Two dimensions of product modularity and innovation: the case of R&D teams

Abstract This study investigates the relationship between product modularity and innovation in 101 research and development (R&D) teams. The key contribution and the departure from prior empirical work consists in bringing into relation multidimensional operationalizations of these two concepts. Product modularity is composed of standardization and reconfigurability and innovation of novelty and efficiency. The literature provides arguments for both negative and positive relationships between standardization and the two types of innovation, while positive relationships are argued for product reconfigurability. The empirical findings corroborate most of the theorizing, although negative relationships are found for standardization. This study contributes to the literature by unpacking the understanding of the concept of product modularity in R&D organizations since the multidimensional approach resolves some of the ambiguity from previous studies. The modularity literature long called for studies to empirically investigate product modularity in more than one dimension implying a number of theoretical implications discussed here.