Abstract
Modular architectural approach has been an important perspective in product innovation research. In this study, we have tried to build a basic theory for understanding interface strategies in modular product innovation through a literature review that covers a number of concepts including product architecture, functional modules, internal and external interfaces, product platforms and families. Based on a product's internal and external dimensions and openness of interface, we construct a strategic matrix of interface possibilities in modular product innovation. We also discuss the technological and organizational requirements for each strategy. Based on case studies of Taiwan's machine tool industry, we examine the practical application of interface strategies. This study finds that existing external interface standards impose limits on product innovation and the innovative efforts tend to focus on internal interfaces and modules, while an open supply network contributes to the high openness between different products in Taiwan's machine tool industry. In addition, we also discuss the architectural essence of Taiwan's machine tool industry, with an expectation that such a discussion may provide the impetus for structural changes in product innovation and supplier networks in the industry.
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