Research Forum Submission (Extended Abstract) Competitive Imitation Strategy for New Product-Market Success

Transcription

1 Research Forum Submission (Extended Abstract) Competitive Imitation Strategy for New Product-Market Success Sungwook Sam Min College of Business Administration California State University-Long Beach Long Beach, California Tel: , Fax: Namwoon Kim * Department of Management and Marketing Faculty of Business Hong Kong Polytechnic University Hung Hom, Kowloon, Hong Kong Tel: , Fax: namwoon.kim@polyu.edu.hk * Presenting Author

2 Competitive Imitation Strategy for New Product-Market Success Even with frequent product imitations in new product market, imitation strategies have been far less studied or discussed in the literature than innovation strategies. Little research outcome available is perhaps, first of all, due to the negative connotation of the word, imitation. Indeed, imitation efforts are often regarded as a follower s passive strategic option and therefore assumed to engender possibly inferior outcomes in terms of product performance compared to innovation efforts (Banerjee, 1992; Bikhchandani, Hirshleifer, and Welch, 1998). However, there are also numerous counter evidences of successful followers that imitate pioneering competitors (e.g., Schnaars, 1994; Shenkar, 2010; Tellis and Golder, 2002). Our study begins with the notice that some, if not all, imitators may dominate the new product market. If so, then what is a process of successful imitation that creates superior competitive advantages by which the imitators can achieve high returns and even outperform major competitors in the new product-market?. In this paper, we introduce the concept of competitive imitation strategy for a new product-market entry, which is defined as a corporate strategy that proactively emulates and integrates competitors strategic move into the new product introduction process to surpass competition. This imitation strategy is distinguished from a purposeless herd behavior that normally leads to cloning of competitors products or services (Debruyne and Reibstein, 2005; Kennedy, 2002) or blind imitation of competitors market decisions as a source of information (Abrahamson and Rosenkopf, 1993; Banerjee, 1992; Lee, Smith, and Grimm, 2003). Instead, competitive imitation strategy represents a well-planned strategic endeavor to achieve distinctive competitiveness in the course of a new product-market entry. Therefore, the eventual goal of competitive imitation strategy is to outperform major 1

3 competitors and obtain competitive superiority from the new product-market, which is beyond the rivalry-based imitation effort that purports to maintain competitive parity or reduce competitive risks in the new product-market (Lieberman and Asaba, 2006). At this point, a more fundamental question still remains -- how a firm s competitive imitation strategy is implemented to achieve a such new product-market success. Our study presents competitive imitation strategy process that is composed of three strategic elements for new product-market success, which are (i) proactive emulation of competitors in new product development (NPD), (ii) commitment to organizational learning and, (iii) mobilization of endowed resources. We argue that a potential market entrant s proactive emulation for new product development may effectively convene the firm s tangible and intangible resources to create imitation advantages, in particular, superior quality, which finally leads to a high financial performance in the new product market. Specifically, for the proactive emulation in NPD market success link, we emphasize the mediating roles of the firm capabilities to commit itself to organizational learning and to mobilize its endowed resources. The rationale for this conceptual framework is two-fold. First, a firm s strong commitment to organizational learning helps absorb and integrate product knowledge and market information available from the direct as well as indirect competitors in the new market (Calantone, Cavusgil, and Zhao, 2002; Cohen and Levinthal, 1990), which will result in locating and securing specific differentiating advantages for the firm against competing firms. These differentiating advantages, a typical example of which is product quality superiority, will contribute to achieving a new product-market success. Secondly, in order to engender great market performance from competitive imitation, firms also need to fully mobilize their endowed resources so that they can address and realize 2

4 competitive imitation scheme in a timely manner. More specifically, in this study, we focus on market-entry related resources of firms such as their access to distribution channels, scale and scope economies, technological/r&d assets, and financial resources that enable the firms make flexible entry schedules based on competitive imitations (Day, 1984; Han, Kim, and Kim, 2001; Karakaya and Stahl, 1989). This kind of readiness of market entry due to endowed resources helps competitive imitators enter the new market during the window of opportunity or even the best timing of their choice, which will increase the possibility of a new product market success (Shenkar, 2010). We test and validate our conceptual framework with samples of 252 Korean enterprises and confirm a significant contribution of competitive imitation strategy to new product-market success. Our empirical results show that the positive impact of the firm s proactive emulation activities on new product success is fully mediated by its commitment to organizational learning and its efforts to mobilize endowed entry capabilities. We also find that many enterprises actively imitate competitors even at the early stages of the new product development to outperform competitors. 3

5 References Abrahamson, E., and L. Rosenkopf Institutional and competitive bandwagons. Academy of Management Review 18: Banerjee, A. V A simple model of herd behavior. Quarterly Journal of Economics 107: Bikhchandani, S., D. Hirshleifer, and I. Welch Learning from the behaviour of others; Conformity, fads and informational cascades. Journal of Economic Perspectives 12: Calantone, R., S. T. Cavusgil, and Y. Zhao Learning orientation, firm innovation capability, and firm performance. Industrial Marketing Management 31: Cohen, W.M., and D. A. Levinthal Absorptive capacity : A new perspective on learning and innovation. Administrative Science Quarterly 35: Day, G. S The capabilities of market-driven organizations. Journal of Marketing 58 (4): Debruyne, M., and D. J. Reibstein Competitor see, competitor do: Incumbent entry in new market niches. Marketing Science 24 (1): Han, J.K., N. Kim, and H. Kim Entry barriers: A dull-, one-, or two-edged sword for incumbents? unraveling the paradox from a contingency perspective. Journal of Marketing 65 (1): Karakaya, F., and M. J. Stahl Barriers to entry and market entry decisions in consumer and industrial goods markets. Journal of Marketing 53 (2): Kennedy, R.E Strategy fads and competitive convergence: An empirical test for herd behavior in prime-time television programming. The Journal of Industrial Economics L (1): Lee, H., K. G. Smith, and C. M. Grimm The effect of new product radicality and scope on the extent and speed of innovation diffusion. Journal of Management 29 (5): Lieberman, M. B., and S. Asaba Why do firms imitate each other? Academy of Management Review 31 (2): Schnaars, S. P Managing Imitation Strategies: How Later Entrants Seize Markets from Pioneers. New York: Free Press. Shenkar, O Copycats: How Smart Companies Use Imitation to Gain a Strategic Edge. Boston, MA: Harvard Business Press. Tellis, G. J., and P. N. Golder Will and Vision: How Latecomers Grow to Dominate Markets. New York: McGraw-Hill. 4