization. Journal of Economic Behavior and Organization, 49(1):19-37.

    Langlois RN, Robertson PL. 1992. Networks and innovation in a modular system: Lessons from the microcomputer and stereo component industries. Research Policy 21: 297–313.

    Luo, J., Baldwin, C.Y., Whitney, D.E. and Magee, C.L., 2012. The architecture of transaction networks: a comparative analysis of hierarchy in two sectors. Industrial and Corporate Change, 21(6), pp.1307-1335.

    MacCormack, A., Baldwin, C. and Rusnak, J., 2012. Exploring the duality between product and organizational architectures: A test of the "mirroring" hypothesis. Research Policy, 41(8), pp.1309-1324.

    MacCormack, A., Rusnak, J. and Baldwin, C.Y., 2006. Exploring the structure of complex software designs: An empirical study of open source and proprietary code. Management Science, 52(7), pp.1015-1030.

    MacCormack, A., Verganti, R. and Iansiti, M., 2001. Developing products on "Internet time": The anatomy of a flexible development process. Management science, 47(1), pp.133-150.

    Matutes C, Regibeau P. 1988. 'Mix and match': Product compatibility without network externalities. RAND Journal of Economics 19: 221-234.

    Parker, G, M.V. Alstyne, and S.P. Choudary. 2016.  Platform Revolution: How Networked Markets Are Transforming the Economy and How to Make Them Work for You. New York: W.W. Norton & Co.

    Parnas, David L. (1972) On the Criteria to Be Used in Decomposing Systems into Modules, Communications of the ACM 15: 1053-58.

    Pil FK, Cohen SK. 2006. Modularity: Implications for imitation, innovation, and sustained competitive advantage. Academy of Management Review, 31(4): 995-1011.

    Puranam, P.  2018 The Microstructure of Organizations.  Oxford University Press.  Oxford, UK.

    Quan X, Chesbrough H. 2010. Hierarchical segmentation of R&D process and intellectual property protection: Evidence from multinational R&D laboratories in China. IEEE Transactions in Engineering Management 57(1): 9-21.

    Sanchez R, Mahoney JT. 1996. Modularity, flexibility, and knowledge management in product and organizational design. Strategic Management Journal Winter Special Issue 17: 63–76.

    Schilling MA. 2000. Toward a general modular systems theory and its application to interfirm product modularity. Academy of Management Review 25: 312–334.

    Simon HA. 1962. The architecture of complexity. Proceedings of the American Philosophical Society 106: 467–482.

    Sosa M, Eppinger S., and Rowles, C. 2004. The Misalignment of Product Architecture and Organizational Structure in Complex Product Development, Management Science, vol. 50, issue 12, 1674-1689

    Sosa, M, Mihm, J, and Browning, T.R. (2013) Linking Cyclicality and Product Quality. Manufacturing & Service Operations Management 15(3):473-491

    Sturgeon, T.J., 2002. Modular production networks: a new American model of industrial organization. Industrial and corporate change, 11(3), pp.451-496.

    Ulrich, K. (1995). The role of product architecture in the manufacturing firm. Research policy, 24(3), 419-440.

    Ulrich KT, Eppinger SD. 1994. Product Architecture, Methodologies for Product Design and Development. McGraw-Hill: New York.

    von Hippel E. 1990. Task partitioning:  An innovation process variable. Research Policy 19: 407-18.

    von Hippel, E., Finkelstein, S. N. (1979). Analysis of innovation in automated clinical chemistry analyzers. Science and Public Policy, 6(1), 24-37.

    Waltl, J., Henkel, J. and Baldwin, C.Y., 2012. IP modularity in software ecosystems: How SugarCRM's IP and business model shape its product architecture. In: International Conference of Software Business (pp. 94-106). Springer, Berlin, Heidelberg.

     

     

     

    -----------------------------------------------------------------------------------------

    Prof. Dr. Joachim Henkel

    Technical University of Munich

    TUM School of Management

    Dr. Theo Schöller-Stiftungslehrstuhl für Technologie- und Innovationsmanagement

    Arcisstr. 21, 80333 Munich, Germany

    Tel.: +49-89-28925741, Fax: +49-89-28925742 ; henkel@wi.tum.de

    Publications, GoogleScholar, Website