Imitation to Innovation: Late Movers’ Catch-up Strategy and Technological Leadership Change

47 Pages Posted: 26 Apr 2015 Last revised: 19 Oct 2015

See all articles by Sungyong Chang

Sungyong Chang

London Business School; Columbia Business School - Management

Hyunseob Kim

Ohio State University (OSU) - Fisher College of Business

Jaeyong Song

Seoul National University - College of Business Administration

Keun Lee

Seoul National University - School of Economics

Date Written: April 26, 2015

Abstract

Little attention has been devoted to the question of how late movers overcome first-mover advantage and catch up with incumbents. We examine the role in catch-up of late movers’ optimal resource allocation between innovation and imitation. Building on Nelson and Winter’s (1982) technology learning and competition model, we develop computational models of late movers’ R&D allocation strategy and technological leadership change. The results suggest that one-sided dependency upon either imitation or innovation deters technological leadership change by late movers in the long run, since the leading firms are moving targets. Furthermore, when a late mover’s technology level is low, the late mover should focus on imitation and build technological capabilities and absorptive capacity; then, as the technological gap decreases, the late mover should allocate more R&D resources to innovation and attempt technological leapfrogging. This transition from imitation to innovation plays a critical role in catch-up. We also test our models including a range of technological environment variables such as appropriability, cumulativeness, and technological opportunity. Our model shows that our original findings are resilient across a wide range of technological environment variables.

Keywords: imitation, innovation, technological catch-up, technological leadership change, technological environment

JEL Classification: O31, O32

Suggested Citation

Chang, Sungyong and Kim, Hyunseob and Song, Jaeyong and Lee, Keun, Imitation to Innovation: Late Movers’ Catch-up Strategy and Technological Leadership Change (April 26, 2015). Columbia Business School Research Paper No. 15-51. Available at SSRN: https://ssrn.com/abstract=2599140 or http://dx.doi.org/10.2139/ssrn.2599140

Sungyong Chang (Contact Author)

London Business School ( email )

Sussex Place
Regent's Park
London, London NW1 4SA
United Kingdom

Columbia Business School - Management ( email )

3022 Broadway
New York, NY 10027
United States

Hyunseob Kim

Ohio State University (OSU) - Fisher College of Business ( email )

2100 Neil Avenue
Columbus, OH 43210-1144
United States

Jaeyong Song

Seoul National University - College of Business Administration ( email )

Seoul, 151-742
Korea, Republic of (South Korea)

Keun Lee

Seoul National University - School of Economics ( email )

San 56-1, Silim-dong, Kwanak-ku
Seoul 151-742
Korea

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