Modularity for ValueAppropriation:Drawing the Boundaries ofIntellectual Property

The existing theory of modularity explains how modular designs create value. We extend thistheory to address value appropriation. A product or process design that is modular with respect tointellectual property (IP) allows firms to better capture value in situations where knowledge andvalue creation are distributed across many actors. We use case studies to develop an inductivetheory of “IP modularity,” from which we derive testable propositions and managerialimplications....