Misting the Mirror: The Value Characteristics of Product Components - a perspective on organising for innovation

Theorists within the modularity tradition have hinted at the potential benefits of a “mirror” between the structure of a product development firm and the technical product it designs. At its heart, the so-called mirroring hypothesis seeks to examine two important and pervasive relationships: (1) the extent of an architectural mapping between firms’ strategic choices of product architecture and firm architecture – within-firm mirroring - and (2) between firms’ architectural choices and industry structures – across-firm mirroring. In supporting the theoretical logic for the strong test of the mirroring hypothesis (ie that the mirroring extends to the knowledge boundaries), advocates of modularity argue that its design principles permit an easier partitioning of knowledge and hence productive capabilities. However, despite the intuition that knowledge boundaries can be successfully partitioned, its enactment appears less prevalent in practice, causing a ‘misting of the mirror’ in respect to the strong form of the mirroring hypothesis. This paper investigates whether the strong test of mirroring in respect of the UK pension industry between 2000 and 2015 holds. We add to the existing contingent variables of complexity and rate of change in terms of misting the mirror the notion of value and how it would seem to determine whether knowledge boundaries are partitioned or integrated and, hence, whether mirroring is present or absent. The paper is structured as follows: (1) the extant literature is examined, focusing on recent contingent perspectives to the mirroring hypotheses, (2) the research method is explored, (3) findings from a retrospective study of the UK personal pensions product market between 2000 and 2015 are presented, (4) the findings are discussed and further contingencies are highlighted that may ‘mist the mirror’, and (5) some concluding remarks and directions for future research are identified.