Critical Success Factors for Implementation of Modular Design: A case study concerning EFD Induction's efforts to develop a common product platform
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Increasing globalization leads to tougher competition than ever. Organizations previously sheltered in specialized niche markets, today face newfound competition from international actors. For many MNCs the optimal response to an increasing global competition is the challenging task of trying to combine some of the benefits of global integration with local responsiveness. Changing the product strategy to modular design can be one important step of this restructuring. Modular design is an approach that allows for specialization, local differentiation and often substantial cost reductions. However, several studies show that transferring capabilities within a firm is far from easy; practice implementation does not always work out as intended. This paper investigates and explains factors influencing implementation of modular design in multinational firms. Our study draws from the experiences of EFD Induction, a leading multinational within induction heating solutions. We examine a proposed conceptual framework in the light of the organization’s own experiences from implementation of modular design in their Norwegian subsidiary. Based on our findings, we suggest success actions for managers facing an impending implementation of modular design. We develop our conceptual framework from three complementary theoretical perspectives on organizational behavior respectively; change management theory, absorptive capacity theory and institutional theory. Change management addresses how to make change happen, thus it undertakes the internal dynamics within the organization. Absorptive capacity theory focuses on the internal properties of the organization; the organization’s ability to absorb, transform and exploit new knowledge. Lastly, institutional theory explores the organization’s interaction with the external environment. By covering the external environment, the internal dynamics and the internal properties of the organization, we argue that this framework help us answer the proposed research questions from a holistic point of view. Our findings are generally supportive of change management’s practical guidance to the implementation process. Drawing from change management, our study indicates that high urgency levels are often required to drive people out of their old patterns of doing product development. Furthermore, the implementation process requires a powerful guiding coalition coordinating the efforts and motivating for change. The case study illustrates the importance of anchoring change in the organizational culture. Similarly, absorptive capacity theory was found to provide us with central insight to the implementation process. Here, it was experienced that a lack of diversity in the employees’ background limited the ways new knowledge was processed and utilized. Further, the study raises strong arguments for facilitating for organizational learning activities. Our case study does not provide much support for the relevance of institutional theory in the implementation of modular design. It appears that the case study companies had limited noteworthy interaction with their external environment. After realizing the theories’ unique and complementary explanation power to the proposed research question, we argue that practice implementation should be planned for, and later discussed in the light of a multidisciplinary approach to literature. From such an approach we propose a stage-model for strategic actions recommended to managers facing implementation of modular design.