Modularity: Implications for Imitation, Innovation, and Sustained Advantage

Modular design practices provide a lens on the link among product architecture, imitation, and the dynamic capabilities that sustain long-term performance. Looking at closed product systems, we propose that simplified links between design and performance outcomes in modular environments facilitate imitation. The same reduction in complexity drives development of dynamic capabilities. These take the form of more rapid and reliable search processes for incremental and radical innovations. The scope and timing of a firm’s modular strategy influence the development of these capabilities, which are critical to sustainable modular performance advantages.