Modular strategies: B2B technology and architectural knowledge

Publisher:
University of California, Berkeley, Haas School of Business
Publication Type:
Journal Article
Citation:
California Management Review, 2005, 47 (4), pp. 86 - 113
Issue Date:
2005-01
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Business-to-business information technology systems are becoming increasingly important in firm supply chains. Utilizing the concept of modularity, this article clarifies the strategic implications of B2B technology. There are two generic B2B strategies: modularization, which allows a firm to rent out its internal capabilities to others in its industry; and architectural entrepreneurship, which alters the supply chain by allowing a central coordinating firm to facilitate arrangements that trust issues and information asymmetries had previously made impossible. Which modular strategy is appropriate depends on the role the focal firm plays in the supply chain and their supply chain indispensability. Only firms with deep architectural knowledge can take full advantage of these modular strategies.
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