The Strength of IT-Based (Virtual) Interfirm Ties in the Development of Complex Product Systems - Information Technology and Product Development - page 180

mode of virtual embeddedness are made through formal channels the egocentric
firm established/sponsored as a way of appropriating returns.
The design and development of the Boeing 787 Dreamliner is another good
example of the egocentric virtual embeddedness model. In the past, Boeing designed
70% and produced 30% of its aircraft. With the Dreamliner, Boeing changed strat-
egy. The company assumed the role of systems integrator, thereby allowing partner
companies to design and manufacture several modules. According to Kevin Fowler,
Boeing's vice-president for systems integration:
We want to get the best collection of people to create the best airplane, so we needed to look
globally. What you find is not only is it expensive, it's not feasible to have everyone come
and be located in one spot. It defeats the purpose of having designers close to manufacturing.
We wanted something to enable us to work as one team and be virtually connected. ( Design
News , 2007)
To set up its virtual team, Boeing created the Global Collaborative Environment
(GCE). This virtual environment includes a set of computer and networking capa-
bilities that connected every member of the 787 team, regardless of their location.
This environment includes Boeing-developed applications in addition to third-party
programs for simulation and design tasks. In this way, Boeing is able to maintain
knowledge of the design components that it has outsourced to other firms.
9.8 Virtual Embeddedness and Modularity
Modularity refers to a systems approach where changes in components that make up
a system's architecture will not change the relationships between components in the
architecture. However, it is often necessary in the development of complex product
development projects to account for technical changes at the niche (component)
level as well as at the architectural level of innovation (Henderson & Clark, 1990).
When niche (component) level innovation is required and when the technologies
are reasonably well understood, lead companies involved in these complex product
development projects can manage the process using modular systems approaches
(Brusoni et al., 2001; Schilling, 2000). But when the change is architectural or both
niche and architectural, managers must consider alternative approaches to manage
changes in the architecture of the system.
Furthermore, firms do not always migrate towards modularity (Schilling, 2000).
Some firms may be motivated to deemphasize modular systems design strategies in
their systems architecture. In these cases, firms may chose to limit the number of
firms that can interface with their product as a way of maintaining market power
(Schilling, 2000). Therefore, when the motives for systems development in CoPS is
focused less on modularity and more on integration, firms are more likely to rely on
trust mechanisms for managing both component and architectural innovation.
A network embeddedness approach for managing NPD in CoPS can potentially
help manage architectural innovation. Although social embeddedness is likely to
be more costly in terms of monitoring technical changes in the architecture of the