Abstract for: The Dynamics of Product Commonality: implications of the circular causality between product and firm structures
Companies designing and manufacturing products are trying to decide whether or not, and how, they could adopt modularization strategies to achieve the same functionality and portfolio of products with fewer parts. Existing literature has identified three issues that have yet to be adequately resolved: having a holistic approach, studying the risks and trade-offs, and modularity over time. Building on existing literature I formulate an endogenous theory of how firms migrate towards increasing or decreasing commonality in their product designs. Central to the dynamics behaviour is the co-evolution of product and organizational design. Through simulation experiments and model analysis I also derived insights that imply situations where more effort is needed to gain the sustained benefits of commonality. This study implies that the success of modularization efforts lies in the hands of the firm more so than the market in which the firm operates.