Modularity in Innovation Alliances

Alliances often aim to improve innovation by a flexible configuration of components contributed by partnering firms. However, while modular innovation has received increasing attention, we find few results about inter-organizational design. Extending the ideas on modular innovation within firms, this study delivers a more fine-grained picture of modularity and synergistic specificity and their consequences on the outcomes of inter-firm collaboration, particularly on outcome-blending. Contextual factors are provided by comparison of two industries: Biotechnology and new media represent two ends of a continuum between (1) highly technology-laden with long time-to-market, and (2) highly design-laden and fast-to-market innovations. Based on a survey of more than 300 enterprises, we find that alliances in both industries achieve a synergistic blending of collaboration outcomes. Applying a two-group structural equation model, we reveal differences according to hypothesized relationships. Findings are related to market and technology characteristics. First, we found structural modularity and synergistic specificity to be different, even negatively related in Biotech. Second, this study identifies that in New Media synergistic process specificity has positive impact on synergistic outcome blending. In contrast, the corresponding parameter in the biotechnology group was not significant. Third, structural modularity has a positive effect on outcome blending in Biotechnology, contrasting to no effect in New Media