Modularity and complexity: An examination of the effects of product structure on the intricacy of production systems

Applications of product modularity have increased sharply over the last decade, as more firms are adopting product modularity as their principal product design strategy due to its potential to increase the speed of product development in the face of dynamic competitive environments. Product modularity has also been advocated an effective means of managing complexity. While this may be the case for the structure of products themselves, the effects of implementing of a modular product design strategy on the organizational systems that support the manufacture of modular products are not as well known. This study represents an attempt at assessing this impact, as it investigates the effects of product modularity on the complexity of production systems.;This study applies a systems theoretic framework and Seemingly Unrelated Regression (SUR) to empirical analysis of the effects of product modularity on production system complexity. The results suggest the product modularity is positively associated with the complexity of internal manufacturing processes and supply networks in situations of high outsourcing and high environmental uncertainty. The study also provides empirically validated perceptual measures of product modularity, manufacturing process complexity, organizational complexity, and supply base complexity.