Influence Mechanism Research Of Product Modularity On Organizational Innovation——Strategic Flexibility-based Perspective

Pearl River Delta (PRD) region’s manufacturing industries, based on their cost advantages, have been called "the factory of the world" since the Reform and Openness. The advantages, however, are being gradually eroded, because the raise of cost of human resourcing, land and raw material. Meanwhile, increasing intensity of global competition, aggravation of buyer market characteristics, and more and more dynamic in external business environment make enterprises have to strengthen their dynamic adaptability and sustainable innovation ability. Hence, an increasing number of scholars and entrepreneurs started to pay a lot of attention on product modularity. Product modularity has been proven to support organizational innovation, which was also supported by business practices. But some facts have showed that product modularity didn’t promote innovation ability of enterprises directly. As it is, the key question is "what is the mechanism that product modularity effects organizational innovation?" which has been barely discussed. Therefore, the question was chosen to discuss in this paper as a key question, based on strategic flexibility perspective.First of all, the paper took a literature study which was about concepts referred to the research, then divided product modularity into modular design and modular production, strategic flexibility into proactive flexibility and reactive flexibility, organizational innovation into management innovation and technical innovation. Secondly, the paper put forward16assumptions about the relationships between these variables and mediation of strategic flexibility, which constituted the theoretical model of this paper. Than, based on300valid questionnaires filled by senior managers who worked for large and medium-sized manufacturing enterprises in the PRD, this paper empirigally tested the theoretical model and assumptions via SPSS16.0and LISREL8.7. The results showed that15of these assumptions were supported,1didn’t hold up.In connection with the results, this paper, according to actual practical situation of manufacturing enterprises in the PRD, concluded that:(1) Product modularity has a significant positive impact on organizational innovation. Large and medium-sized manufacturing enterprises should be the core in development of product modularity technology in the PRD, promoted organizational change and led improvement of small and micro enterprises, eventually formed modularized industrial structure and innovation model.(2) In addition to the direct impact of product modularity on organizational innovation, it also affected organizational innovation through a media variable-strategic flexibility. Manufacturing enterprises should value product modularity in strategic level and improve its adaptability for environment by developing product modularity, even to the extent that guiding market demand by advancement of strategic flexibility. Finally, this paper analyzed a typical case (Company M). It briefly introduced process and content of company M’s product modularization reform, compared its differences of management and technology and innovation ability after this reform with before, which aimed for providing some valuable references.