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  • 2015
  • Working Paper
  • HBS Working Paper Series

Bottlenecks, Modules and Dynamic Architectural Capabilities

By: Carliss Y. Baldwin
  • Format:Print
  • | Language:English
  • | Pages:52
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Abstract

How do firms create and capture value in large technical systems? In this paper, I argue that the points of both value creation and value capture are the system's bottlenecks. Bottlenecks arise first as important technical problems to be solved. Once the problem is solved, the solution in combination with organizational boundaries and property rights can be used to capture a stream of rents. The tools a firm can use to manage bottlenecks are, first, an understanding of the technical architecture of the system; and, second, an understanding of the industry architecture in which the technical system is embedded. Although these tools involve disparate bodies of knowledge, they must be used in tandem to achieve maximum effect. Dynamic architectural capabilities provide managers with the ability to see a complex technical system in an abstract way and change the system's structure to manage bottlenecks and modules in conjunction with the firm's organizational boundaries and property rights.

Keywords

Architecture; Architectural Knowledge; Dynamic Capabilities; Bottleneck; Modularity; Organization Design; Organization Boundaries; Property Rights; Organizational Design; Organizational Structure

Citation

Baldwin, Carliss Y. "Bottlenecks, Modules and Dynamic Architectural Capabilities." Harvard Business School Working Paper, No. 15-028, October 2014. (Revised May 2015.)
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About The Author

Carliss Y. Baldwin

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Related Work

    • 2015
    • Faculty Research

    Bottlenecks, Modules and Dynamic Architectural Capabilities

    By: Carliss Y. Baldwin
Related Work
  • Bottlenecks, Modules and Dynamic Architectural Capabilities By: Carliss Y. Baldwin
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