The impact of product modularity and supply chain integration on product performance

Abstract

In recent years, product modularity (PM) and supply chain integration (SCI) have been recognized as key concepts for the success in product development. A few literatures have explored their effects on competitive capabilities (CC) and product performance in product development. However, the relationships among PM, SCI, CC and product performance have not been closely examined in literature and there have been very few empirical studies. This dissertation therefore investigates the relationships among PM, SCI, CC and product performance with emphasis on empirical evidences. It tries to explore the bridging between product development and supply chain management in an empirical manner. The basic premise of the study suggests that, if PM and SCI are properly managed, they can improve product performance through the enhancement of multiple competitive capabilities, including product innovativeness (PI), low price, product quality, delivery, flexibility and customer service. Hypotheses drawn from the study were tested on a multi-industry sample. Data analysis was conducted using comprehensive statistical methods, including factor analyses, regression analyses, correlation tests and structural equation modelling. The findings were verified by six follow-up case interviews. The findings of the study confirmed the impact of PM on product performance. In particular, PM showed an inverted U-shaped relationship with PI in electronic industry, while demonstrating a linear relationship with PI in plastic and toy industry. Product modularity was also found to be crucial for the improvement of flexibility and customer service, but unrelated to low price, product quality and delivery. In addition, the results suggested that low price, product quality and customer service are important for market entry, while PI, flexibility and delivery are important for securing orders in the marketplace. The findings of the study also verified the impact of SCI on product performance. In particular, product co-development with suppliers, internal functional units and customers was found to be positively related to PM, PI, product quality, delivery, flexibility and customer service.