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Laggards imitate, leaders innovate: the heterogeneous productivity effect of imitation versus innovation

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  • Ching T Liao

Abstract

This study finds that imitation increases the productivity of laggards more than that of leaders, while innovation has the opposite effect. As firms approach the productivity frontier, the effect of imitation on productivity decreases, while that of innovation increases. The empirical evidence suggests that search costs are the mechanism underlying this effect. Firms increase their productivity by imitating productive firms. When they become more productive, search costs increase, because they have fewer opportunities to imitate.

Suggested Citation

  • Ching T Liao, 2020. "Laggards imitate, leaders innovate: the heterogeneous productivity effect of imitation versus innovation," Industrial and Corporate Change, Oxford University Press and the Associazione ICC, vol. 29(2), pages 375-394.
    • Handle: RePEc:oup:indcch:v:29:y:2020:i:2:p:375-394.
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    4. Algarni, Mohammad A. & Ali, Murad & Leal-Rodríguez, Antonio L. & Albort-Morant, Gema, 2023. "The differential effects of potential and realized absorptive capacity on imitation and innovation strategies, and its impact on sustained competitive advantage," Journal of Business Research, Elsevier, vol. 158(C).
    5. Ching T. Liao, 2022. "Skill improvement by product imitation," Small Business Economics, Springer, vol. 58(3), pages 1563-1577, March.
    6. Subhasis Bera & Dil B. Rahut, 2024. "Driving Global Innovation Convergence: Evidence of 104 Countries’ Productivity and Efficiencies of National Innovation System," Journal of the Knowledge Economy, Springer;Portland International Center for Management of Engineering and Technology (PICMET), vol. 15(4), pages 18467-18494, December.
    7. Jacques Mairesse & Pierre Mohnen & Ad Notten, 2025. "Innovation and productivity: the recent empirical literature and the state of the art," Eurasian Business Review, Springer;Eurasia Business and Economics Society, vol. 15(1), pages 1-27, March.
    8. Chang, Sungyong & Kim, Hyunseob & Song, Jaeyong & Lee, Keun, 2024. "Dynamics of imitation versus innovation in technological leadership change: Latecomers’ catch-up strategies in diverse technological regimes," Research Policy, Elsevier, vol. 53(9).
    9. Adomako, Samuel & Amankwah-Amoah, Joseph & Ahsan, Mujtaba, 2023. "Base of the pyramid orientation, imitation orientation and new product performance in an emerging market," Technovation, Elsevier, vol. 119(C).
    10. Gnangnon, Sèna Kimm, 2024. "Trade Policy Space, Aid for Trade and, Intra-African and External African Manufactured Exports," International Economics, Elsevier, vol. 180(C).
    11. Orlando Gomes, 2024. "The emergence of chaos in productivity distribution dynamics," Decisions in Economics and Finance, Springer;Associazione per la Matematica, vol. 47(2), pages 565-596, December.
    12. Peijie Du & Kang Tian & Yanrong Wang, 2022. "Independent Innovation Incentive Mechanism of the National Independent Innovation Demonstration Zone of China Based on Evolutionary Game," Complexity, John Wiley & Sons, vol. 2022(1).

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    JEL classification:

    • L29 - Industrial Organization - - Firm Objectives, Organization, and Behavior - - - Other
    • O39 - Economic Development, Innovation, Technological Change, and Growth - - Innovation; Research and Development; Technological Change; Intellectual Property Rights - - - Other

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