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.
{"title":"The Power of Imperfect Imitation","authors":"Hart E. Posen, Jehong Lee, Sangyoon Yi","doi":"10.1002/SMJ.2007","DOIUrl":"https://doi.org/10.1002/SMJ.2007","url":null,"abstract":"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.","PeriodicalId":279826,"journal":{"name":"Atlanta Competitive Advantage Conference 2010 (Archive)","volume":"14 1","pages":"0"},"PeriodicalIF":0.0,"publicationDate":"2010-08-09","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"122330993","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":0,"RegionCategory":"","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}
Cross-selling – selling multiple products or services to a buyer – is a common practice in business-to-business markets. In this paper, I exploit the preferences revealed in the relationships between buyers and suppliers to investigate the origin and magnitude of client-specific economies of scope. I use data from the UK corporate legal market to estimate the relative importance of cost, product line expertise and client-specific scope economies in the creation of economic value.I find evidence of a large opportunity cost of terminating a buyer-supplier relationship. Moreover, scope extensions are associated with less value creation at lower levels of scope. The losses tend to be reduced as scope increases. These findings suggest two sources of increasing returns. The first is the existence of a large cost of creating a new relationship. The second is supplier's ability to reduce the costs associated with delivering a new line of product to an existing buyer, above and beyond the cost of creating the relationship.In addition to these findings, this paper contributes to the literature on value-based models of strategy by showing how their underlying logic can be leveraged for empirical research and applications.
{"title":"Where Do Client-Specific Scope Economies Come from? A Revealed Preference Analysis","authors":"Olivier Chatain","doi":"10.2139/ssrn.1550980","DOIUrl":"https://doi.org/10.2139/ssrn.1550980","url":null,"abstract":"Cross-selling – selling multiple products or services to a buyer – is a common practice in business-to-business markets. In this paper, I exploit the preferences revealed in the relationships between buyers and suppliers to investigate the origin and magnitude of client-specific economies of scope. I use data from the UK corporate legal market to estimate the relative importance of cost, product line expertise and client-specific scope economies in the creation of economic value.I find evidence of a large opportunity cost of terminating a buyer-supplier relationship. Moreover, scope extensions are associated with less value creation at lower levels of scope. The losses tend to be reduced as scope increases. These findings suggest two sources of increasing returns. The first is the existence of a large cost of creating a new relationship. The second is supplier's ability to reduce the costs associated with delivering a new line of product to an existing buyer, above and beyond the cost of creating the relationship.In addition to these findings, this paper contributes to the literature on value-based models of strategy by showing how their underlying logic can be leveraged for empirical research and applications.","PeriodicalId":279826,"journal":{"name":"Atlanta Competitive Advantage Conference 2010 (Archive)","volume":"1995 1","pages":"0"},"PeriodicalIF":0.0,"publicationDate":"2010-02-10","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"125552702","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":0,"RegionCategory":"","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}
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