A Study of Modularity in the Perspective of Standardization: A Comparative Analysis of Electronic and Automotive Industries

Abstract

Information and communication technologies (ICT) have been combined with products from other industries to provide new functionality, as recently shown in the cases of Internet of Things (IoT). Modularity assumes a crucial role in such technological convergence, and has impacts on the relationship between organizations as well as competition within an industry. Interface standards, which ensure the connectivity between modules, serve as a critical factor in the process by which modularity affects organization systems and industry structure. To understand the aforementioned phenomenon, we studied modularity and interface standards with a focus on the interaction between technology and organization systems and subsequent changes in industrial dynamics. This paper examines previous literature on modularity and interface standards in the aspects of product architecture, organization systems, and institutional factors. With this analytical framework, we conducted a comparative analysis of electronic and automotive industries to derive implications for standardization policy. This research has shown the significance of external open interface standards in shaping an industrial landscape where a variety of module producers horizontally compete. It also advises that policymakers take into account product characteristics, engagement of leading firms in an industry, and institutional factors such as WTO law in the design of standardization policy.