Modularity in technology and organization

This paper is an attempt to raid both the literature on modular design and the literature on property rights to create the outlines of a modularity theory of the firm. Such a theory will look at firms, and other organizations, in terms of the partitioning of rights—understood as protected spheres of authority—among cooperating parties. And it will assert that organizations reflect nonmodular structures, that is, structures in which decision rights, rights of alienation, and residual claims to income do not all reside in the same hands.