Annals of Business Administrative Science
Online ISSN : 1347-4456
Print ISSN : 1347-4464
How Do Firms Compete When Faced with Architectural Changes?
Lessons from the Optical Storage Media Industry
Koichi NAKAGAWA
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JOURNALS FREE ACCESS

2006 Volume 5 Pages 1-18

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Abstract

This study explores how firms respond to changes in product or process architecture. Product or process architecture is the design rules of a system which can be described as the pattern of interrelations between components. Firms must prepare adequate knowledge in a specific architectural condition, so changes of architecture cause serious managerial problems for firms, called modularity traps (or integrity traps). A case study of the optical storage media industry gives some hints for overcoming such traps. First, firms have to alter their strategies and business domains when architectural conditions are changing. That is, in a modularity condition firms have to specialize, and in an integrity condition firms have to coordinate some activities. Second, and more importantly, firms have to retain their component and system knowledge, in order to maintain competitiveness both in specialized activities and in integrated activities.

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