| Abstract: |
Modularity has gained recently a growing attention in the management
literature as a key to explain the contemporary trends of industrial dynamics,
according to which external «market-based» economies have become predominant
over internal «bureaucracy-based» economies. Nowadays global supply-networks
play a key role for a large share of material and immaterial inputs in many
sectors, and the diffusion of modular architectures for products, in
connection with flexible production systems, is often indicated by the
literature as the main driver for this change. In order to analyze better this
connection, in this paper a model is presented which tries to focus on the
factors that influence the competitive performance of internal versus
outsourced production when the two options are subject to a trade-off with
respect to the kind of innovation strategies they can use. In particular
through a set of exploratory agent-based simulations we verify two hypotheses.
The first one is the existence of a trade-off between decentralized search and
complexity, as suggested by a recent strand of literature which has modeled
innovation as a discovery process on complex fitness landscapes. The second
one is a comparative advantage of centralized search, which occurs, for all
levels of complexity, when the returns of innovation are lower. When the
conditions just described occur in a competitive context, the limits of
modularity become apparent. |