Massive Modularity: Understanding Industry Organization in the Digital Age: The Case of Mobile Phone Handsets

Abstract

The Policy Research Working Paper Series disseminates the findings of work in progress to encourage the exchange of ideas about development issues. An objective of the series is to get the findings out quickly, even if the presentations are less than fully polished. The papers carry the names of the authors and should be cited accordingly. The findings, interpretations, and conclusions expressed in this paper are entirely those of the authors. They do not necessarily represent the views of the International Bank for Reconstruction and Development/World Bank and its affiliated organizations, or those of the Executive Directors of the World Bank or the governments they represent.

Power in consensus: Legitimacy, global value chains and inequality in telecommunications standard‐setting

“…As such, winning firms could capture monopoly rents on a truly global scale by dominating critical nodes in the ecosystem (Thun et al. 2022), potentially generating vast inequality. However, the particular combination of four types of power restricts the monopolistic potential of leading firms (especially prominent in networked industries), and generates consensus around more socially optimal and value‐creating technologies.…”

“…The value chain starts with user equipment (UE), like smartphones and other connected devices, which are consumer‐oriented but require exceptional technical capabilities given the sheer complexity, small size and power efficiency requirements (see Thun, et al. 2022). Next are the radio access network and the core base station hardware, which constantly communicates with UE.…”

“…Mobile telecommunications requires intense interoperability between billions of mobile devices and through complex telecom networks, crossing every country in the world. As such, global standard‐setting is a high‐stakes game that can give rise to inequality through monopoly rents on a global scale, if large, monopolistic firms end up dominating critical pieces of the infrastructure (Thun, Taglioni, Sturgeon & Dallas, 2022). Telecommunication standards can create long‐run technological lock‐in through winner‐takes‐most proprietary patents and product complements (Bekkers et al., 2002), which can last for a decade or more over technology generations (e.g., 4 to 5G).…”

Manufacturing Competency: Roots of Competitive Advantage of Chinese Electric Vehicle Battery Industry

“…An EV version of Wintelism will be characterized by mass production of battery makers as core component suppliers controlling technology and production, and having both R&D and manufacturing competencies, complemented by rise of independent makers of digital drive trains or software suppliers [1] (pp.121-136). This is a gigantic "massive modular ecosystem" [33]. Car makers have to find a position between these two ends, an alternative strategy to the highly integrated model of BYD and Tesla.…”