The Effect of the Fit Between Product Architecture and Competitive Action on Business Performance: An Empirical Study of the Taiwan IT Industry

Abstract

This study combines product architecture and competitive action by using a survey of the Taiwan IT industry. The analytic framework is applied to the theory of situational management to observe whether there is a good fit between product architecture (modular or integral), and inter-firm competitive action (homogeneous or heterogeneous), which corresponds to the level of business performance. This study thus seeks an in-depth understanding of the relationship between product architecture and competitive action, as well as confirmation for the development direction and competitive model of Taiwan’s IT industry, where some important characteristics have been found. First, to establish the competitive advantages, the product architecture needs to match the competitive action. Second, a firm usually adopts homogeneous action when its product architecture tends to be modular products; inversely, it usually adopts heterogeneous action when its product architecture tends to be integral products. Third, homogeneous competitive action has a mediating effect on modular architecture and business performance. Overall, this study provides a theoretical analytic framework to better understand the interactive relationship between product architecture and competitive action.