Product and Organizational Modularity: A Contingent View of the Mirroring Hypothesis

This study aims to advance a contingent view of the mirroring hypothesis, focusing on the causal effect of product modularity on organizational modularity. It compares the group of papers (‘orthodox’) that confirms the mirroring hypothesis with the group of papers (‘critique’) that assumes a critical position. The citation network analysis performed on the ‘critique’ group searches for contingent factors that explain under which circumstances the mirroring hypothesis does not hold. Results show that the mirroring hypothesis is contingent on a set of six distinct, although interdependent, factors: (i) component technological change and diversity; (ii) innovativeness of product architecture; (iii) complexity of product architecture; (iv) capability dispersion along the supply network; (v) rivalry among leading firms & among suppliers; and (vi) logistics costs. This study discusses each contingent factor in turn, highlighting theories or approaches that ought to be used in conjunction (not in contrast) with the modularity theory to explain the boundaries of firms and industries. A contingent view of the mirroring hypothesis reconciles the two opposite views on the mirroring hypothesis, enhances its ramifications into the theory of the firm, and gives insights to practitioners.