What Are the Advantages of Modular Construction?

The theory of modularity is the latest research topic in the field of industrial organization. In 1997, Professor Baldwin and Dean Clark of Harvard Business School published "Management in the Modular Age" on Harvard Business Review. The article states that the phenomenon of modularity Industry, automobile and other industries have expanded from the production process to the design process. At the same time, the revolutionary significance of modularization to the industrial organization structure has been pointed out. The Design Rules: The Power of Modularity, published by two scholars in 2000, is the first book on modularity theory.

Modular theory

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The theory of modularity is the latest research topic in the field of industrial organization. In 1997, Professor Baldwin and Dean Clark of Harvard Business School published "Management in the Modular Age" on Harvard Business Review. The article states that the phenomenon of modularity Industry, automobile and other industries have expanded from the production process to the design process. At the same time, the revolutionary significance of modularization to the industrial organization structure was pointed out. The Design Rules: The Power of Modularity, published by two scholars in 2000, is the first book on modularity theory.

Chinese name

Modular theory

Foreign name

Modularity theory

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Recent research topics

Features

Semi-autonomous subsystem

"Module" refers to "semi-autonomous subsystems, which are more complex systems or processes formed by interconnecting with other similar subsystems according to certain rules." The dynamic integration process of breaking up a complex system into different modules and making information communication between modules through standardized interfaces is called modularization. Modularity is divided into narrow sense and broad sense. Narrow sense modularity refers to the modularization of product production and process design, while generalized modularity refers to the dynamic of module decomposition and module concentration of a system (including products, production organizations, processes, etc.). Integration process. According to Japanese industrial economist Aoki Masahiko, the earliest discussion of modularity can be traced back to Adam Smith. The most primitive form of modularization is division of labor. Extending this concept of enterprise-level division of labor to the field of industrial organization is industry The simplest understanding of organizational modularity.

A well-known Japanese scholar Akihiko Aoki in 2003 defined a "module" as a semi-autonomous subsystem that can form a system and has a certain independent function. It can pass through a standardized interface structure and a semi-autonomous subsystem with other functions. , According to certain rules to form a more complex system.

Modular production was first used as a process design method in the watch industry, automobile manufacturing and other industries in the industrial economy era. The earliest research on modularity was Simon (1962), who proposed the "decomposability" of modules and clarified the importance of modularity for managing complex systems. Since people's lives in the industrial economy era are still in the stage of transition from quantity consumption to quality consumption, and the industry is based on the Ford system, modularization was only used as an industrial design method at that time, and was not fully applied to Industrial organization theory.

Since the 1990s, humans have begun to enter the era of information economy and globalization. Enterprises are facing global competition and the rapid development of technology. People's consumer demand has transitioned from quality consumption to personalized consumption. In this context, flexible production, virtual organization, and other post-Ford production organization forms began to emerge, and the industry also shifted from vertical division to horizontal division. Some economists have found that the modularized production organization form plays a pivotal role in this flattening and flexible trend, and the research on modularization has also shifted from process design to organizational design. Cremer compares and analyzes the information efficiency of information assimilation and information alienation module systems.

Aoki Masahiko proposed two modes of module centralization, including the "A" mode in which the connection rules between modules are specified in advance, the "J" mode in which the module connection rules can be continuously improved, and the information processing within each module is completely "wrapped." "This condition; he even thinks that modularity is the essence of industrial structure under the conditions of the new economy. Baldwin and Clark, two deans of Harvard Business School, analyzed the modular cluster of high-tech venture companies in Silicon Valley, and concluded that the new economic era is the "modular era", so they came up with a modular theory.

In the 1990s, Japan experienced a downturn in economic growth, and the Japanese theoretical and business circles were reflecting on their own industrial development models. Many Japanese scholars began to pay attention to the concept of modularity. Therefore, modular theory has made great progress in Japan as a tool for analyzing the information industry revolution and industrial organization structure. National scholars Erji, Nobuo Ikeda, Miles Asuma, and others have written articles discussing the modular theory of industrial economy. Aoki Masahiko summarized the theory of modularity in his article "Modularity: The Essence of New Industrial Structure", put forward some related concepts, and explored three types of information organization models for module centralization.

In recent years, some scholars in China have also begun to study the modularization of industrial organizations. In 2003, Lu Guoqing published the "Industrial Innovation Model Based on the Information Technology Revolution" in "Industrial Economics Research". He believed that the modularization of industrial structure One of the effects of evolution. In the same year, Zhu Ruibo wrote in "China Industrial Economy" that modules are the carriers of industrial integration, and module integration has led to the emergence of industrial integration. Then he also took the IC industry as an example to study the integration of modules, published "System Economy: The Essence of the New Economy-Also on the Theory of Modularity", studied modules and modularity from the perspective of industrial system theory, and gave Your own understanding. These studies have promoted the development of modular theoretical research in China. Now, modular research has been valued by more and more scholars, and it has been used as a tool to start research in different fields.

Since the 1950s, the three main schools, the Harvard School, the Chicago School, and the New Industrial Organization Theory School, have provided important theoretical basis for the formulation of western industrial regulation and antitrust policies. But they can't explain some new problems in industrial organization well under the condition of information economy, and the emergence of modular theory makes up for some of the shortcomings of these theories. Simply put, the modular theory makes up for the shortcomings of the traditional mainstream industrial organization theory.

First, the theoretical basis. Because traditional mainstream economics is deeply influenced by classical physics, its theoretical paradigm has characteristics such as time reversibility and mechanical determinism. Although the modular theory also uses certain theories of mainstream economics as analytical tools, it also has certain characteristics of system economics, evolutionary economics, and new institutional economics.

Because modularization theory regards modular organization as a system; regards the changes of new industrial organization patterns as a dynamic evolution process in which enterprises continuously adjust to adapt to environmental changes; and focuses on the efficiency of the internal institutional arrangements of enterprises and industrial organizations on the economic system Impact analysis.

Second, research objects and methods. In the past, the theory of industrial organization paid more attention to the analysis of corporate behavior when it involved regulation and monopoly issues, and it could not well explain the emergence of flat industrial structure and the formation of a competitive monopoly structure under the information economy. The modular theory pays more attention to the effect of technological progress on the change of industrial structure than the previous industrial organization theory, and pays more attention to the analysis of the impact of industrial and corporate organizational structure and information distribution on organizational efficiency; its game theory analysis concept also shifts from non-cooperative games to cooperation Game change. It can be said that the modular theory provides a more reasonable explanation of economic phenomena such as horizontal industrial integration and industrial integration.

In general, the modular theory is different from the previous industrial organization theory, but the modular theory can still be regarded as a supplement and development to the original industrial organization theory. Because the modular theory is still in its development stage, there are still some areas for improvement in its theory. For example, some concepts of the existing modular theory need to be further clarified, less convincing mathematical models and empirical studies, etc. However, the way of thinking, research methods, and some basic conclusions are still very valuable.

The reason why modular industrial organization forms can succeed under the conditions of the information economy is partly because sharing information expands the externality of the network and partly because individual information and "back-to-back" competition accelerate the process of industrial innovation and evolution. .

1.Sub-module independent design

Under the modern modularized industrial structure, each module only has to comply with fixed standards, and the financing, design, and production of each module itself can all be carried out within the module. The ability of sub-modules to be independently designed is the biggest difference between modern modularization and traditional division of labor. It enables innovation to be carried out at the level of each module. In addition, the independent design of the sub-modules urges the sub-modules in the system to be constantly innovated, otherwise it will be easily replaced by modules outside the system, and the modules outside the system may also try to enter the system through hard development. In this way, each module has the pressure to be eliminated, so that the production of the entire chain is at a high level.

Module variability

The module itself has a strong ability to adapt to the uncertainty of the lower-level system. It can respond to various temporary changes to the submodule through "modular operations" such as addition, splitting, integration, and transformation. For example, if a module loses market value or a newer technology can replace it, then the system can be quickly restored to its effective and optimal state by transforming, updating, or replacing the module operation. In addition, in order to respond to market changes, the entire production chain can be brought into line with market requirements by merging modules and splitting modules.

3.The ductility of the module

Ductility means that a module can complete or even change its functions by expanding sub-modules, such as external devices in the computer industry and digital products derived from computers. When the computer was just born, there were few supporting external devices. With the development of the computer industry, additional modules have become very popular supplementary products, such as printers, scanners, digital cameras, MP3, etc., which make the functions of the computer constantly Expansion while forming a mutually reinforcing relationship with computer sales.

These modules can even be independent from the higher-level modules and become a separate industry, opening up a broad market. Nowadays, more and more computer digital products have almost formed separate modules. The businesses specialized in producing these products have formed a scale . The variability and extensibility of the sub-modules make the entire system more flexible and easier to adapt to the rapidly changing demands of the modern market.

4. Introduce new types of competition and cooperation

Under the common standard (the modular theory calls it "visible information"), the upper module can choose different lower modules, which makes the competition manifest in the modular organization structure. The competition in the modular environment is fiercer than in the traditional environment, because companies must continue to improve, otherwise they will not be able to find better module providers in the market. They grasp the direction of technology development and provide more effective products. In order to eliminate the existing module suppliers, this is a "back-to-back competition", the focus of competition is design research and development and innovation;

In addition, this institutional arrangement also brings more opportunities for small enterprises with new technologies to cooperate with large enterprises. New enterprises created by new technologies can easily reach cooperation with upper-level modules and integrate them into upper-level modules. Its sub-module, of course, is that the introduction of this new sub-module can improve the level of the entire module, or this new sub-module can be used to replace the original module.

This cooperation may be much closer than expected. In Silicon Valley, the goal of many small businesses is to be merged by large companies to integrate the two. A classic example is Cisco. As we all know, Cisco is a strong technical force. Enterprises, but this extraordinary technology is not only derived from its own research and development, but it uses the most cutting-edge technology purchased from the outside to form its own modules. This type of research and development is called "A & amp; D" (M & A), which corresponds to "R & D" (Research and Development). From this point of view, the modularized industrial structure is more suitable for the era of knowledge economy.

5. Change the market structure and form an industrial cluster

Due to the influence of modularization, the monopolistic market structure will gradually transform into an industrial cluster market structure. The characteristic of modularity is that each sub-module can be independently designed and produced under a certain common standard. Each module has its characteristics and advantages. Each module can be used for a certain product of the original market monopolist. Part of it has a substitution effect, making more and more modular companies compete and gather in the market. An industrial cluster is a collection of geographically concentrated enterprises and institutions that are interconnected in a particular field.

In this way, the strength of monopoly enterprises is disintegrated a little bit, and most of them will be transformed into "helmsman enterprises" (that is, core enterprises) in the modular industrial structure, providing interface information for the entire system, while some invisible information is left to the module companies Master; or these former monopolists will only keep the core production parts with absolute technological advantages and transform into a modular enterprise.

Callist Baldwin and Jim Clark, pioneers of modularity theory, believe that modularity is one of the effective strategies for organizing and designing complex products or processes. Modular theory can be applied not only to the theory of industrial organization, but also to other semi-autonomous systems.

Supply chain, as a form of enterprise organization, is different from a single enterprise organization or an enterprise group. It is an intermediate economic organization between independent enterprises and the market. Manufacturers, distributors, retailers, and end-user value-added networks. As the concept of supply chain management in the corporate world gradually deepens, members of the supply chain begin to come under pressure from inside and outside the supply chain, and become a semi-disciplined one. system. The application of modular theory to the field of supply chain management is a further extension of the modular theory and the theory of supply chain management.

The current theoretical research believes that not every industry sector can apply a modular strategy. There are only a few recognized industries that are suitable for the use of modular organizations to produce and operate, such as computers, automobiles, financial services, telecommunications, Furniture, etc. It is believed that industries that are suitable for modular organization generally have the following three characteristics: complex structure, synchronous operation, and uncertainty. This is where modularity can make the most of it.

Modularity is good at playing a role in complex transactions and production systems, such as automotive, computer production, etc. itself is a complex process, and each accessory can form a certain market size, and can also exist as a sub-module in the entire system . For example, in the automotive industry, the production of tires, airbags, meters, air conditioners, and seat belts can become a separate industry. Only this type of production system with a certain scale can be divided into blocks, operated with modules, and innovated. Operation to maximize the advantages of production and organization brought by modularization.

Modularity makes synchronous operations possible, and it has something to do with the complexity of the matter. Just like programming, complex projects that originally needed to be operated sequentially from beginning to end can be parallelized after being modularized and decomposed, and finally assembled. This synchronous operation has gone beyond the traditional division of labor production method, including the independent design and innovative synchronization of each sub-module.

Industries that need to deal with uncertainty often are also the soil for modular growth preferences. The decomposition of modules enables various risks to be dispersed. Each module only needs to deal with some relatively certain risks. For example, the application of modularization in the field of financial services has strengthened the ability of the financial sector to cope with uncertainty.

Significance of modular theory

First, accelerate China's industrial transformation. In the era of information economy and economic globalization, many industries in China are transforming from low-end extensive to high-end intensive. High-end intensive industries have more complex economic systems and higher information processing requirements. Therefore, China's knowledge-intensive and technology-intensive The industry should transform to a modular organization on a large scale. In this process, we must pay attention to the relationship between the "wrapped" knowledge in the module and the "tacit knowledge" inside the module.

Second, enterprises must seize the opportunity to upgrade the industrial structure according to their own advantages. In the era of globalization and information economy, the focus of value realization in the industry is constantly shifting, and the industrial structure is showing a trend of horizontal integration. In this trend, small and medium-sized enterprises can develop very well, but it is necessary to position themselves as a module that can give play to their advantages, and we must avoid small and comprehensive tendencies. And companies with reputation, information, knowledge, and capital advantages should position themselves as module integrators or industry standard makers, and integrate resources globally through flexible contract networks.

Third, monopoly structures in modular industries are often the result of competition. In an already modular industry, even if there is a monopoly structure, the market is often efficient. Studies by scholars such as Kamie and Schwartz also show that significant innovations often come from organizations with monopolistic structures. Therefore, we should pay attention to the efficiency analysis of the monopoly structure in anti-monopoly, and oppose the monopolistic behavior that impairs efficiency.

Fourth, the informal system is of great significance. From Silicon Valley's successful experience, a culture of competition and mutual trust is important.