Empirical research: Modularity in products and organizations, and their effects on inventory performance

The objective of this paper is to make the empirical test on the long discussed relationship between product and organizational design decisions. Besides, this research attempts to reveal the impact of this relationship on the inventory performance. The proposition, called the mirroring hypothesis, conjectures that the product and organizational modularity levels are positively correlated. Apart from the still-continuing debate on its validity, the mirroring hypothesis contradicts with the high inventory performance goal as well. The supply chain literature argues for high product modularity and low organizational modularity for the maximum inventory performance, which indicates the negative correlation between product and organization modularity levels. To explore the nature of this triadic relationship, the structural equational model has been established based on the survey responses of the Turkish manufacturing firms. The results show that firms need to integrate more (low organizational modularity) with their suppliers as they have modular products contrary to the mirroring hypothesis. This research also puts forward that whereas the integration with suppliers boosts the inventory performance, the modular product possession is not found to have such positive effect.