The effects of product modularity on competitive performance: Do integration strategies mediate the relationship?

The purpose of this paper is to examine the effects of product modularity on four aspects of competitive performance: cost, quality, flexibility, and cycle time.

Constructs were created from a comprehensive survey of the automotive sector. Regression is used to ascertain the relationship between the constructs of product modularity and performance with three different integration strategies as mediators.

Modularity positively and directly influences each aspect of competitive performance for each integration strategy tested. Indirect effects were found for each integration strategy for cost and flexibility; and for manufacturing integration and cycle time.

A product modularity strategy enables simultaneous improvements on multiple dimensions of competitive performance.

This research is the first to empirically validate the effects of product modularity on competitive performance. Furthermore, it provides insight into the exact nature of product modularity's influence on competitive performance.