Carliss Y. Baldwin

William L. White Professor of Business Administration

Carliss Y. Baldwin is the William L. White Professor of Business Administration at the Harvard Business School. She studies the process of design and its impact on firm strategy and the structure of business ecosystems. With Kim Clark, she authored Design Rules, Volume 1: The Power of Modularity, the first of a projected two volumes. Volume 2, Modularity on Trial, will consider how modular technologies are affecting the basic structure of the global economy—for good and for bad.

Baldwin received a bachelor's degree in economics from MIT in 1972, and MBA and DBA degrees from Harvard Business School. She developed and taught Mergers & Acquisitions, a second-year MBA course, and presently teaches Finance 2, a first-year required course.

She has served on numerous corporate and non-profit boards. At Harvard Business School, she has been a Director of Research, Senior Associate Dean for Faculty Planning, and head of the Doctoral Programs. Within Harvard University, she has been on the Visiting Committee of the Harvard Graduate School of Design and the policy and admissions committee of the joint Ph.D program in Science, Technology and Management.

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Design Rules, Vol. 1: The Power of Modularity

with Kim B. Clark

We live in a dynamic economic and commercial world, surrounded by objects of remarkable complexity and power. In many industries, changes in products and technologies have brought with them new kinds of firms and forms of organization. We are discovering news ways of structuring work, of bringing buyers and sellers together, and of creating and using market information. Although our fast-moving economy often seems to be outside of our influence or control, human beings create the things that create the market forces. Devices, software programs, production processes, contracts, firms, and market are all the fruit of purposeful action: they are designed.

Using the computer industry as an example, Carliss Y. Baldwin and Kim B. Clark develop a powerful theory of design and industrial evolution. They argue that the industry has experienced previously unimaginable levels of innovation and growth because it embraced the concept of modularity, building complex products from smaller subsystems that can be designed independently yet function together as a whole. Modularity freed designers to experiment with different approaches, as long as they obeyed the established design rules. Drawing upon the literatures of industrial organization, real options, and computer architecture, the authors provide insight into the forces of change that drive today's economy.
The Architecture of Transaction Networks: A Comparative Analysis of Hierarchy in Two Sectors

with Jianxi Luo, Daniel Whitney and Christopher Magee

We apply network-based methods to measure the degree of hierarchy in interfirm transaction networks in two industry sectors in Japan: automotive and electronics. We find significant structural differences between the two networks and show how these differences are related to the strategies of the largest firms in each sector.
Modeling a Paradigm Shift: From Producer Innovation to User and Open Collaborative Innovation

with Eric von Hippel

Organization Science, 22(6):1399-1417

We argue that innovation by individual users and open collaborative innovation increasingly compete with and may displace producer innovation in many parts of the economy.
Exploring the Duality between Product and Organizational Architectures: A Test of the Mirroring Hypothesis

with Alan MacCormack and John Rusnak

Research Policy, forthcoming

We examine the relationship between modularity and organizational structure in the software industry. We find consistent evidence that products developed by loosely-coupled organizations are significantly more modular than product developed by tightly-coupled organizations. Our tests support the hypothesis that products tend to "mirror" the architectures of the organizations in which they are developed.
The Impact of Modularity on Intellectual Property and Value Appropriation

with Joachim Henkel

This paper defines three generic threats to intellectual property (IP) and models the impact of modularity on these threats. It then analyzes the strategy of capturing value by maintaining exclusive control of an essential module in an otherwise open system.