A third dimension in the mirror? How senior managers design products and organizations

• DOI: http://doi.org/10.1002/jsc.2307
• Published date: 01 January 2020
• Date: 01 January 2020

RESEARCH ARTICLE

A third dimension in the mirror? How senior managers design

products and organizations

Norbert Bach

1

| Peter Galvin

2

1

School of Economic Sciences and Media, TU

Ilmenau, Ilmenau, Germany

2

School of Business and Law, Edith Cowan

University, Joondalup, Australia

Correspondence

Norbert Bach, TU Ilmenau, School of

Economic Sciences and Media PO Box 10 05

65 D-98684 Ilmenau, Germany

Email: norbert.bach@tu-ilmenau.de

Abstract

Individual CEO characteristics may affect architectural choices through the applica-

tion of managerial discretion. Systems such as organizations and their products are

not purely driven toward modularity because of external forces. Individual CEO char-

acteristics may constitute an additional dimension to established mirroring consider-

ations that impacts both the choice of architecture and the correspondence between

product and organization architectures.

1|INTRODUCTION

How different pairings of firms’product architecture and organization

architecture arise and evolve over time, and whether there is a

mirroring across these different architectural levels is subject to a

number of factors both external and internal to the firm (e.g., Colfer,

2007; Colfer & Baldwin, 2016; Sorkun & Furlan, 2017). While origi-

nally proposed in the form “products design organizations”(Sanchez &

Mahoney, 1996), the direction of this so-called mirroring hypothesis

has been questioned. Complementing the original reasoning, Sanchez,

Galvin, and Bach (2013) suggest a “reverse mirroring hypothesis”to

also allow for “organizations designing products.”

Configuring complex systems such as product and organization

architectures and the respective supply chain is a design task

(Baldwin & Clark, 2000; Jacobides, 2005; Puranam, Alexy, & Reitzig,

2014). The design challenge is to create a technical architecture and

corresponding organization architecture that together are capable of

carrying out complex tasks in efficient ways that allow the firm to

compete in dynamic environments. Originating from the literature on

strategic flexibility (Brozovic, 2018; Harrigan, 1985; Sanchez, 1995;

Sanchez & Mahoney, 1996; Worren, Moore, & Cardona, 2002)

scholars put forward the notion that “strategizing managers”seek the

best combination of modular and integrated architecture pairings to

allow the firm to capture value from both gains from specialization

and gains from trade (Sanchez, Galvin, & Bach, 2013; Sanchez &

Mahoney, 2013). A key question is whether such architectural choices

are the result of the “iron cage”of institutional forces and isomorphic

pressures (DiMaggio & Powell, 1983) or whether it is the individual

characteristics of top manager's that drive these architectural choices.

While the degree of managerial discretion may vary between indus-

tries, we build our arguments using an upper echelons perspective

(e.g., Hambrick & Mason, 1984). Our analysis is rooted in the assump-

tion that managerial choices are not purely the result of external

forces and that managers and their individual characteristics do

matter.

The extant literatu re shows empirical sup port for such a “CEO-

effect”on firm performance (Liu, Fisher, & Chen, 2018; Quigley,

Crossland, & Campbel l, 2017; Quigley & Hambrick, 2015). Indivi dual

characteristics su ch as the CEO's age, ten ure, experience, and per-

sonality affect fi rms’strategic choi ces and firm performan ce (for a

meta-analysis, see Wang, Holmes Jr., Oh, & Zhu, 2016). Following

this rationale, we ar gue that top managers’individual characteristics

influence firms’architectural choi ces. To build our theore tical posi-

tion, we first summarize the literature on architectural choice and

the mirroring hypothesis. We then present the core findings of the

CEO effect as a concep tual foundation of ou r analysis. Combin ing

architectural choice (dependent variable) and CEO effect (indepen-

dent variable) we then de rive propositions how individual CEO ch ar-

acteristics affect firms’architectural choices. The paper ends with a

discussion relating our propositions to the literature on mirroring

and misting and the embed dedness of firm archi tectures in industry

architectures.

JEL classification code: L22.

DOI: 10.1002/jsc.2307

This is an open access article under the terms of the Creative Commons Attribution-NonCommercial-NoDerivs License, which permits use and distribution in any

medium, provided the original work is properly cited, the use is non-commercial and no modifications or adaptations are made.

© 2020 The Authors. Strategic Change: Briefings in Entrepreneurial Finance published by John Wiley & Sons, Ltd.

Strategic Change. 2020;29:25–33. wileyonlinelibrary.com/journal/jsc 25