The nature of production and organisation An N/K model of modularity, (dis)integration and performance

Kerstin Press, Markus Michael Geipel and Frank Schweitzer

Appropriability, Proximity, Routines And Innovation (2007)


This paper investigates the link between product modularity and (dis)integration. A theoretic model benchmarks relative performance of (dis)integration for different degrees of modularity. As in existing work, (nearly) modular production processes befit disintegration while non-modular ones require integration. However, modularity and disintegration only lead to greater product differentiation if there is competition. Empirical evidence is then used to investigate, whether the link between product modularity and disintegration is encompassing or whether a role for some large, integrated firms (systems integrators) remains. This aspect is found to depend on the type of industry studied.