The Impact of Component Modularity on Design Evolution: Evidence from the Software Industry

36 Pages Posted: 16 Dec 2007  

Alan MacCormack

Massachusetts Institute of Technology (MIT) - Sloan School of Management

John Rusnak

Harvard Business School

Carliss Y. Baldwin

Harvard Business School, Finance Unit

Date Written: December 2007

Abstract

Much academic work asserts a relationship between the design of a complex system and the manner in which this system evolves over time. In particular, designs which are modular in nature are argued to be more "evolvable," in that these designs facilitate making future adaptations, the nature of which do not have to be specified in advance. In essence, modularity creates "option value" with respect to new and improved designs, which is particularly important when a system must meet uncertain future demands.

Despite the conceptual appeal of this research, empirical work exploring the relationship between modularity and evolution has had limited success. Three major challenges persist: first, it is difficult to measure modularity in a robust and repeatable fashion; second, modularity is a property of individual components, not systems as a whole, hence we must examine these dynamics at the microstructure level; and third, evolution is a temporal phenomenon, in that the conditions at time t affect the nature of the design at time t+1, hence exploring this phenomenon requires longitudinal data.

In this paper, we tackle these challenges by analyzing the evolution of a successful commercial software product over its entire lifetime, comprising six major "releases." In particular, we develop measures of modularity at the component level, and use these to predict patterns of evolution between successive versions of the design. We find that modularity has a strong and unambiguous impact on design evolution. Specifically, we show that i) tightly-coupled components are "harder to kill," in that they have a greater likelihood of survival in subsequent versions of a design; ii) tightly-coupled components are "harder to maintain," in that they experience more surprise changes to their dependency relationships that are not associated with new functionality; and iii) tightly-coupled components are "harder to augment," in that the mix of new components added in each version is significantly more modular than the legacy design.

Suggested Citation

MacCormack, Alan and Rusnak, John and Baldwin, Carliss Y., The Impact of Component Modularity on Design Evolution: Evidence from the Software Industry (December 2007). Harvard Business School Technology & Operations Mgt. Unit Research Paper No. 08-038. Available at SSRN: https://ssrn.com/abstract=1071720 or http://dx.doi.org/10.2139/ssrn.1071720

Alan MacCormack (Contact Author)

Massachusetts Institute of Technology (MIT) - Sloan School of Management ( email )

77 Massachusetts Ave.
E62-416
Cambridge, MA 02142
United States

John Rusnak

Harvard Business School ( email )

Soldiers Field Road
Morgan 270C
Boston, MA 02163
United States

Carliss Y. Baldwin

Harvard Business School, Finance Unit ( email )

Boston, MA 02163
United States

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