The Evolution of Modular Product Architectures and the Emergence of Platform Ecosystems

• Main Authors: WOODARD, C. Jason, Clemons, Eric K.
• Format: text
• Language: English
• Published: Institutional Knowledge at Singapore Management University 2013
• Subjects: Modularity; Product architecture; Simulation; Computer Sciences; E-Commerce
• Online Access: https://ink.library.smu.edu.sg/sis_research/1929; https://ink.library.smu.edu.sg/context/sis_research/article/2928/viewcontent/platform2013_submission_7.pdf
• Institution: Singapore Management University

While a large body of research has examined the advantages and disadvantages of modularity in product design, studies of modularization have tended to focus on settings in which a product’s architecture is determined by a single designer or designers within a single organization. In this paper, we ask whether modularity can arise in a decentralized setting where high-value designs are rewarded but designers’ ability to coordinate with each other and anticipate the consequences of their actions is limited—in short, whether modularity can evolve. To answer this question, we developed an agent-based model in which boundedly rational firms combine components into products. We conducted computational experiments to identify conditions that favor the emergence of products with a high degree of modularity, as measured by the extent of functional decoupling among the components. We further explored the extent to which modularity enables firms to discover high-value product designs in environments characterized by diverse or dynamic consumer preferences. Finally, we investigated the patterns of reuse among components to trace the emergence of “core” products that can become the basis for platform ecosystems. Our preliminary results support the conclusion that modularity in product design can indeed evolve, although the products generated by our model lack the defining features of real-world modular architectures (e.g., hierarchically nested subsystems and interface standards). Nonetheless, these findings can serve as a baseline for future research on the evolution of complex products and the industries that produce them.