How Do Firms Compete When Faced with Architectural Changes?

• Main Author: Koichi NAKAGAWA
• Format: Article
• Language: English
• Published: Global Business Research Center 2006-12-01
• Series: Annals of Business Administrative Science
• Subjects: product architecture; modularity trap; architectural knowledge; vertical integration; optical storage media; cd; dvd
• Online Access: https://www.jstage.jst.go.jp/article/abas/5/0/5_1/_pdf/-char/en

This study explores how firms respond to changes in product or process architecture. Product or process architecture is the design rules of a system which can be described as the pattern of interrelations between components. Firms must prepare adequate knowledge in a specific architectural condition, so changes of architecture cause serious managerial problems for firms, called modularity traps (or integrity traps). A case study of the optical storage media industry gives some hints for overcoming such traps. First, firms have to alter their strategies and business domains when architectural conditions are changing. That is, in a modularity condition firms have to specialize, and in an integrity condition firms have to coordinate some activities. Second, and more importantly, firms have to retain their component and system knowledge, in order to maintain competitiveness both in specialized activities and in integrated activities.