Institutional pressures and product modularity: do supply chain coordination and functional coordination matter?

Abstract

Product modularity has received increasing attention from researchers and practitioners in recent years. However, the research on the antecedents of implementing product modularity is limited. In this research, drawing on institutional theory and organisational coordination theory, we propose a model to empirically investigate the effects of institutional pressures (i.e. coercive, normative, and mimetic pressures) on product modularity and how such effects are moderated by organisational coordination (i.e. supply chain coordination and functional coordination). We use data collected from 199 manufacturers to empirically test the research model. The results show that these three institutional pressures have different main effects on product modularity. Coercive pressures and normative pressures are positively and significantly associated with product modularity while the effect of mimetic pressures is not significant. In addition, supply chain coordination and functional coordination play different roles in the relationships between these three institutional pressures and product modularity. Supply chain coordination and functional coordination positively moderate the effect of coercive pressures on product modularity, but negatively moderate the effects of normative pressures and mimetic pressures on product modularity. The implications of these findings are discussed and suggestions for future research are delineated.