THE IMPACT OF MODULAR DESIGN AND INNOVATION ON COMPANY PERFORMANCE: THE ROLE OF CONTEXTUAL FACTORS

摘要

Modular product design and product innovation are quickly becoming mainstays in the field of technology management. Many researchers have explored the importance of modular product design and its effects on new product performance. Others have reported the impact of product innovation on company performance and how to effectively create new products. However, a few empirical studies explicitly examine how modular design and innovation work together to improve new product performance and what contextual factors facilitate modular product design and product innovation. This paper proposes a research model that hypothesizes three contextual factors (i.e. product variety, product platform strategy and product modular design system) with modular product design and three (i.e. R&D intensity, organizational innovative climate and product development roadmap) with product innovation, in addition to hypothesizing a relationship between modular product design and product innovation. The model also proposes that modular product design and product innovation improve competitive capability, product development speed, new product and innovation performance. The proposed model was tested by using a self-administrative industrial survey of 153 manufacturers in Hong Kong electronic and electrical appliances industry. The response rate was 29%. A majority of the respondents were senior management with over 6 years R&D experience in the company. Alpha reliability, confirmatory factor analysis, and structural equation modeling were used to verify the research constructs and proposed model. The results supports our proposed model that product variety, product platform strategy and product modular design system were positively correlated with modular product design. Organizational innovative climate and product development roadmap had positive effects on product innovation but R&D intensity had not. Instead, R&D intensity had a direct effect on innovation performance. As hypothesized, modular product design was found to be positively correlated with competitive capability and product development speed. Product innovation was positively correlated with new product performance, product development speed, competitive capability and innovation performance. Product development speed was explored to have a positive relationship with new product performance. The findings of this study increase our understanding of the dynamics of the contextual factors, modular design, product innovation and company performance. The study identifies which factors motivate the adoption of modular design and innovation together. As expected, modular design and product innovation improve company performance in various ways such as new product performance, product development speed, competitive capability and innovation performance. The statistically insignificant relationship between modular design and innovation shows that further research on the literature is needed. The study has its limitations that it used a cross-sectional empirical survey to verify the model. Product modules may affect multiple product families as the modules can be reused several times for future product development, so as to the product innovation activities. In future research, multiple cross-sectional analyses in different time frames or longitudinal study could be used to study the relationship of modular design and innovation over an extended period.