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Modularity and Product Innovation in Digital Markets

The Review of Network Economics

Vol. 6, Issue 2 - June 2007, pp 175-193

Marc Bourreau
ENST, Paris, France and CREST-LEI

Pinar Dogan
John F. Kennedy School of Government, Harvard University
E-mail: [email protected]

Matthieu Manant
ENST, Paris, France

  Most digital goods have a modular design; that is, they consist of complementary and distinct building blocks, called modules. Modular product design, in contrast to integrated (or integral) design, enables alteration of a specific module that is usually assigned for a specific function without necessarily requiring an entire redesign of the product. This feature facilitates product innovation. The possibility of having common modules embedded in a range of products is likely to affect firms' product innovation strategies and post-innovation competition both in traditional and digital markets. In this paper, we explore such effects with a focus on digital markets.

Keywords: Digital, modular, integrated, innovation.

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