Modularity after the Crash

20 Pages Posted: 13 Aug 2001

See all articles by Kim B. Clark

Kim B. Clark

Harvard Business School; National Bureau of Economic Research (NBER); Brigham Young University Idaho

Carliss Y. Baldwin

Harvard Business School, Finance Unit

Date Written: May 2001


In "Managing in the Age of Modularity," which was written in June 1997 and appeared in the Harvard Business Review, we proposed that a new technological phenomenon, the modular design of complex computer systems, caused the emergence of a large modular cluster of firms and markets in the computer industry. We went on to say that "managing" in this "modular environment" was different from managing a large, hierarchical corporation of the type that had emerged in the early 20th Century. The events of the past four years, especially the bubble and crash, have caused us to reflect critically on both our theory and the related managerial recommendations. In this invited paper, with full benefit of hindsight, we revisit the questions: do the benefits of modularity and the modular cluster form of organization justify the costs? If so, when and why? And what do managers need to know to be effective in a modular environment?

Keywords: Modularity, Modular Design, Modular Cluster, Modular Organization, Design Evolution, Real Options,, Bubble, Crash

JEL Classification: G31, L22, M10, O31, P51

Suggested Citation

Clark, Kim and Baldwin, Carliss Y., Modularity after the Crash (May 2001). Harvard NOM Research Paper No. 01-05. Available at SSRN: or

Kim Clark

Harvard Business School ( email )

Soldiers Field
Morgan Hall 125
Boston, MA 02163
United States
617-495-6550 (Phone)
617-495-0316 (Fax)

National Bureau of Economic Research (NBER)

1050 Massachusetts Avenue
Cambridge, MA 02138
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Brigham Young University Idaho

525 S Center St
Rexburg, ID 83440
United States

Carliss Y. Baldwin (Contact Author)

Harvard Business School, Finance Unit ( email )

Boston, MA 02163
United States

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