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Title System Architecture Dynamics The case of Japanese Car Navigation Systems Abstract This paper attempts to clarify how the integration of software and hardware is related to product systems and product development organization in the growing electronic equipment market in the IT age. As a framework for analyzing the effect of integration, we will examine the influence of software on product functions, product development organization and product innovation by introducing the concept of system architecture, which represents the nature of a system, and is defined as a combination of hardware and software.    As a particular case, Japanese car navigation market is analyzed. Regarding system architecture, we discuss how both software and hardware have open architecture dynamics, how those dynamics have several trajectories, and have a major impact not only on cooperation between product development structure and external organization, but also on innovation. Munehiko ITOHResearch Institute for Economics and Business AdministrationKobe UniversityRokkodai-cho, Nada-ku, Kobe 657-8501 JapanPhone: (81) 78 803 7036 Fax: (81) 78 803 7059