Governance implications of modularity in sourcing relationships
- PDF / 699,247 Bytes
- 25 Pages / 595.276 x 790.866 pts Page_size
- 0 Downloads / 196 Views
ORIGINAL EMPIRICAL RESEARCH
Governance implications of modularity in sourcing relationships Nukhet Harmancioglu 1 & Stefan Wuyts 2 & Peren Ozturan 3 Received: 19 April 2018 / Accepted: 27 September 2020 # Academy of Marketing Science 2020
Abstract Modularization, an important trend in innovation markets, allows for recombination of product components into multiple end-product configurations. Although modularization has consequences for how firms manage their relationships with upstream component suppliers, the governance implications of modularity for innovation sourcing relationships have not been adequately examined in the prior literature. We intend to bridge this gap. We argue that (i) buyer firms employ governance mechanisms (monitoring and socialization) to cope with the strategic hazards of innovation sourcing relationships (knowledge specificity, knowledge asymmetry, and knowledge spillover) and (ii) the consequences of deploying these mechanisms in response to the strategic hazards on relationship performance are contingent upon the degree of modularity of the system in which they are deployed. We provide empirical support for the developed moderated mediation model through an analysis of 194 innovation projects. The developed theory and findings contribute to the governance and modularity literatures. In addition, our findings may help change managers’ behaviors: we observe that managers do not consider modularity when selecting governance mechanisms, while our model findings suggest they should. Keywords Modularity . Organizational control . Innovation sourcing . Moderated mediation Firms increasingly resort to external sourcing of components to innovate cost-effectively while retaining strategic flexibility (Carson 2007; West and Bogers 2014). The phenomenon of buyer-supplier cooperation for product innovation is prevalent across a spectrum of mostly technology-intensive industries, including consumer-electronics, computer software, automobiles, and pharmaceuticals (Choudhury and Sabherwal 2003; Wang et al. 2008). In recent years, major players such as IBM Corp., Accenture Ltd., Electronic Data Systems Corp., Computer Sciences Corp. and HP Co. have signed mega sourcing contracts nearing $15 billion in value (ISG Outsourcing Index). The Boeing Commercial Aircraft Group’s Produce Macro-Process Team and
Sun Microsystems’s JAVA development teams are indicative of the trend to seize strategic opportunities via sourcing relationships. The trend to collaborate with component suppliers goes hand in hand with another trend, to utilize modular product architectures as the basis for innovation design (Ghosh et al. 2006; Parmigiani and Mitchell 2009). Schilling (2000) defines modularity as “a continuum describing the degree to which a system’s components can be separated and recombined, and the extent to which the system architecture enables the mixing and matching of components” (p. 312). What enables firms to utilize modular systems, is the presence of industry-wide standards (c.f., Sanchez 1995; Schilling 200
Data Loading...
