Menu
Home
Log in / Register
 
Home arrow Management arrow Strategic Management in the 21st Century. Corporate Strategy

CONCLUSION

We broadly suggest that the decision to imitate can be attractive when the innovation is incremental and thus imitation is low risk and likely to be congruent with the prospective imitator's existing market knowledge and capabilities. Conversely, the decision to imitate more radical innovations will generally be less attractive. Imitating an incremental innovation is most likely to lead to positive performance outcomes when the innovator firm also has a history of introducing successful innovations to the market. Imitating will minimize the innovator firm's advantage and, hopefully, enable the imitator to hold if not gain market share. The value of imitating a radical innovation by such a competitor remains questionable, however, as past innovation performance is only weakly correlated with future performance. In the context of either incremental or radical innovations introduced by a competitor with demonstrable competency in a particular market space, there is potential benefit from pursuing imitation. Deep market knowledge of the innovator is generally associated with the introduction of innovations that are congruent with current market conditions; thus the risk inherent in mimicking innovation is low, regardless of whether the innovation itself is radical or incremental.

From a strategic perspective, the introduction of an innovation by a competitor is a disruptive event, and will cause at least some consternation among other market actors who will have to determine whether their current offerings are sufficient to compete with the "new." They will have to decide whether to remain with existing products, copy the competitor's offering, or pursue new product offerings that are different from those of the competitor. The overarching challenge, as with developing any competitive strategy, is that the decision to engage in imitation is highly fluid, and likely to be predicated not just on the desire to imitate, the focus in this chapter, but also on the ability to imitate, that is, the capacity to actually put forth a new offering that mimics all or a portion of the innovation. Indeed, it may not be practical or advisable for a firm to shift resources from its ongoing product development foci to counter a competitor's innovation through imitation. Moreover, as mentioned previously, long-term firm performance is not likely to improve by always copying the competition. Nonetheless, imitation can be a useful competitive tool to minimize the potential advantage to the innovator of going first, and to ensure that the prospective imitator does not miss critical market developments by failing to keep pace with the competition. What this chapter has provided is a practical discussion of how to make sense of a competitor's innovation in determining the appropriateness of competitive imitation, and what signals encapsulated within that innovation assist in crafting an imitation response.

NOTES

1. Suarez, F., and Lanzolla, G. "The half-truth of first-mover advantage," Harvard Business Review 83 (2005): 121-127.

2. Ethiraj, S. K., and Zhu, D. H. "Performance effects of imitative entry," Strategic Management Journal 29 (2008): 797-817.

3. Boulding, W., and Christen, M. "First-mover disadvantage," Harvard Business Review 79 (2001): 20-21.

4 . Pfeffer, J., and Sutton, R. I. "Evidence-based management," Harvard Business Review 84 (2006): 62-74.

5. The terms "product" and "offering" are used generically in this chapter to refer to either a new product or a new service.

6. Rosenbusch, N., Brinckmann, J., and Bausch, A. "Is innovation always beneficial? A meta-analysis of the relationship between innovation and performance in SMEs," Journal of Business Venturing 26 (2011): 441-457.

7. March, J. G. "Exploration and exploitation in organizational learning," Organization Science 2 (1991): 71-87.

8. Connelly, B. L., Certo, S. T., Ireland, R. D., and Reutzel, C. R. "Signaling theory: A review and assessment," Journal of Management 37 (2011): 39-67; Semadeni, M., and Anderson, B. S. "The follower's dilemma: Innovation and imitation in the professional services industry," Academy of Management Journal 53 (2010): 1175-1193.

9. Dewar, R. D., and Dutton, J. E. "The adoption of radical and incremental innovations," Management Science 32 (1986): 1422-1433.

10. Semadeni and Anderson, "The follower's dilemma."

11. Connelly et al., "Signaling theory."

12. Stiglitz, J. E. "Information and the change in the paradigm in economics," American Economic Review 92 (2002): 469.

13. Spence, M. "Job market signaling," Quarterly Journal of Economics 87 (1973): 355-374; Spence, M. "Signaling in retrospect and the informational structure of markets," American Economic Review 92 (2002): 434-459.

14. Spence, "Signaling in retrospect."

15. Connelly et al., "Signaling theory," 43.

16. Kirmani, A., and Rao, A. R. "No pain, no gain: A critical review of the literature on signaling unobservable product quality," Journal of Marketing 64 (2000): 66-79.

17. Connelly et al., "Signaling theory."

18. Ross, S. "The economic theory of agency: The principal's problem," American Economic Review 63 (1973): 134-139; Certo, S. T. "Influencing initial public offering investors with prestige: Signaling with board structures," Academy of Management Review 28 (2003): 432^46.

19 . Lange, D., Lee, P. M., and Dai, Y. "Organizational reputation: A review," Journal of Management 37 (2011): 154.

20. Ocasio, W. Towards an attention-based view of the firm. Strategic Management Journal 18 (Special issue, Summer 1997): 187-206.

21. Semadeni and Anderson, "The follower's dilemma."

22 . Fein, A. J., and Anderson, E. "Patterns of credible commitments: Territory and brand selectivity in industrial distribution channels," Journal of Marketing 61 (1997): 19-34.

23. Lumpkin, G. T., and Dess, G. G. "Clarifying the entrepreneurial orientation construct and linking it to performance," Academy of Management Review 21 (1996): 135-172.

24. Banbury, C. M., and Mitchell, W. "The effect of introducing important incremental innovations on market share and business survival," Strategic Management Journal 16 (1995): 161-182.

25. Porter, M. E. "Towards a dynamic theory of strategy," Strategic Management Journal 12 (1991): 95-117.

26. Semadeni and Anderson, "The follower's dilemma."

27. Lee, H., Smith, K. G., and Grimm, C. M. "The effect of new product radicality and scope on the extent and speed of innovation diffusion," Journal of Management 29 (2003): 753-768.

28. Ibid.

29. Semadeni and Anderson, "The follower's dilemma."

30. Ibid.

31. There are other ways to operationalize market competency; for example, relative market share, with greater competency attributed to the firm with the largest share. We suggest that operationalizations of market competency may be industry specific, and prospective imitators may wish to evaluate market competency congruent with the most salient measure in their respective industry. Furthermore, it may also be appropriate in the case of highly diversified firms, such as GE or Berkshire Hathaway, to ignore the corporate level and focus instead at the business unit level for determining market competency. This is because very high levels of diversification may obscure demonstrable competencies at the segment level.

32 . Kogut, B., and Zander, U. "Knowledge of the firm and the evolutionary theory of the multinational corporation," Journal of International Business Studies 24 (1993): 625-645.

33 . Berman, S. L., Down, J., and Hill, C.W.L. "Tacit knowledge as a source of competitive advantage in the National Basketball Association," Academy of Management Journal 45 (2002): 13-31; Semadeni and Anderson, "The follower's dilemma."

34. Semadeni and Anderson, "The follower's dilemma."

35. Banbury and Mitchell, "The effect of introducing important incremental innovations."

36. Semadeni and Anderson, "The follower's dilemma."

37 . Van de Ven, A. H. "Central problems in the management of innovation," Management Science 32 (1986): 590-607.

38. Semadeni and Anderson, "The follower's dilemma."

39. Lee et al., "The effect of new product radicality."

40. Lieberman, M. B., and Asaba, S. "Why do firms imitate each other?" Academy of Management Review 31 (2006): 366-385.

41. Notice the term here is differentiation advantage, and not competitive advantage. We do not mean to imply that pursuing radical innovation will automatically lead to a competitive advantage through a lack of imitation; such advantage would be predicated on market acceptance of the radical innovation.

42. Abrahamson, E. "Management fashion," Academy of Management Review 21 (1996): 254-285.

43. Fligstein, N. "The spread of the multidivisional form among large firms, 1919-1979," American Sociological Review 50 (1985): 377-391.

44. Palley, T. I. "Safety in numbers: A model of managerial herd behavior," Journal of Economic Behavior and Organization 28 (1995): 443-450.

45. Lieberman and Asaba, "Why do firms imitate each other."

 
Found a mistake? Please highlight the word and press Shift + Enter  
< Prev   CONTENTS   Next >
 
Subjects
Accounting
Business & Finance
Communication
Computer Science
Economics
Education
Engineering
Environment
Geography
Health
History
Language & Literature
Law
Management
Marketing
Mathematics
Political science
Philosophy
Psychology
Religion
Sociology
Travel