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Catching up with the market leader: Does it pay to rapidly imitate its innovations?

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  • Giachetti, Claudio
  • Li Pira, Stefano

Abstract

In this study we attempt to shed more light on the relationship between speed of new technology imitation and the sales performance of the imitator compared to the innovator, with a particular focus on the performance outcomes resulting from the rapid imitation of technologies introduced by the market leader. Using data on handset technologies mounted on more than 600 devices introduced to the UK market by 14 mobile phone vendors operating from 1997 to 2008, we study hundreds of imitative actions to test hypotheses on the extent to which an imitator can catch up (i.e., reduce the market share gap) with the market leader by rapidly imitating its innovations. First, we show that gaining advantage by rapidly imitating a technology pioneer is contingent on whether the pioneer is the market leader or a non-leader rival. Second, we find that the risks of rapid imitation of the market leader's technologies are mitigated when industry clockspeed is high, i.e., during a period of fast innovation and imitation cycles in an industry, resulting in rapid variations in product design. Third, we observe that the degree of competitive responsiveness of the technology pioneer when its innovations are imitated represents an important mechanism that can explain why speed of imitation may affect how an imitator can improve its market share gains relative to the pioneer. This paper advances competitive dynamics and imitation as predictive theories of how rapid imitators might catch up with market leaders in technology-intensive industries.

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  • Giachetti, Claudio & Li Pira, Stefano, 2022. "Catching up with the market leader: Does it pay to rapidly imitate its innovations?," Research Policy, Elsevier, vol. 51(5).
    • Handle: RePEc:eee:respol:v:51:y:2022:i:5:s0048733322000336
    DOI: 10.1016/j.respol.2022.104505
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    More about this item

    Keywords

    Speed of imitation; Competitive dynamics; Windows of opportunity; Catching up; Clockspeed; Mobile phone;
    All these keywords.

    JEL classification:

    • L11 - Industrial Organization - - Market Structure, Firm Strategy, and Market Performance - - - Production, Pricing, and Market Structure; Size Distribution of Firms
    • L63 - Industrial Organization - - Industry Studies: Manufacturing - - - Microelectronics; Computers; Communications Equipment
    • O33 - Economic Development, Innovation, Technological Change, and Growth - - Innovation; Research and Development; Technological Change; Intellectual Property Rights - - - Technological Change: Choices and Consequences; Diffusion Processes

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