The Use of Modular Organizational Forms: An Industry-Level Analysis

In many industries, integrated hierarchical organizations have been replaced by nonhierarchical entities that are permeable, interconnected, and modular. Other industries, however, maintain relatively high levels of integration. We use the logic of general systems modularity to explain why in some industries there is a greater use of modular organizational forms, including contract manufacturing, alternative work arrangements, and alliances, than in other industries. This model was tested using data from 330 U.S. manufacturing industries.