UNDERSTANDING THE CHOICE OF ALLIANCES AND ACQUISITIONS FROM MODULARITY PERSPECTIVE: AN INDUSTRY-LEVEL STUDY

Abstract

This paper argues that the importance of product modularity in the choice of organisation forms depends on the broader industrial context. To support this claim, I analysed a total of 15,072 acquisitions and 17,919 alliances and joint ventures in 412 U.S. manufacturing industries, and found some significant support. In particular, I found that the level of technological change increases the importance of product modularity in the choice of alliances over acquisitions while labour and capital intensity act in the opposite way. This finding offers a more refined view of the impact of product modularity on firm boundaries.