The Effect of Product Modularity on Supplier Integration

Abstract

This chapter seeks to identify the set of conditions under which the mirroring hypothesis holds, proposing that modular product architecture leads to organizational modularity (i.e., supplier disintegration). The contradictory results on the mirroring hypothesis in the extant literature call for a more holistic analysis of the issue. To this end, this chapter develops a multi-objective mathematical model, allowing for the simultaneous examination of potentially influential factors, including those claimed to be neglected by the mirroring hypothesis. The findings reveal that modular product architecture does not necessarily lead to supplier disintegration, but that its effect is contingent on a firm's priorities.