Modularity in KIBS: The Case of Third-Party Logistics Service Providers

This paper investigates service modularity and inter-organizational coupling in knowledge-intensive business services (KIBS). While KIBS literature traditionally emphasizes tight client-provider interactions with service customization, modularity literature emphasizes inter-organizational decoupling with service standardization. We disentangle this tension by exploring how KIBS firms utilize service modularity and shape their client-provider relationships in terms of information and knowledge sharing. Conducting two in-depth case studies of third-party logistics (TPLs), we show that TPLs extensively rely on service modularity with standard procedures as their constitutive element. We also demonstrate that service modularity and inter-organizational decoupling are aligned for knowledge sharing but not for information sharing, which remains high regardless of the service architecture. Overall, we suggest that modularity in KIBS differs in many aspects from modularity in products and that these differences significantly impact the organizational design consequences of service modularity. Theoretical and managerial implications are drawn.