Direct and Mediated Effects of Product Modularity on Development Time and Product Performance

Product modularity is often considered a crucial driver for the improvement of new product development (NPD) performance, in terms of NPD time and product performance, especially in those contexts characterized by a high product variety and constantly changing demand. However, quantitative studies demonstrating these links are scant and an increasing amount of anecdotal evidence suggests that there is a need to develop a more complete theory on the effects of product modularity on NPD time and product performance by examining the potential mediating effect of supplier involvement in NPD. To meet this need, we analyzed the impact of product modularity on NPD time and product performance, and whether supplier involvement in NPD can mediate “modularity-NPD time” and “modularity-product performance” relationships. Data from a sample of 201 manufacturing plants demonstrate that product modularity significantly affects NPD time and product performance. In addition, the impact of modularity was partially mediated by the involvement of suppliers in NPD. A better understanding of this effect can contribute to clarifying the mechanisms by which product modularity affects NPD time and product performance and thus could give guidance to managers on how to lever product modularity in order to improve the NPD process.