the car and computer industries also points to the importance of labour and capital market conditions as factors mediating the outsourcing decision. It is no wonder that a difference in the mix of these strategic drivers, combined with pre-existing architectural differences, has led to a diversity of product and organizational architecture amongst car manufacturers.
To conclude, this chapter went beyond the pre-existing general discussion of the influence of product modularity on organization design, specifically by using evidence in the car industry to discuss what changes modularity might bring to the organization of design, development and production. Modularity in product architecture gives greater scope for choosing among alternative organization architectures. But the exact choice of organizational form and boundaries depends on corporate strategy, factor conditions, and the existing distribution of capabilities.
The author gratefully acknowledges funding by, and valuable discussion within, the International Motor Vehicle Program (IMVP). This paper incorporates insights gained through interviews carried out at OEMs and module suppliers in Europe and North America. I wish to thank all those who gave generously of their time in answering my questions.
Abernathy, W. J. and Clark, K. B. (1985). 'Innovation: Mapping the Winds of Creative Destruction', Research Policy, 14: 3-22.
Baldwin, C. Y. and Clark, K. B. (1997). 'Managing in the Age of Modularity', Harvard Business Review, September-October: 84-93.
—— ——, (2000). Design Rules: The Power of Modularity. London: MIT Press.
Best, M. (1990). The New Competition: Institutions of Industrial Restructuring. Cambridge, MA: Harvard University Press.
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: 597-621.
Burns, T. and Stalker, G. M. (1961). The Management of Innovation. London: Tavistock.
Chesbrough, H. and Kusunoki, K. (2001). 'The Modularity Trap: Innovation, Technology Phase Shifts, and the Resulting Limits of Virtual Organizations', in I. Nonaka and D. J. Teece (eds.), Managing Industrial Knowledge: Creation, Transfer and Utilization. London: Sage, 202-30.
Clark, K. (1985). 'The Interaction of Design Hierarchies and Market Concepts in Technological Solution', Research Policy, 15/5: 235-51.
Ethiraj, S. K. and Levinthal, D. (2002). Modularity and Innovation in Complex Systems (mimeo). Philadelphia, PA: Wharton School.
Financial Times (1999). 4 August.