Research on modularity and architectural innovation has established that production systems routinize approaches to interdependency across groups or systems but struggle to manage unforseen changes in the interdepedence. Yet we rarely observe firms in the process of adapting across complex, interdependent systems of production. This study builds on modularity theory and the knowledge-based view of the firm to investigate differences in firms’ adaptive behavior in response to an externally imposed supplier change for Formula 1 teams. Before and after an official tire supplier was designated in 2007, we observe adaptations, component problems, and performance among teams that could retain the same tire supplier and those that were forced to change. Difference in difference analysis shows that a firm’s ability to integrate a new external component, even a highly modular product such as a tire, is significantly affected by its ability to understand and adapt in related components across the system. Firms integrating a new tire supplier have fewer problems and perform better when they make more adaptations in tire-related components.
- organization design,
Available at: http://works.bepress.com/charles_williams/11/