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We live in a dynamic economic and commerical 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 markets 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.
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