Inter-firm Value Absorption in Modular Innovation Systems: A Case Study of Toyota Auto Corporation

Abstract

Modular innovation systems have become increasingly prevalent in the automotive industry, enabling firms to collaborate and share resources while maintaining flexibility and specialization. This case study examines the inter-firm value absorption dynamics within Toyota Auto Corporation, a leading player in the automotive sector known for its modular production systems and collaborative network of suppliers. Drawing upon the concepts of modularity, value chain analysis, and innovation ecosystems, this research investigates how Toyota Auto Corporation absorbs value from its network of suppliers through modular innovation processes. Through in-depth interviews, document analysis, and observational data, this study explores the mechanisms and strategies employed by Toyota and its suppliers to capture and integrate value across the automotive value chain. Furthermore, this research examines the implications of inter-firm value absorption for product development, cost efficiency, and competitive advantage within the automotive industry. The findings offer insights into the collaborative dynamics and value creation mechanisms inherent in modular innovation systems, with implications for firms seeking to enhance their innovation capabilities and competitiveness through strategic partnerships and network collaborations.