Value innovation mechanism and competitive advantages of modular organization

With the fast development of information technology (IT), "modularity" becomes an important subject in knowledge economic era and attracts much attention from theoretical circles. Thus modular organization, as a new organization management model in the context of network economy, turns into a hot subject in the area of industrial organization research. The emergence of modularity technology drives organizations to implement modularity accordingly, and brings a new concept of organization design as well. This paper summarizes the features of modular organization and analyzes the internal mechanism of modular organization\´s value innovation. The competitive advantage of modularity includes: cost decreasing, making full use of external resources, flexible response to market change and helpful for knowledge flowing and sharing.