What is behind mirroring hypothesis? Dynamics between modularity and integration: case from electric vehicle industry and BMW i3

Type de publication:

Conference Paper


Yurong Chen


Gerpisa colloquium, Paris (2017)


Electric Vehicle, integration, Mirroring Hypothesis, modularity


Electric vehicles (EV) is considered as a radical innovation in today’s automobile industry. EV has challenged current automobile product architecture, as it involves new components inside the vehicle to replace the old ones (e.g. battery and electric motor) and sets a new ecosystem that requires the commitment from electricity and recharging system. With new product architecture and new components, EVs re-trigger and extend the long lasting debates in the auto mobile industry, that is, modularization and corresponding outsourcing (Frigant, 2011; Jacobides, Macduffie, & Tae, 2016; MacDuffie, 2013). This relationship between the degree of integration of a firm and the product architecture comprising integrality and modularity is presented as the “mirroring” hypothesis in the literature (Argyres & Bigelow, 2010; Colfer & Baldwin, 2016; Sanchez & Mahoney, 1996). It suggests that integration of component products in the upstream and downstream operations of the firm is associated with integrality of product architecture (coupling interfaces and more-to-more functional components mapping based on the definition of Ulrich (1995)).
Scholars with interests in EV industry often find that EV itself tends to have more modular interfaces, as a result of the relaxation on the space, OEM’s intention to reduce production cost, and technology uncertainty (Luccarelli, Matt, & Spena, 2015). On the other hand, scholars also claim that EV and its supporting infrastructure, may face more complicated constrains, such as range anxiety problems (Chen, Chowdhury, Donada, & Perez, 2016; Fujimoto, 2016), especially for battery electric vehicle (BEV). These features relate to an integral functional component mapping. Therefore, it raises the question 1) how the two dimensions of modularity level shift in EV ecosystem architecture respectively? 2) How it affects mirroring hypothesis, i.e. the integration choice of firms. This proposal intends to understand what are the drivers and mechanisms behind mirroring hypothesis, especially, what is the role of functional component allocation in the integration decision process.
The author follows the wisdom that the modularity level of product architecture and the corresponding integration choice, are not only determined by technologies, but also largely depend on individual firm’s choice (Jacobides et al., 2016; MacDuffie, 2013).Therefore, case study applies properly in this research setting. The author uses archival data and interviews with managers from BMW I projects, to capture the interfaces and functional component allocation in EV ecosystem architecture. For example, the integral function of range anxiety reduction, which relates to the vehicle body, battery pack, and recharging network. It also illustrates BMW’s evolving integration strategy, that is, BMW’s more engaging activities in fast recharging infrastructure, and the concerns behind.
The story of BMW I3 shows that the demand for the integral range anxiety reduction function cannot be satisfied by the capability pool of disintegrating industry, i.e. recharging firms lack incentives to invest in fast charging technology and develop its network, and lead to BMW’s engaging activities in recharging network, which is corresponding to the literature on industry architecture change (Cacciatori & Jacobides, 2005; Jacobides, 2005). The work contributes to the understanding of mechanisms behind mirroring hypothesis. That is, the benefits for specialization and trade motive product shift to modular interface with the effort of engineers and managers, which is the necessary condition for disintegration; while the gap between demand for an integral function and the disintegrated capabilities pool ask for the integration of certain capability, however, a firm can make its decision on whether integrate the capability and satisfy the demand.

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