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While modularity has gained popularity as an organizational and technical architecture in complex systems, its proponents have overlooked the down side, says a Ross School professor. Granted, firms can improve their flexibility, increase innovation and respond faster to changes in the marketplace by reducing the complexity of their organizational structure through modularization. But there is a price to pay because the benefits of modular structures are highly susceptible to imitation by competitors, making it harder for leading companies to retain their competitive advantage, says Sendil Ethiraj, assistant professor of strategy.
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