How Much to Copy? The Contingent Value of Imitation Capabilities

It is a common (and frequently implicit) assumption in the literature on knowledge exchange and organizational learning that imitating practices from high-performing firms has a positive impact on the imitating firm. While a large body of research has pointed out obstacles to successful imitation, very little is known about what degree of imitation is most effective. In this paper, we use a simulation model to explore the role that interdependence among practices, firm-similarity, and time horizon play in influencing the value of different degrees of imitation, and show how they interact in non-trivial ways. For instance, we find that in the presence of interactions, the most effective imitation strategy between similar firms with long time horizons is the worst strategy for short time horizons. One implication of our results is that even if a firm has the capability to copy all practices from a high-performing firm, this will only occasionally be the most appropriate imitation strategy. We also show that imitation can serve two different functions - mimicking high performers and dislodging a firm from its current set of practices - each one requiring very different organizational routines for its successful implementation. Lastly, we use the model to shed light on three previous disputes in the literature: the controversy between slow and fast learning, whether imitation is effective only at the start of operations or on a continuing basis, and whether firm similarity increases or decreases learning opportunities.