ABSTRACT
Architecture-based innovation strategies have the potential to disrupt sectoral orders if the related product designs are successful in the market while incumbent market leaders are unable to change the relevant organizational patterns to accommodate similar product designs. The automotive industry is specifically associated with the development of the internal combustion engine (ICE) and the model case for an industry featuring integral product designs. After the automobile sector had settled on an ICE–based dominant design, a number of connected shifts in product and process technologies have gradually transformed the sector; first, from one featuring an open-modular to a closed-modular and to a closed-integral product architecture. The chapter explores innovation in China can be explained in terms of an interplay of fragmented domestic industry architectures and a general trend in many industries toward the modularization of product architectures. The secondary segments of the passenger vehicle sector have entered the spotlight particularly after the country’s accession to the World Trade Organization in 2001.
