The Power of Imperfect Imitation
Strategic Management Journal, Forthcoming
39 Pages Posted: 16 Feb 2010 Last revised: 29 Oct 2012
Date Written: September 28, 2011
We examine the power and limitations of imitation. Naive intuition may hold that the efficacy of imitation would be diminished by imperfections in copying high-performing firms. Employing a computational model, we find that imperfect imitation can generate unexpectedly good outcomes for follower firms – indeed, better than the outcomes achieved if they were perfect imitators. Imitation, from time to time, enables follower firms to surpass superior firms. Our model demonstrates this dynamic process increases the average performance of all firms in the industry relative to that achieved if firms were perfect imitators. This finding suggests there is an adaptive role to mechanisms, such as bounded rationality, that make perfect imitation difficult.
Keywords: Imitation, Search, Heterogeneity, Bounded Rationality, Industry Evolution
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