The Mechanism Study Of How The Organizational Modularity Affects Organizational Dynamic Capabilities

Since the beginning of this century, the economic development, which has been speeding up its involvement towards being globalized, networked, intellectualized and personalized on demands, has promoted the ultimate transformation in paradigm of industrial organization. The new formula is characterized by vertical cracking of global value chain and synergy in production factors of stepping across the traditional organizational boundaries on the basis of agile recourse combination in open networks. In this trend, there will be more and more leading companies that are choosing modular strategy to improve the dynamics of organizing capacity and be in response to the environmental changes effectively. Organizational modularity, the inner force at the core for driving the industrial organizational reform, has improved the synergy efficiency between organizations, and reduced the collaboration cost between organizations, which has created realization conditions for low-cost mass customization and networking recourse consolidation. Although the current authoritative documentary related to the organizational modularity has extensive consensus on the opinions regarding to the improvement of organizational dynamic capabilities, it is still in the initial exploratory stage in respect of the "how". The statistical empirical study is very scarce, which makes the connection relation between the theory of organizational modularity and theory of dynamic capability terribly vague. This study is designed to establish a clear, secure and profound logic of connections of influence between the two theories for filling up the theoretical gap.In order to solve the Black Box rules for the organizational modularity that impact the organizational dynamic capability, this study has split up it into three "constructs", which are organizational modularity (degree), modular interface and organizational dynamic capability according to the inner theoretical logic with the understanding of the concept of Organizational Modularity as described in the authoritative documentary for exploring the deep structural relation between organizational modularity and influencing mechanism of organizational dynamic capability. Organizational modularity that is currently defined the theoretical documentary is actually the combination of the three concepts which are organizational modularity (degree), modular interface and organizational dynamic capability. To scientifically explore the inner mechanism of organizational modularity, this study extracted the two concepts of organizational dynamic capability and modular interface from the fuzzy concept of organizational modularity, only two characteristic dimensions which are "division of labor" and "organizational independence" are remained for measuring the degree of organizational modularity. The author believes that the organizational dynamic capability of organizational modularity is influenced by mediating effect through decomposition of the concept of organizational modularity, which is the core logic to the design of this study.To understand the dynamic capability based on the characteristics of organizational modularity is another key proposition of this study. Organizational modularity is considered to be the intermediate organizational mechanism between the market mechanism and enterprise mechanism, which has broken the angle of view of the traditional organizational boundaries based on property right and endowed the organizational boundaries with the understanding of modular organizational boundaries based on professional division efficiency. Ground on the boundary of division efficiency, the organizational modularity mainly pursues its internal profit from the creation of the completeness of professional capability while the profit generated from the flexible combination of differentiation capability is mainly pursued between the organization modularity. The organizational dynamic capability then can be divided into two situations as "inter-organization dynamic capability" and "intra-organization dynamic capability" on the ground of the foresaid perspectives."Intra-organization dynamic capability" focuses on the capability of integration, reconstruction and recombination for the heterogeneous resources between organizations;"inter-organization dynamic capability" will attach more importance on the agility of the core ability and the capability of expanding application in pluralism. The model to be studied hereof will be split into two sub-models which are "influencing mechanism that organizational modularity gives to inter-organization dynamic capability" and "influencing mechanism that organizational modularity gives to intra-organization dynamic capability " according to the classification of the circumstance of "organizational dynamic capability" construct for exploring the differentiation of the influencing mechanism of the organizational modularity in different conditions of dynamic capability.In respect of the mechanism for organizational modularity that influences the organizational dynamic capability, this study has given theory construction and hypothesis and validation through the following three aspects:(1)Literature review and evaluation. To find out the development threads and crossing points regarding to the problems of the frontier research and establish documentary basis together with the basis for research on circumstances of organizational dynamic capability construct in connection with the relativity between the three constructs through commentary, summary and analysis of the related theory of organizational modularity, dynamic capability and modular interface.(2) Multi-case study and theoretical model construction. The present study further prepares abundant case-based empirical materials for the construction of theoretical research model, strengthens the robustness of feasibility study and reduces the risk of theory construction through the research of multiple typical cases in6different industries. Multi-case research complies with the procedures and methods of normative case study, where there are2key exploratory case studies adopt the follow-up investigation with quasi-experiment based on Design Science Research Methodology, DSRD and conduct the differentiation comparison for the organizational dynamic capability before and after the implementation of organizational modularity;4explanative case studies are designed to provide cumulative evidence of logical relationship, multi-tested causality and give supplement survey for relationship between the variables and the items for measurement. This study has constructed two sub-models which are the influencing mechanism of inter-organization dynamic capability and influencing mechanism of inter-organization dynamic capability in respect of organizational modularity on the basis on the literature research and case study.(3)Statistical empirical study:In connection with the theoretical model that the organizational dynamic capability is influenced by organizational modularity through intermediation of modular interface, examination and verification together with the comparison of mechanism of action and differentiation of this type of model when in the condition of inter-organization dynamic capability and afterwards in the condition of inter-organization dynamic capability shall be carried out through large sample statistical analysis. The research conducted in the foresaid two conditions shall be provided with initial model construction and modifications for the items on the questionnaire after exploratory factorial analysis is given on the50pieces of test patterns. In this case, random investigations shall be carried out in the5provincial and municipal business samples, from which229pieces of valid samples were collected from manufacturing and service trade. To examine and confirm the influencing mechanism that the organizational modularity gives on the organizational dynamic capability in the two foresaid conditions and their differentiation through the exploratory factorial analysis and model estimation with equation of structure carried out on the data of the large samples.Conclusions obtained hereof through the above research as follow:(1)The concept of organizational modularity can be effectively decomposed into three constructs which are organizational modularity (degree), organizational dynamic capability and modular interface, where the degree of organizational modularity consists of two variable dimensions which are the degree of division of labor and the degree of independence of organization; the organizational dynamic capability can be divided into inter-organization dynamic capability and inter-organizational dynamic capability, which is characterized by statistical significance; modular interface is composed of three variable dimensions including interface standardization, interface compatibility and differentiation upon the property of cooperation. In the situation of having two types of organizational dynamic capabilities, organizational modularity has significant and positive influence on inter-organization dynamic capability and intern-organizational dynamic capability and the modular interface will play a role as intermediation.(2)In the context of having inter-organization dynamic capability, this type of capability is influenced by the organizational modularity through its full intermediation of modular interface. In the construct of degree of organizational modularity, the relativity between the degree of division of labor and the three variables of modular interface is high while that of between the degree of independence of the organizations and modular interface is relatively medium or even lower. Among the variables of the components of modular interface, the relation between the differentiation upon the property of cooperation and inter-organization dynamic capability is the closest and has the greatest intermediation; intermediation provided by interface compatibility takes the second place; that of interface standardization is the least.(3)In the context of having the inter-organization dynamic capability, this type of capability is influenced by the organizational modularity through its partial intermediation of modular interface. In the construct of organizational modularity, the degree of division of labor has less direct influence on the inter-organization dynamic capability and is weaker than the intermediation of modular interface; the organizational independence degree has greater direct influence on inter-organization dynamic capability and is stronger than the intermediation of modular interface. The relativity between the three variables of the modular interface and the degree of division of labor is higher than that of the degree of independence of organizations, but it is more approachable to the relativity of inter-organization dynamic capability. The theoretical innovative contribution and significance of enlightenment on management that is obtained from this study as follow:(1)(The study first splits out three different constructs in modularity theory which are organizational modularity (degree), organizational dynamic capability and modular interface from the concept of main-stream organizational modularity, the logic relation between the three has been established and verified so that a profound theoretical bridge for connection has been built between the theory of organizational modularity and theory of dynamic capability.(2)The study first separates the conception of dynamic capability into two different categories of capabilities in modular paradigm which are inter-organization dynamic capability and intern-organizational dynamic capability, diversity of which has effectively inspected and verified in the empirical study. In the meantime, the paths of impact brought by the organizational modularity on the two dynamic capabilities have significant difference.(3)The company shall highly have an eye to the organizational modular management paradigm which is the inevitable result of deepening development of modularity in products, manufacturing and value chain and can significantly improve the dynamic capability for the company to overcome the rigidity dependence of the organizations on traditional development path for enhancement of the response capability to the complex and dynamic environment.(4)The company shall be good at making the most of the advantage of two different dynamic capabilities, upon which the importance shall not be only attached on the development of flexible integration capability of the resource between organizations but also on fully digging out the potential of application in pluralism of the core capability to the organization, to effectively combine inter-organization dynamic capability and the inter-organization dynamic capability in virtue of modular network mechanism and flexible organizational process.(5)The company shall pay special attention to the modular interface as a catalyst in the dynamic capabilities construction. The modular interface has been an irreplaceable and key role in the organizational molecular mechanism. To particularly strengthen the interface standardization of external synergy, interface compatibility and portfolio management classified by the property of cooperation according to different situations to enhance the integration of networking resources and embedded application ability of resources in the context of globalization, networking and intellectualizati on.