Product architecture and product market internationalization: A conceptualization and extension

• Author: Nicholas Burton,Richard Nyuur,Nicholas O'Regan,David Sarpong,Joseph Amankwah‐Amoah
• Published date: 01 January 2020
• Date: 01 January 2020
• DOI: http://doi.org/10.1002/jsc.2309

RESEARCH ARTICLE

Product architecture and product market internationalization:

A conceptualization and extension

Nicholas Burton

1

| Richard Nyuur

1

| Joseph Amankwah-Amoah

2

|

David Sarpong

3

| Nicholas O'Regan

4

1

Northumbria University, Newcastle, UK

2

Kent Business School, University of Kent,

Kent, UK

3

Brunel University, London, UK

4

University of the West of England, Bristol, UK

Correspondence

Richard Nyuur, Northumbria University, City

Campus East 1, Newcastle, UK NE1 8ST.

Email: richard.nyuur@northumbria.ac.uk

Abstract

Designing a modular product architecture and corresponding organization design

may enable firms to internationalize more effectively and efficiently. Open and

closed, integrated, and modular product architectures may be associated with

increasing product market and firm internationalization. We postulate that the more

open and modular the product architecture, the easier product market internationali-

zation becomes. We hypothesize that an open and modular product architecture may

permit international product markets to become “components”within a strategy of

“modular internationalization.”

1|INTRODUCTION

Over the past five decades, a great deal of international business

research has focused on the process, scope, motivations, determi-

nants, extent, methods, and speed of firm international expansion

(Casillas & Acedo, 2013; Leonidou & Katsikeas, 1996; Mathews &

Zander, 2007). Aligned to this line of research is economic geogra-

phy scholarship that foc uses on the role of location i n the multina-

tional firm's international activities (Alcacer, 2006; Narula &

Santangelo, 2009, 2012). Literature in these research areas empha-

size that a firm expands int ernationally in order to exploit its specifi c

ownership advantages, with the success of the inter national expan-

sion dependent on the ability of the firm to overcome the generic

challenges of going abroad (Dunning, 1980; Hymer, 1976). Multina-

tional enterprises (MNE s) are suggested to be the main dri vers of

internationalization and globalization (Welch & Luostarinen, 1988).

Internationalizati on is considered as a series of events thr ough which

a firm increases its level of involvement in foreign markets over time

(Johanson & Vahlne, 1990; Leonidou & Katsikeas, 1996). Accord-

ingly, the internatio nalization of a firm can be assessed by refer ence

to the number of countries to which the firm exports its products or

has subsidiaries, the d iversification of its fo reign markets, and the

cultural and/or physica l distance between coun tries it operates in

(Casillas & Acedo, 2013).

An emerging body of work has also begun to examine the

“architectural fit”between home and host country, for example, the

role of industry architecture in shaping firm international expansion

success (Jacobides & Kudina, 2013). Industry architecture refers to

the rules and mechanisms that determine how labor and surplus is

divided among firms within a value chain (Fitzgerald & Veliyath, 1995;

Jacobides et al., 2006). Accordingly, firms' capabilities and competitive

environment are shaped by the industry architecture—which may be

similar or different from those in other countries. The pioneering work

of Jacobides and Kudina (2013, p. 150) revealed that “separability and

similarity of industry architectures across countries are robust and

important predictors of success in international expansion”. Specifi-

cally, they found that the “fit”between home and host countries'

industry architectures in terms of similarity and comparability, as well

as institutional separability facilitates successful internationalization.

Institutional separability refers to the separability of the parts of an

industry value chain”(Jacobides & Kudina, 2013, p. 151). It is there-

fore suggested that industry architectures should be factored into

examining internationalization success.

Arguably, the literature on internationalization, international

entrepreneurship, and economic geography all hint that firms' inter-

nationalizing behavior encompasses a wide range of aspects (Welch &

Luostarinen, 1988; Casillas & Acedo, 2013). However, the dominant

theoretical lenses in these research streams tend to anchor and facili-

tate discussions along the lines that internationalization is a function

of factors among which product architecture is not rarely mentioned

JEL classification codes: L14, 15, O32, O33.

DOI: 10.1002/jsc.2309

Strategic Change. 2020;29:47–55. wileyonlinelibrary.com/journal/jsc © 2020 John Wiley & Sons, Ltd. 47