Modularity as an Entry Strategy: The invasion of new niches in the LAN equipment industry

Stefano Brusoni () and Roberto Fontana

No 171, KITeS Working Papers from KITeS, Centre for Knowledge, Internationalization and Technology Studies, Universita' Bocconi, Milano, Italy

Abstract: This paper focuses on niche entry patterns in the LAN equipment industry in the 1990s. We analyze an original data-set of LAN equipment consisting of more than 1,000 hubs and switches marketed between 1990 and 1999. Modularity emerged as a design strategy that supported incumbent firms’ efforts to enter new product niches in the hub segment. However, after the emergence of switches as an alternative to hubs, coupled with the introduction of a new standard, incumbents relying on a modular hub strategy were overtaken by a new comer (Cisco). Moreover, the fastest followers were incumbents that had not previously relied on modular hub architectures. Our interpretation is as follows: modularity offers advantages of speed when changes occur within established boundaries. However, it also generates a ‘tunnel effect’ that prevents firms from developing products based on different problem-solving strategies. Such changes are more easily introduced by firms that do not rely on tightly-defined modular design rules.

Keywords: Entry; Modularity; LAN Equipment (search for similar items in EconPapers)
JEL-codes: D83 L63 O33 (search for similar items in EconPapers)
Pages: 47 pages
Date: 2005-07, Revised 2005-07
New Economics Papers: this item is included in nep-com, nep-ind and nep-ino
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Citations: View citations in EconPapers (3)

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