Dynamics of Imitation versus Innovation in Technological Leadership Change: Latecomers’ Catch-up Strategies in Diverse Technological Regimes

47 Pages Posted: 8 Jul 2021

See all articles by Sungyong Chang

Sungyong Chang

London Business School; Columbia Business School - Management

Hyunseob Kim

Jackson State University - College of Business

Jaeyong Song

Seoul National University - College of Business Administration

Keun Lee

Seoul National University - School of Economics; CIFAR

Date Written: June 21, 2021

Abstract

We examine the role of latecomers’ optimal resource allocation between innovation and imitation in latecomers’ catch-up under diverse technological regimes. Building on Nelson and Winter (1982), we develop computational models of technological leadership change. The results suggest that one-sided dependency upon either imitation or innovation deters technological leadership change. At an early stage with low-level technologies, latecomers should focus on imitation; then, as the technological gap decreases, they should allocate more R&D resource to innovation. We also examine the role of several variables, such as appropriability, cumulativeness, and cycle time of technologies (CTT), as related to technological regimes. The simulation results show that while low appropriability tends to increase the probability of technological leadership change, it makes imitation a more effective strategy compared to innovation; in addition, while a higher level of cumulativeness tends to reduce the probability of leadership change, it makes imitation a more valuable option because innovation becomes more difficult for latecomers. We also find an inverted U-shaped relationship between the CTT and the probability of technological leadership change. When the CTT is short, it makes sense for latecomers to allocate more resources to imitation, especially when their technology level is initially low.

Keywords: latecomers, technological leadership change, imitation, innovation, technological regime, catch-up

JEL Classification: O31, O32

Suggested Citation

Chang, Sungyong and Kim, Hyunseob and Song, Jaeyong and Lee, Keun, Dynamics of Imitation versus Innovation in Technological Leadership Change: Latecomers’ Catch-up Strategies in Diverse Technological Regimes (June 21, 2021). Available at SSRN: https://ssrn.com/abstract=3871232 or http://dx.doi.org/10.2139/ssrn.3871232

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

Jackson State University - College of Business

Jackson, MS 39217
United States
6019791367 (Phone)

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

CIFAR ( email )

180 Dundas Street West, Suite 1400
Toronto, Ontario
Canada

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