Journal of Management & Governance

, Volume 1, Issue 1, pp 123–140 | Cite as

Division of Labour and the Locus of Inventive Activity

  • Ashish Arora
  • Alfonso Gambardella
  • Enzo Rullani


This paper argues that modularity of knowledge andtechnologies has important implications for the locusof inventive activities. This is because modularityallows for a separation of the innovation process intwo main activities: The production of basic(standardised) modules, and their combination toproduce variants of technologies or product designsthat are better suited to the special needs ofindividual users or markets. This gives rise to adivision of labour whereby the production of moduleswill be performed by specialised upstream suppliers(who enjoy economies of scale), while the combinationof modules will be performed by firms furtherdownstream or by the users themselves. We then suggestthat this pattern can explain a variety of phenomenasuch as why users ’’co-produce‘‘ their innovations, andhow small regions can support innovative activitydespite the apparent efficiency advantage of largerregions.


Transportation Cost Inventive Activity Basic Module Technological Integration Large Market 
These keywords were added by machine and not by the authors. This process is experimental and the keywords may be updated as the learning algorithm improves.


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Copyright information

© Kluwer Academic Publishers 1997

Authors and Affiliations

  • Ashish Arora
    • 1
  • Alfonso Gambardella
    • 2
  • Enzo Rullani
    • 3
  1. 1.Heinz SchoolCarnegie Mellon UniversityPittsburgh
  2. 2.Istituto di Studi AziendaliUniversity of UrbinoUrbinoItaly
  3. 3.Dipartimento di Economia AziendaleUniversity of VeniceVeniceItaly

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