The Mirroring Hypothesis: Theory, Evidence and Exceptions

75 Pages Posted: 27 Apr 2016 Last revised: 30 Aug 2017

Lyra Colfer

Broadway Technology

Carliss Y. Baldwin

Harvard Business School, Finance Unit

Date Written: May 23, 2016

Abstract

The mirroring hypothesis predicts that organizational ties within a project, firm, or group of firms (e.g. communication, collocation, employment) will correspond to the technical patterns of dependency in the work being performed. A thorough understanding of the phenomenon is difficult to achieve because relevant work is scattered across multiple fields. This paper presents a unified picture of mirroring in terms of theory, evidence and exceptions. First, we formally define mirroring and argue that it is an approach to technical problem-solving that conserves scarce cognitive resources. We then review 142 empirical studies, divided by organizational form into (1) industry studies; (2) firm studies; and (3) studies of open collaborative projects. The industry and firm studies indicate that mirroring is a prevalent pattern but not universal. However, there is evidence of a mirroring ‘trap’: firms focused on the current technical architecture may fall victim to architectural innovations arising outside their boundaries. Thus in technologically dynamic industries, partial mirroring, where knowledge boundaries are drawn more broadly than operational boundaries, is likely to be a superior strategy. Firms can also strategically ‘break the mirror’ in two ways: by implementing modular partitions within their own boundaries; or by building relational contracts that support technical interdependency across their boundaries. Finally, in contrast to industry and firm studies, studies of open collaborative projects, most of which focused on software, were not supportive of the hypothesis. We argue that these contradictory results arise because digital technologies make possible new modes of coordination that enable groups to deviate from classical mirroring as seen within firms.

This working paper includes Appendix A, which describes our detailed findings by category. Appendix B, a tabular summary of the 142 studies in our sample, is available on request from the authors.

Keywords: Modularity, innovation, complex technical systems, product architecture, industry architecture, organization design, design structure, organizational structure, organizational ties, mirroring hypothesis

JEL Classification: D23, D85, L22, O32

Suggested Citation

Colfer, Lyra and Baldwin, Carliss Y., The Mirroring Hypothesis: Theory, Evidence and Exceptions (May 23, 2016). Harvard Business School Finance Working Paper No. 16-124. Available at SSRN: https://ssrn.com/abstract=2770675 or http://dx.doi.org/10.2139/ssrn.2770675

Lyra Colfer

Broadway Technology ( email )

5000 Plaza on the Lake
Austin, TX

Carliss Y. Baldwin (Contact Author)

Harvard Business School, Finance Unit ( email )

Boston, MA 02163
United States

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