Journal of Business Research 65 (2012) 1290–1294

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Journal of Business Research

Technological expectation and consumer preferences for product form

Seh-Woong Chung a, Jin K. Han a, Yong Seok Sohn b,⁎
a
LKC School of Business, Singapore Management University, 50 Stamford Road, #05-01, 178899, Singapore
b
School of Management, Kyung Hee University, Dongdaemun-Gu, Hoegi-Dong 1, Seoul, Republic of Korea

a r t i c l e i n f o a b s t r a c t

Article history: Increasingly, manufacturers address consumers' fear of product obsolescence by offering products in a mod-
Received 1 September 2010 ular form, hence allowing the consumer to replace or upgrade components as needed. The extant literature,
Received in revised form 1 January 2011 however, has not studied consumers' responses to product modularity. This study explores how consumers
Accepted 1 March 2011
weigh potential benefits (e.g., alleviate obsolescence concerns) vis-a-vis downsides (e.g., magnify complexity
Available online 16 November 2011
perceptions) to arrive at product-form preferences. The study further extends the literature by showing
Keywords:
product lifecycle stages and order-of-entry to moderate the impact of product modularity on consumer
Modularity preferences.
Obsolescence © 2011 Elsevier Inc. All rights reserved.
Technological expectation
Product complexity

1. Introduction
Creating appropriate modular architectures to support new kinds
of product strategies is now central to business strategies. Busi-
nesses need to create product and process architectures that are
capable of providing the flexibility…for individuals and to up-
grade them when better components come along. (Sanchez, 2000)
As a rite of passage, all high-tech product consumers will, at some
point, have deliberated over the new/obsolete paradox, pondering
the inevitable fate that today's latest technologies will become out-
moded in the not-so-distant future (Mick & Fournier, 1998). As the
modern-day consumer increasingly looks to high-tech products as
lifestyle solutions—at work as well as for play (e.g., smart phones,
notebooks, personal media devices) (Gerson, 2007), the new/obso-
lete paradox will remain a persistent dilemma from the buyer's
standpoint, which presents a challenge and also perhaps an opportu-
nity for firms in the consumer-technology sector.
In this context, a potential strategic tool for addressing aversion to
obsolescence may underlie in the manufacturer's strategy on product
architecture (Brusoni & Fontana, 2005; Sanchez, 1999, 2000). A good
illustration is the success by the upstart PDA-maker Handspring, who
adopted a modular architecture for its PDA (i.e., where users can
readily interchange or upgrade components). This strategy is a stark
contrast to the incumbent Palm's monolithic platform, where all
parts are hardwired. Nonetheless, the appeal of Handspring's
⁎ Corresponding author. Tel.: + 82 2 961 2152; fax: + 82 2 961 0515.
E-mail addresses: swchung@smu.edu.sg (S.-W. Chung), jkhan@smu.edu.sg
(J.K. Han), ysohn@khu.ac.kr (Y.S. Sohn).
modular PDA was somewhat transitory, thereby, leaving some key
questions behind. Specifically, do consumer preferences for product
platform evolve over time, and if so, what are the factors beyond ob-
solescence issues that may drive the preferences for monolithic vs.
modular platform?
To this end, this research explores consumer preference at differ-
ent points along the technological trajectory and offers a contingency
perspective to product-architecture strategy. The studies in this re-
search demonstrate that preference for product architecture evolves
with technological trajectories and that choice decisions follow a
high-tech buying hierarchy. This research also explores order-of-
entry effects to better understand the strategic potential for leverag-
ing product architecture, and finally, discusses managerial implica-
tions and directions for future research.
2. Conceptual development
2.1. Scope of modular product architecture: Modularity-in-use
Both practitioners and scholars alike acknowledge that a paradigm
shift is taking place in product development: from product creation
towards modular platform development (Baldwin & Clark, 1997).
According to Sanchez (1999), strategic benefits of modular architec-
ture may arise from its potential to “introduce technologically im-
proved products more rapidly, bring new products to market more
quickly, and lower costs of creation and realization.” Specifically,
modularity in product development can occur at three levels:
modularity-in-design, modularity-in-production, and modularity-in-
use (Baldwin & Clark, 1997). To date, the literature focuses dispropor-
tionate amount of attention on modularity-in-design and -produc-
tion, while giving scant attention to modularity-in-use — mainly

0148-2963/$ – see front matter © 2011 Elsevier Inc. All rights reserved.
doi:10.1016/j.jbusres.2011.10.032
 S.-W. Chung et al. / Journal of Business Research 65 (2012) 1290–1294
attributable to the topic's engineering-/operations-based origin.
Nonetheless, as the demand-side (vis-à-vis supply-side) factors ulti-
mately determine the success or failure of any product or its platform,
the motivation for this research is to bridge the gap in the knowledge
on modularity-in-use. This study, therefore, examines how the end-
users perceive the merits of modular architecture.
2.2. Modular vs. Monolithic architecture
Its flexibility is one of the most important advantages of modular
architecture (Schilling & Steensma, 2001). Specifically, this open-
system architecture bestows the end-user with the flexibility to re-
place and upgrade to an improved component in a “plug-and-play”
style. In other words, consumers are buying into the idea of future-
proofing when they select a modular platform (McLaughlin, 2005).
Ulrich (1995) similarly underscores this point with upgrade opportu-
nities offered by modular computer systems that enable more power-
ful chip enhancements. In contrast, the monolithic product
architecture is a closed-system, where the entire product has to be
replaced in any upgrading decisions. The concept of future-proofing
is entirely inapplicable in the monolithic archetype. The overriding
implication is that, in the introduction stage of the product life
cycle, when a high-tech category is undergoing a rapid pace of im-
provement in its core performance, the appeal of modular architec-
ture should dominate that of monolithic archetype on the basis of
flexibility criterion. Brusoni and Fontana (2005) echo this point by
pointing out that “companies wanting to emphasize…flexibility and
upgradability may well choose a modular architecture.”
The flipside to modularity's advantage may, however, serve as its
Achilles heel. Intrinsic to modular architecture is its platform's inter-
face with modular components. This very structural element that
gives rise to flexibility may also serve to raise the perceived complex-
ity of the product (Ernst, 2004). Past studies show that consumers
tend to associate higher levels of product complexity in technology
products with lower perceptions of product reliability (e.g., Leek &
Kun, 2006) as well as degradation in perceived usability (e.g.,
Liljegren, 2006; Mukherjee & Hoyer, 2001). That is, for complex prod-
ucts, consumers tend to infer high likelihood and frequency of fail-
ures. Complexity is also detrimental on the ease-of-use judgment—
with inferred learning costs as a key factor. Altogether, given that
modularity's flexibility enhances the platforms appeal whereas com-
plexity the opposite, what would the net impact be, on balance
(refer to Table 1)? To shed light on this issue, the next section dis-
cusses Christensen (2000)'s high-tech buying hierarchy.
2.3. High-tech buying hierarchy and technological trajectory
According to Christensen (2000), consumers typically make buy-
ing decisions on high-tech products by following a buying hierarchy,
with performance criterion at the top, followed by reliability and us-
ability considerations, respectively. To elaborate, performance differ-
ences among the alternatives would dominate the choice decision. If
this dimension does not play a discriminating role, then reliability
subsequently becomes the next choice criterion, followed by the
lower-order criterion of usability. A recent study by Han, Chung,
and Sohn (2009) on product-form choice lend support to
Christensen (2000)'s model of high-tech buying hierarchy. They cor-
roborate the hierarchy effects in high-tech choice decision and fur-
ther show that consumers' perceived vs. objective differences in
Table 1
Product architecture: flexibility vs. complexity.
Flexibility Complexity
Modular + −
Monolithic − +
1291
performance drive the preferences and choices for higher-order
criterion.
In the context of product architecture, the above studies show that
the distinction in flexibility between the two platforms may also sig-
nal performance differences to consumers. Past works show that con-
sumers are cognizant of the technological trend of improving
performances with time, and accordingly, today's buying decisions
actually reflect future performance expectations (Bridges, Yim, &
Briesch, 1995; Kim, Han, & Srivastava, 2002). The implications are
two-fold. First, if the future technological expectation is high (i.e.,
steep technological trajectory), then consumers will prefer modular-
ity's flexibility allowing for performance upgrades vs. static monolith-
ic structure. This scenario is likely to occur in the earlier part of the
product's life-cycle when the industry's performance standard falls
below the consumer's threshold level (e.g., imaging quality of early
digital cameras or speed of yesteryear's processor chips). In addition,
with the performance criterion activated, the relative advantage of
monolithic platform on complexity perception is immaterial due to
its status as lower-order criteria (e.g., reliability and usability).
In sum, modular product architecture dominates the monolithic
counterpart in choice for below threshold cases. H1a: In a choice con-
text between modular versus monolithic product platform, more con-
sumers will prefer the modular platform at low levels of technological
performance for a common given feature.
Secondly, if the future technological expectation is low (i.e., flat
technological trajectory), then consumers will prefer the less
seemingly-complex monolithic platform for its reliability and usabil-
ity dimensions vs. the modular option. This scenario is likely to
occur as the technology approaches mature phase of the product's
life-cycle when the industry's performance standard has satisfied
the consumer's threshold level (e.g., present-day imaging quality of
digital cameras or current standard speed of computer processor
chips). Performance has become what Sanchez (1999) refers to as
“threshold attributes” in this phase. Threshold attributes are func-
tions provided by components that are essential to the overall func-
tioning of a product but are not perceived by consumers as adding
value to the product as long as they function adequately. In essence,
components that provide threshold attributes have the strategic role
of functioning at a threshold level of acceptable performance and
reliability.
With performance criterion no longer serving a discriminating
role, consumers will now apply the lower-order criteria (reliability
and usability) in forming their preferences for one type of product
platform over another, and thus, prefer the less seemingly-complex
monolithic platform (hence, seemingly-superior in reliability and us-
ability) to the modular platform.
In sum, monolithic product architecture dominates in the choice
over the modular counterpart for above the threshold cases. H1b: In
a choice context between modular vs. monolithic product platform,
more consumers will prefer the monolithic platform at high levels
of technological performance for a common given feature.
3. Experiment 1
3.1. Method
Experiment 1 explores consumers' choices between the monolith-
ic and the modular product forms (H1a and H1b). One hundred twen-
ty one business students participated in this experiment in exchange
for a course credit. The participants received questionnaires contain-
ing information two options of product forms. The first option was a
purchase of a PDA integrated with a digital camera as a ‘two-in-one’
product (i.e., monolithic model). The second option was a PDA with
a digital camera module that the user can plug into the PDA (i.e.,
modular model). The subjects' task was to indicate which of the two
models they would choose.
1292 S.-W. Chung et al. / Journal of Business Research 65 (2012) 1290–1294

The between-subject experimental design consists of two condi-

tions (low-performance vs. high-performance). The dependent vari-
able is subjects' product-form choice between the two models
(monolithic vs. modular). The low-performance condition employs
1-megapixel resolution for both the integrated and the modular prod-
uct forms. The high-performance condition uses a 5-megapixel reso-
lution. The 1-megapixel level represented the lower-end of digital
camera technology at the time of the data collection in 2004. The
5-megapixel reflected the higher-end of technological standards.
According to an industry analyst, “the sweet spot for mass sales of
digital cameras last year was 3 to 4 megapixels, and this year it will
likely rise again” (Hughlett, 2005). The industry standard for standa-
lone digital camera is generally higher than the functional equivalent
feature in the camera phone. This procedure is also consistent with
Han et al. (2009)'s study in setting low vs. high performance level
for digital camera category. This study demonstrates that the perfor-
mance reservation value is indeed higher for the digital camera
(about 3 megapixel) than for the digital camera function in camera
phones (about 1.5 megapixel). The price level is equivalent across
the two product forms
3.2. Measurement
On the second page of the questionnaire, subjects provide, in writ-
ing, the reasons for their choices, and provide the performance reser-
vation value for the digital camera function. Specifically, they indicate
the minimum acceptable level of picture resolution on a seven-point
scale ranging from 1-megapixel to 7-megapixel. Finally, subjects an-
swer questions measuring product perceptions on the dimensions
of flexibility and complexity.
3.3. Results and discussion
The performance reservation value serves as a manipulation
check. Lending support to the manipulation, the average performance
reservation value is 3.3. This validates the use of 1-megapixel level
and 5-megapixel level as low-performance condition and high-
performance condition, respectively. H1a and H1b posit that more
consumers would choose the modular (monolithic) product form in
the low-performance (high-performance) condition. In support of
these hypotheses, subjects are significantly more likely to choose
the modular model in the low-performance condition than in the
high-performance condition. Eighty-four percent of the subjects (51
of 61 subjects) prefer the modular model in the low-performance
condition compared with forty-eight percent (29 of 60 subjects) in
the high-performance condition (χ 2 = 14.60, p = .0001)(Fig. 1).
Analyses of consumers' product perceptions on flexibility and
complexity dimensions provide insight on the underlying rationale
for the revealed preferences. On the flexibility dimension, subjects
rate modular option to be significantly higher than the monolithic
counterpart (mean = 4. 7 vs. 2.8 for modular and monolithic options,
respectively; t = 11.08, p = .000); on the complexity dimension, sub-
jects rate modular option relatively higher as well (mean = 4. 6 vs. 2.9
for modular and monolithic options, respectively; t = 8.10, p = .000).
The written open-ended responses for the choice further corroborate
the premise that the tradeoff between the complexity-related issues
and the future flexibility is the driving factor for the observed choice
pattern. Nearly all subjects who choose the monolithic option men-
tion convenience, ease-of-use, or reliability as the reason for the
choice. Typically, these responses include statements such as: ‘easier
to carry,’ ‘there is less hassle,’ ‘easy to use,’ etc. In contrast, subjects
who choose the modular product option list the flexibility as the
most important reason: For example, ‘expand in the future,’ ‘techno-
logical advancement is rapid these days,’ ‘transfer to another module
later,’ ‘can detach the module when not needed,’ etc.
Fig. 1. Platform choice percentage by performance level.
To summarize, the results of Experiment 1 indicate that the tech-
nological performance level of the given feature moderates con-
sumers' choice of product form between the monolithic vs. modular
platform. When the performance level is below the consumers' per-
formance reservation value, consumers seek flexibility, and thereby,
choose the modular form. However, when the performance level is
above the threshold value, flexibility for future performance is no lon-
ger important. Hence, with the modular platform appearing relatively
more complex, the monolithic option becomes the more preferred
option due to higher perceived convenience, ease-of-use, and/or reli-
ability—all arising from relatively less-complex product perceptions.
As aforementioned in the PDA market, Palm (the incumbent) had
adopted the monolithic platform whereas Handspring (the new en-
trant) had chosen the modular platform. Although Handspring initial-
ly experienced substantial success, Palm recaptured the dominance
later in the product lifecycle. These findings, in the context of
Handspring's strategy, suggest that new entrants may potentially
overcome pioneering advantage if they adopt a contingent product-
architecture strategy. The next study addresses this very issue.
4. Experiment 2
By sheer order-of-entry, pioneers in new markets often enjoy in-
herent advantages over subsequent entrants in a variety of ways
(e.g., established preferences, supra-normal returns, market share,
customer loyalty, quality perceptions, preemption of resources). The
literature offers numerous examples of the pioneer advantage across
multiple disciplines including economics, management, and market-
ing (for reviews, see Kalyanaram, Robinson, & Urban, 1995; Kerin,
Varadarajan, & Peterson, 1992; Lieberman & Montgomery, 1988,
1991). The incumbent advantage is persistent and difficult to over-
come, which leaves a challenging proposition for coming into the
market henceforth. Although the findings from Experiment 1 support
the notion that a firm should consider contingent product-
architecture strategy (modular and monolithic) as technological per-
formance trajectory evolves higher over time, whether such a
product-platform strategy can overcome pioneering advantage re-
mains to be seen.
To this end, this study explores the contingencies of product-
platform strategy (monolithic vs. modular) by a new entrant to gain
access to the market that is dominated by the incumbent. For this
purpose, the next experiment examines two situations; when the in-
cumbent is currently using (1) a monolithic strategy and (2) a modu-
lar strategy. The new entrant seeking to differentiate itself would
then adopt a modular strategy and a monolithic strategy in these
two conditions, respectively.
 S.-W. Chung et al. / Journal of Business Research 65 (2012) 1290–1294
The product-form differentiation strategy of the new entrant like-
ly will be effective only to the extent that the strategy matches con-
sumers' preference pattern observed in Experiment 1. In specific, a
modular strategy will be efficient only when the incumbent is offer-
ing an integrated product at the low level of technological perfor-
mance. In contrast, when the incumbent is using the modular
strategy, the new entrant may successfully differentiate itself using
the monolithic strategy provided the technological performance is
at a high level. H2: When the incumbent is using the monolithic
(modular) strategy, the modular (monolithic) strategy is a successful
product platform strategy when the technological performance of a
given feature is low (high).
4.1. Method
The sample consists of one hundred one business students. Similar
to Experiment 1, the questionnaire contains information about two
companies (one company the incumbent, and the other a new en-
trant) respectively offering a PDA integrated with a digital camera
and a PDA that comes with a digital camera module. The experiment
consists of 2 (differentiation: modular vs. integrated) by 2 (perfor-
mance: low vs. high) between-subjects design. In the modular differ-
entiation condition, the cover story describes that the new entrant
offers a modular PDA in response to the incumbent company offering
an integrated PDA. Conversely, the description in the monolithic dif-
ferentiation condition depicts a situation where the new entrant of-
fers a monolithic PDA in response to the incumbent selling a
modular PDA. The manipulation of the performance remain the
same as that used in Experiment 1; namely, 1-megapixel vs. 5-
megapixel.
4.2. Results and discussion
The results are consistent with H2. In the ‘modular differentiation’
condition, sixty-two percent of the subjects (31 of 50 subjects) prefer
the new-entrant's product when the technological performance is
low. However, when the technological performance is high, only
twenty-eight percent of the subjects (14 of 50 subjects) prefer the
new-entrant's product (χ2 = 11.09, p = .0009). The choice patterns
are reverse in the ‘monolithic differentiation’ condition. Seventy-one
percent of the subjects (36 of 50 subject) prefer the new entrant's
product in the ‘high performance’ condition, while only sixteen per-
cent (8 of 51 subjects) do so in the ‘low performance’ condition
(χ 2 = 28.12, p b .0001) (Fig. 2).
Fig. 2. Platform choice percentage: New entrant strategy and performance level.
1293
Prior literature across many disciplines presents ample evidence
that the pioneering advantage is a strong, persistent phenomenon.
The results of this experiment show that the new entrant may over-
come this seemingly insurmountable obstacle by adopting the
product-form differentiation strategy. More importantly, any firm
adopting the product-form differentiation will have to tailor its ef-
forts by considering both the incumbent strategy and the technolog-
ical performance of the feature.
5. Summary and discussion
The objective of this research is to provide the initial groundwork
and motivation for studying the product-platform preferences in the
context of technological evolution. Results of experiments reveal im-
portant regularities in consumer preferences. Most importantly, con-
sumers prefer modular product platform over monolithic ones when
the level of technological performance is relative low; however, the
pattern of preference reverses at high performance levels. These re-
sults are due to the fact that consumers view modular vs. monolithic
platform as a trade-off between flexibility and complexity.
One theoretical account for the observed patterns of results is the
performance reservation value explanation. When the technological
performance level is below the performance reservation value, con-
sumers see added value in the flexibility provided by the modular
product. As the performance level begins to exceed consumers' reser-
vation value, the complexity (inclusive of convenience, usability, reli-
ability) factor outweighs the concern for the flexibility, and therefore,
leads to the preference for the monolithic form.
These results expand the extant understanding of the consumer
decision making processes in high-tech product purchases. The
high-tech buying hierarchy model (Christensen, 2000) stipulates
that consumers first examine the performance criteria when making
choice decisions. The findings of the current study extend this
model by showing that consumers not only consider the current per-
formance differences among the alternatives, but also take into ac-
count future performance expectations.
Furthermore, results also indicate that the ‘differentiation-by-
product-form’ may provide an effective product strategy for new en-
trants to the technology market; however, any firm using the product
form as a market-entry strategy must consider the performance res-
ervation value held by consumers and the performance level of the
given technology. In short, provided that the incumbent is currently
offering a monolithic product, the modular product strategy is appro-
priate for the new entrant only in low technological performance
conditions. In contrast, if the incumbent presently has a modular
1294 S.-W. Chung et al. / Journal of Business Research 65 (2012) 1290–1294
product, the new entrant can use the integrated strategy only in high
technological situations.
A number of issues still remain for future research. One issue is
that this study used a single digital component—PDA with a digital
camera function. Future work may include multiple components
(e.g., digital camera, MP3 player, GPS, etc.) to examine whether/
how the additional components shift the preference patterns.
By manipulating the level of technological performance of the dig-
ital camera function, the current study shows that the preference for
product platforms would depend on the stage of the product life cycle
(i.e., emerging vs. mature) as the technological performance of the
function would improve along the product life cycle. These findings
are in line with prior literature (e.g., Han et al., 2009) which shows
that consumers form technological expectations on the digital-
camera technology for camera phones at all levels of technology —
even though the standalone digital camera technology possessed a
higher performance upperbound. Future studies may extend the find-
ings by replicating the results with separate technological products in
different stages of the product life cycle. One would expect that the
preference for modularity would be the greatest in products that
are in emerging stages of the product life cycle, and vary across prod-
uct categories in later stages of the product life cycle.
Acknowledgments
YongSeok Sohn acknowledges the generous support of the Nation-
al Research Foundation in Korea (NRF-B00237), and Jin K. Han would
like to thank Kyung Hee University's International Scholar research
support. The authors appreciate helpful comments from Dae Ryun
Chang and Shijin Yoo on the earlier version of the manuscript.
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