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http://dx.doi.org/10.9723/jksiis.2019.24.6.081

An Analysis of the Effect of Adopting New Technology and Modularity in NPD on Firm Profitability  

Pyun, Jebum (호서대학교 빅데이터경영공학부)
Publication Information
Journal of Korea Society of Industrial Information Systems / v.24, no.6, 2019 , pp. 81-93 More about this Journal
Abstract
As customers' needs are more diversified, the issue of managing product variety has become more important to manufacturers. It is because an increase in product variety may cause various inefficiencies in operations, while satisfying more diverse needs. Consequently, firms have introduced the concept of modularity to improve operational performance. Yet there are only a few studies which analytically investigate the effect of modularity in new product development (NPD). Therefore, this research develops an analytical model of exploring the effect of modularity on firm profitability when a component built upon new technology is introduced into an existing product, and provides important managerial implications on the NPD and technology management, which can guide the decision making on modularity in practice. The results show that it is necessary to increase modularity level when i) the product is easy to upgrade, ii) the product's price should be high due to external factors, and iii) the effect of new technology investment is uncertain, while it is desirable to increase the investment cost for introducing new products with low demand elasticity for modularity.
Keywords
Modularity; New product development; Product architecture; Management of technology; Analytic modeling;
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Times Cited By KSCI : 3  (Citation Analysis)
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