A Contingency Perspective on Imitation Strategies: When Is 'Benchmarking' Ineffective?

Abstract

Imitation is ubiquitous, yet the comparative efficacy of imitation strategies is poorly understood. A popular imitation strategy, sometimes called benchmarking, “mixes-and-matches” the practices common to leading firms. Using computational models, we compare benchmarking to the “copy-the-best” imitation strategy of copying a subset of the best-performing firm’s practices. We find benchmarking is more effective in heterogeneous environments, where practices that are good for firms in one group (e.g., geographic submarket) may be bad for firms in another. Firms using mix-and-match tend to imitate practices of rivals within their group, less likely copying inappropriate practices from other groups. In homogeneous environments, however, the “copy-the-best” strategy is superior because firms are more likely to go beyond their group and copy novel good practices from rivals in other groups.