The Use of Modular Organizational Forms in Italy: an industry level analys

Globalization and technological change transform industries toward configurations characterized by articulated vertical and horizontal contracting structures. Industries are «permeable, interconnected and modular» (Schilling, Steensma, 2001, p. 1149; Zenger, Hesterly, 1997). Also, Gereffi, Humphrey, Sturgeon (2005) argue that the world economy has changed in significant ways during the past several decades, especially in the areas of international trade and industrial organization. The most important new features of the contemporary economy are the globalization of production and trade, [...] and the vertical disintegration of transnational corporations, which are redefining their core competencies to focus on innovation and product strategy, marketing, and the highest value-added segments of manufacturing and services (ivi, p. 79). Similarly, Arndt and Kierzkowski (2001) use the concept of “fragmentation” to describe the physical separation of different parts of production systems. Schilling and Steensma (2001) analyze this trend at the industry level in the US manufacturing sector showing that organizational modularity1 is related with the heterogeneity of inputs and demand, the intensity of technological change and the presence of industry standards. Using data from 68 Italian industries, this paper tests the determinants of the adoption of modular organizational forms in the Italian manufacturing sector, using the Schilling and Steensma’s (2001) work as a reference study. At this stage of the knowledge about national production systems evolution toward modular configuration, this study is relevant for several reasons. First because while anecdotal evidence seems to confirm that similar trends interest a variety of countries, no specific study has been conducted outside the US to analyze the determinants of organizational modularity. Second, even if Schilling and Steensma (2001) demonstrated the role of heterogeneity, technological change and industry standards, we can not claim that these factors affect the use of modular organizational forms in the same way in a different economic setting. In other words, this study provides further understandings concerning the potential role of national specific institutions in shaping industries configuration. Our study deepens not only the knowledge regarding industry-level factors but may develop eventual roles of industry’s and country’s specific factors. Adopting the Schilling and Steensma (2001) model as a reference study enlarges the contributions of this work. First it tests the validity of the model in a different economic context. Second it adds further tests at the effectiveness of their new research constructs and measures (ivi, p. 1151). Moreover, it feeds that field of literature that supposes the convergence of national production systems toward a common model (Berger, 2006; Sturgeon, 2006), and that part of literature aimed at developing an industry-level theory of the use of modular organizational forms (Schilling, 2000; Schilling, Steensma, 2001). The paper continues as follow. In the next paragraph we point out the peculiarities of the Italian production system. Second we describe the theoretical model, its research constructs and hypotheses. Then we describe methodology and descriptive statistics. Results and discussion are presented subsequently. Limitations and future opportunities conclude the paper.