Challenges for differentiators combining modularization and competence renewal

Heike Proff

doi:10.1108/S1744-2117(2010)0000005009

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Research in Competence-Based Management

ISSN: 1744-2117
Series editor(s): Professor Ron Sanchez and Professor Aimé Heene

Subject Area: Management Science/Management Studies

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Challenges for differentiators combining modularization and competence renewal

Document Information:
Title:	Challenges for differentiators combining modularization and competence renewal
Author(s):	Heike Proff
Volume:	5 Editor(s): Ron Sanchez, Aimé Heene, Thomas Ede Zimmermann ISBN: 978-1-84950-990-9 eISBN: 978-1-84950-991-6
Citation:	Heike Proff (2010), Challenges for differentiators combining modularization and competence renewal, in Ron Sanchez, Aimé Heene, Thomas Ede Zimmermann (ed.) A Focussed Issue on Identifying, Building, and Linking Competences (Research in Competence-Based Management, Volume 5), Emerald Group Publishing Limited, pp.143-174
DOI:	10.1108/S1744-2117(2010)0000005009 (Permanent URL)
Publisher:	Emerald Group Publishing Limited
Article type:	Chapter Item
Abstract:	The growing modularization of complex products encourages the division of labor in industry. End product manufacturers outsource production of individual components to large module suppliers, saving on costs in the short term. In the medium term, however, they sacrifice competences. The competitive strategy they choose – either cost leadership or differentiation – determines how this conflict is resolved. This paper examines the shift in competences to module suppliers, and the likely reactions of end product manufacturers, particularly those pursuing a differentiation strategy. The discussion begins at a general level, and then focuses on the automotive industry as an example. The paper derives potential strategic actions going forward based on transaction cost theory and core competency theory, and conducts a content analysis to examine them empirically.