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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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    File URL: http://hdl.handle.net/10.1093/icc/dtz043
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    Citations

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    Cited by:

    1. Patrick Mellacher, 2021. "Growth, Inequality and Declining Business Dynamism in a Unified Schumpeter Mark I + II Model," Papers 2111.09407, arXiv.org, revised Nov 2023.
    2. Gomes, Orlando, 2024. "Optimal planning of technological options and productivity distribution dynamics," Economic Modelling, Elsevier, vol. 130(C).
    3. Zabala-Iturriagagoitia, Jon Mikel & Aparicio, Juan & Ortiz, Lidia & Carayannis, Elias G. & Grigoroudis, Evangelos, 2021. "The productivity of national innovation systems in Europe: Catching up or falling behind?," Technovation, Elsevier, vol. 102(C).
    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. 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).
    7. 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.

    More about this item

    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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