The role of modularity and integration in enhancing manufacturing performance

Abstract

Purpose The purpose of this paper is to examine the impacts of modularity‐based manufacturing practices (MBMP) and manufacturing system integration (MSI) on manufacturing performance (MP) using absorptive capacity as an important enabling factor. Design/methodology/approach Constructs were developed through a comprehensive literature review. Structural equation modeling was used to test the research model and hypotheses based on a large sample of 303 US manufacturing firms. Findings Both MBMP and MSI have significant impacts on MP. The positive effects of MBMP on MP are stronger than those of system integration. The absorptive capacity of a firm facilitates better use of modularity practices and system integration. Practical implications More attention should be given to modularity practices in resource allocation planning. Also, system integration together with modularity practices can generate significantly higher MP. Originality/value The paper is the first large‐scale empirical study to examine the effects of absorptive capacity on MSI and MBMP, which in turn impacts MP. Furthermore, the findings empirically support that a combination strategy of modularity and system integration can help manufacturing firms to achieve higher performance.

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