Architectural innovation and design evolution: strategic and organizational dynamics of industry platforms

Abstract

The importance of understanding changes in the underlying architecture of complex systems has been well established, both in the academic and practitioner literature. Though existing research has made significant advances, important issues remain. Generally, existing research on architectural change has tended to overlook the interplay between environmental and firm-level drivers. In particular, relatively few studies have looked at the challenges firms face in making architectural design choices, and contingencies arising out of architectural change. As such, empirical evidence on this relationship is under-represented, even though its importance has been well established, for instance in the literature on organization design and contingency theory. Overall, this thesis emphasizes the interplay between environmental drivers and firm-level actions. In particular, it highlights the challenges firms face in dealing with environmental changes (e.g. new entrants, regulatory changes, standards setting), how this affects architectural design choices, and the underlying motivations driving these decisions. The dissertation is built up as follows. Following an introductory chapter, Chapter 2 develops a conceptual framework to understand changes in industry modularity. It suggests that industry architectures become more modular based on dissemination of product interfaces and organizational practices, and highlights several moderating factors influencing this process. Chapter 3 analyzes changes in product and organizational architecture, highlighting the combined role of environmental and firm-level drivers in affecting this relationship. Tensions between collaboration and competition in particular complicate a firm‘s decision making process regarding product and organization architecture design choices. Chapter 4 examines the product and industry level, focusing on which factors drive value appropriation and value creation in interdependent industry ecosystems. The chapter explores this through a study comparing the contrasting deployment of the i-mode mobile internet service, highlighting the importance of industry architectures to explain these differences.