A Research On The Formation And Evolution Of Modular Industrial Organization

With the guidance of Schumpeter and Chandler theory, transaction cost theory. Schilling’s general modular system theory and the theory of modular organization, this thesis analyzes the formation mechanism of the Chinese manufacturing modular industrial organization. Based on the status of China’s manufacturing modular industrial organization and the characteristics of the reality of the economic environment in China, the thesis also builds a theoretical model and presents the theoretical hypotheses of the formation of the Chinese manufacturing modular industrial organization. Utilizing the cross-sectional data of30Chinese manufacturing industries in2005and2009, the paper tests Schilling’s and China’s theoretical hypotheses of the formation of modular industrial organization. In this basis, the paper presents the general idea, establishes the basic framework and systematically designs the "three-step" trajectory of the modular development of the Chinese manufacturing industrial organization.The empirical study shows that the independent variable Heterogeneity of Inputs and Demands has a positive and significant impact on the formation of the Chinese manufacturing modular industrial organization (0.106, p<0.001). However. Industry Standards, Intensity of Competition and Labor Intensity negatively and significantly affect the formation of the Chinese manufacturing modular industrial organization. The estimated parameter coefficient values are respectively (-0.223, p<0.01),(-0.081, p<0.001), and (-1.172, p<0.01). And the direct impact of Technological Innovation on the formation of the Chinese manufacturing modular industrial organization is not significant (0.038, p0.14). FDI has a positive and significant impact on the formation of the Chinese manufacturing modular industrial organization (0.443, p<0.001). while Firm Size has a negative and significant impact on the formation of the Chinese manufacturing modular industrial organization (-1.488, p<0.001). The parameter coefficients of the dummy variable Industry Attributes is also negative (-0.178). and statistically significant (p<0.001). All the above empirical results reveal that under different conditions of economic environment and distinct industrial technical-economical features, the key factors driving the formation of modular industrial organization are totally different. In the Chinese context. Foreign Direct Investment is the main driving force of China’s manufacturing modular industrial organization. While, non-labor intensive small and medium enterprises constitute the main part of Chinese manufacturing modular industrial organization.The thesis maintains that the formation of industrial organization is a collaborative evolution of interaction between the economic environment and market entities and equilibrium of long-term and dynamic game playing between them. Therefore, to realize the formation and development of the Chinese manufacturing modular industrial organization, the Three-Step trajectory should be followed. This trajectory will be moved on through two aspects, economic environment and market entities. First, the economic environment should be optimized and the institutional mechanism must be perfected. Second, the reactions of the market players will be stimulated and the industrial integration will be boosted. Third, the production network will be built and the overall strength and competitiveness will be enhanced.