The effects of organizational flatness, coordination, and product modularity on mass customization capability

This study examines the effects of organizational flatness, coordination (cross-functional coordination, cross-plant coordination and supply chain coordination) and product modularity on mass customization capability (MCC) development. We develop a flatness-coordination-modularity-MCC model. Data from 317 firms located in ten countries across three industries are analyzed to test the research model using partial least squares. Our results show that product modularity, cross-functional coordination and supply chain coordination significantly contribute to MCC, whereas the influences of cross-plant coordination and organizational flatness are insignificant. Organizational flatness enhances coordination practices, and its effect on MCC is fully mediated by cross-functional and supply chain coordination. Moreover, both cross-functional and cross-plant coordination increase product modularity, whereas supply chain coordination does not. We also find that such empirical results are not significantly affected by industry type or plant size. This study contributes to the literature by providing empirical evidence of the links between the practices of flatness, coordination and modularity, and the ways in which they jointly improve MCC. Our findings also provide guidance for managers and executives regarding how to design organizational structures and coordinate with both internal and external stakeholders to improve product modularity and MCC. Limitations of the study related to the nature of the data and the plant level focus are noted. •We empirically test a flatness–coordination–modularity – MCC (mass customization capability) model.•Product modularity, cross-functional coordination and supply chain coordination contribute to MCC development.•Cross-functional and cross-plant coordination improve product modularity.•Organizational flatness significantly enhances coordination practices.•Cross-functional and supply chain coordination mediate the effect of organizational flatness on MCC.