Assessing performance of utilizing organizational modularity to manage supply chains: Evidence in the US manufacturing sector

Recent competition and customization have motivated manufacturers to institute modular organizations to manage supply chains. Proclaimed as a paradigm shift, organizational modularity manifests agility and flexibility to diversify product offerings, utilize production capacity, and allocate network capital and assets. Whereas studies have conceptualized the impacts of modular organizations, large-scale research that examines modularity's impacts on performance are lacking. The study assesses the impacts of organizational modularity in the US manufacturing sector. A set of hypotheses proposes that higher level of modularity is associated with higher efficiency and profitability. I found modularity to negatively affect product specialization and positively impact capacity utilization, ROI and ROA. The findings help to determine the robustness of utilizing the modularity for complex supply chain coordination. (C) 2011 Elsevier B.V. All rights reserved.