On the strategic use of product modularity for market entry

Abstract

Abstract We model the conditions under which firms should enter the market with modular products that support multiple standards instead of an integral product that supports a single standard. Product modularity enables firms to broaden their portfolios and increase their chances of investing in the “right” technologies early in a technology cycle. Entry with integral products instead occurs later in the cycle. We test the model’s predictions on a sample of the Local Area Network industry entrants during the 1990s.