As pointed by numerous scholars high technology sectors are very apt for studying entrepreneurial actvites due to their high levels of innovatveness. However, taking into account the highly dynamic and substantally hostle environment in those sectors, innovaton may ofen not be the best strategic choice for market entry. In fact, the business practce confrms the extensive utlizaton of imitaton strategy by technology entrepreneurs Meanwhile, the literature on entrepreneurship focuses almost exclusively on original innovators, underestmatng the importance of imitaton in the growth process and indicatng shortage of research on imitatve actvites of entrepreneurs. Therefore this artcle presents discussion on the applicability of entrepreneurial orientaton to imitators from the high-tech industries.
Keywords: imitaton, high-technology frms, entrepreneurial orientaton.
Rapid technological progress strengthens compettve pressure and creates a rich pool of technological opportunites that encourage entrepreneurial behavior of frms (Lindelof & Lofsten, 2006). However, taking into account the acceleratng pace of imitaton in high-technology sectors it has to be considered whether an entrepreneurial orientaton should be assigned only to the frst movers. In the literature entrepreneurship is tghtly linked with innovaton, in the sense that innovatveness represents the fundamental and necessary conditon for the entrepreneurial orientaton, yet the concept of innovaton is not limited to the frst practcal use of the soluton but also applies to products, processes, methods assimilated from other enttes (Oslo Manual, 2005, p. 53). In fact, in high-tech industries the boundaries between the innovaton and imitaton are ofen blurred. Hence, following the pioneer does not eliminate risk of market entry and is not necessarily equal to lack of capabilites, weak market positon or inability to recognize market opportunites. Nevertheless, the literature on entrepreneurship focuses almost exclusively on original innovators, underestmatng the importance of imitaton in the growth process and indicatng shortage of research on imitatve actvites of entrepreneurs (Schmitz, 1989). Meanwhile the business practce confrms the extensive utlizaton of imitaton strategy by entrepreneurs (Baumol, 1986 afer: Schmitz, 1989, p. 722; Droege & Dong, 2008) - “while entrepreneurial actvity focuses on actualizing promising opportunites, the strategies and actons by which many entrepreneurial frms do so are best described as imitaton strategies” (Droege & Dong 2008, p. 51). This indicates the need for broadening the scope of theoretcal analysis of entrepreneurial actvity by including both strategic approaches to innovaton. Since there are two alternatve paths for seizing market opportunites, the key managerial decision concerns selectng the most appropriate strategy in a given context. The specifcity of the highly innovatve and dynamically growing high-tech industry calls for a partcular atenton in the subject area. Therefore this artcle presents discussion on the applicability of entrepreneurial orientaton to imitators from the high-tech industries.
Entrepreneurial orientaton concept in high-tech industry
Entrepreneurial orientaton (EO) is based on the assumpton that frms undertaking entrepreneurial actvity can be distnguished from other frms by measurable features (Bednarczyk, 2010, p.19-31). Findings of early research indicated that entrepreneurial frms are more risk prone than other types of frms. Further additonal features were developed such as entrepreneurs’ need for achievement, internal locus of control (personality characteristcs), strong emphasis on product innovaton, aggressive competton with rival frms, proactve searching and seizing new business opportunites (Palich & Bagby, 1995, p. 427; Park, 2005, p. 741; Kreiser, Marino, Weaver, 2002, p. 73). The growing number of identfed atributes and inconclusive empirical support for some of them called for an integratve approach in a form of a cohesive entrepreneurial orientaton concept. The frst conceptualizaton of EO was developed by Miller (1983), who defned an entrepreneurial frm as one that “engages in product market innovaton, undertakes somewhat risky ventures and is frst to come up with proactve innovatons, beatng compettors to the punch” (Miller, 1983, p. 771). This propositon was further adopted and operatonalized by numerous researches. Among several propositons an operatonalizaton developed by Covin and Slevin became the most widely utlized in entrepreneurship research (Covin & Slevin, 1988 afer: Kreiser, et al. 2002; Droege & Dong, 2008). According to their suggeston the entrepreneurial orientaton of a frm as an aggregate measure should be calculated by summing together the levels achieved by this frm in each of the three dimensions of the EO (Covin & Slevin, 1988, afer Kreiser, et al. 2002):
- Innovaton – in entrepreneurship literature innovaton is recognized as the fundamental undertaking of the entrepreneurial organizaton. According to Covin and Miles (1999) innovaton underlines all forms of entrepreneurship, representng the most important of the three dimensions. A strong commitment to the process of creatng and introducing new value to the market distnguishes an entrepreneurial frm from organizatons with diﬀerent strategic orientaton (Zahra, 1993, p. 47). Thus, in order to meet the criteria set for entrepreneurial organizaton a frm should develop a higher than a given industry average number of new products or markets (Kreiser, et al. 2002, p. 74). Moreover, recent studies on entrepreneurial innovaton increasingly include also non-technical innovatons concerning new marketng and organizatonal methods, new business models.
- Risk-taking – while risk taking is atributable to any business actvity, since all managerial decisions are risky because their outcomes are distant in tme, entrepreneurial frms tend to be more risk prone than other frms. The observaton that entrepreneurs are atracted to risky ventures with expected above-average outcomes formed the basis for the frst formal theory of entrepreneurship (Palich & Bagby, 1995, p. 426). However, willingness to engage in risky ventures does not mean that entrepreneurs accept greater levels of uncertainty, rather they have lower risk percepton (Palich & Bagby, 1995). “Entrepreneurs may not think of themselves as being any more likely to take risks than non-entrepreneurs, but they are nonetheless predisposed to cognitvely categorize business situatons more positvely” (Palich & Bagby, 1995, p. 426). According to Simon, Houghton and Aquino (2000) the low level of perceived risk exhibited by entrepreneurs could be due to the cognitve biases such as overconfdence, illusion of control and belief in law of small numbers.
- Proactveness – this dimension received signifcantly less atenton in the entrepreneurship literature than the previous two (Kreiser, et al. 2002, p.78). Lumpkin and Dess (2001) defne proactveness as opportunity-seeking perspectve involving aggressive interacton with the environment, in partcular compettors. Therefore entrepreneurial proactveness has two features: an aggressive competton with rival frms and an organizatonal pursuit of favorable business opportunites (Kreiser, et al. 2002, p. 78). Some researchers extracted compettve aggressiveness as a distnct dimension of EO but such approach did not receive a wider support in the literature (Droege & Dong, 2008). The studies confrmed that entrepreneurs are more actve in seeking opportunity than corporate managers, as they have the capacity to see what others do not (Timmons, 1999, afer: Park, 2005, p. 742). According to the literature a prior experience of an entrepreneur is the prominent factor of the opportunity recogniton process (Shane, 2000) – between 50 and 90% of startup ideas come from prior work experience (Hills, Shrader, Lumpkin, 1999, afer: Park 2005, p. 742). Other potental factors mentoned in the literature such as personality traits and social networks require further research to confrm their validity (Park, 2005, p. 747).
Further studies focused on the development of the EO operatonalizaton resulted in a fundamental change in hitherto widely adopted assumpton. The research work conducted by Lumpkin and Dess (1996) and Kreiser et al. (2002) led to the conclusion that, although these three dimensions comprise a single measure, they equally represent individual components of EO having individual contributons to frm performance as well as independent interactons with environmental variables. It undermined the commonly utlized assumpton of uni-dimensional, aggregated character of EO measure by proving its mult-dimensionality (Kreiser, et al. 2002). Further, the strict requirement of exhibitng high levels of each dimension in order to be recognized as an entrepreneurial frm was signifcantly relaxed. It was found that various combinatons of the three dimensions can equally shape the EO of a given frm. (Kreiser, et al. 2002; Lumpkin & Dess, 1996).
As pointed by numerous scholars, high technology sectors (High…, 2009) are very apt for studying entrepreneurial actvites. In those sectors rapid technological change creates a rich pool of technological opportunites that encourages entrepreneurial frmlevel behavior and enables the successful entry of new frms (Lindelof & Lofsten, 2006). According to Park (2005) in markets characterized by a rapid technology advancing barriers resultng from the lack of critcal mass of newly established frms are practcally negligible. However, as argued by Granstrand (1998) the high-technology frms face knowledge-based barriers since they need a specialized managerial knowledge to locate, mobilize, combine and exploit other resources in response to business opportunites. In dynamic technological markets entrepreneurial frms play a more prominent role than in sectors fully occupied by large frms with established knowledge base, R&D budgets, accumulated experience that enable engaging in large scale innovatons (Park, 2005, p. 741). Due to the dynamic technology development emerging entrepreneurial frms can challenge established positons with good prospects of success. Indeed, ofen “radical new technologies render the competencies of incumbent frms obsolete leaving them locked into existng technological trajectories and outdated business propositons” (Cefs & Marsili, 2011, p. 478). This observaton is consistent with the conclusion formulated by Sorensen and Stuart (2000), according to which aging is associated with increases in high-tech frms’ rates of innovatons, but the scope of their innovatve actvites frequently becomes limited to local areas of expertse in partcular domain of business actvity and leads to competency traps thus threatening the environmental ft of those companies. In high-technology markets in order to innovate frms are forced to invest heavily in competence development in partcular areas of technology which in turns causes strategic inerta on the adaptve potental of those frms to important changes in technological regimes (Sorensen & Stuart, 2000, p. 87). Nevertheless partcipaton in the innovaton race is a necessity for the frms operatng in the high-tech industry even though it does not spectacularly improve their chances of survival (Cefs & Marsili, 2011). Those frms need to innovate just to maintain their positons (Cefs & Marsili, 2011). “High-tech frms work in a truly extreme environment where the technology challenges are ofen on the edge of scientfc possibility, but with the available resources generally scarce” (Park, 2005, p. 741). In the academic literature these extreme external conditons are most ofen described by using environmental dynamism and environmental hostlity dimensions. Environmental dynamism refers to “the rate of change and innovaton in an industry as well as the uncertainty and predictability of the actons of compettors and customers” (Miller & Friesen, 1983, p. 222). According to Khandwalla (1977, p. 27) a hostle environment is “a risky, stressful and dominatng environment with precarious industry setngs and intense competton”. Zahra and Neubaum (1998) identfed four levels of environmental hostlity:
- Macro level related to politcal, regulatory and economic conditons,
- Market level referring to unfavorable conditons that exist within the industry,
- Compettve level related to the intensity of competton in a given industry and aggressiveness of actons taken to gain opportunites,
- Technological level referring to radical changes in technological resources and capabilites available within the industry.
It is widely supported in the literature that highly dynamic environment, by creatng numerous opportunites, provide a strong impetus to take risk (Covin & Slevin, 1991; Khandwalla, 1977). In case of hostlity dimension the relatonship between organizatonal risk-taking and level of environmental hostlity tend to be curvilinear as the organizatonal risk-taking is the highest at moderate levels of environmental hostlity (Kreiser ). Extreme hostle conditons discourage frms from taking risks that would erode their profts. Equally benign environments do not provide incentves for risk-taking as conservatve strategies ensure sustaining positons. Consequently, in highly dynamic and considerably hostle environments that characterize high-technology sectors quick and risky actons are necessary to maintain the chances of survival (Park, 2005). Technological companies facing such external adversity and abundance of opportunites are more likely to undertake entrepreneurial actvites to deal with dynamic, hardly predictable changes (Zahra & Neubaum, 1998). Since eﬀectve opportunity recogniton in the high-tech industries is determined by technology advancement and diversifcaton, entrepreneurial frms pursuing business opportunites need to embrace this multdirectonal technology development, “combine it with either new or existng market opportunites and contnually evolve the technology with market or customer needs (Park, 2005, p. 745). One technology can give rise to multple opportunites (Shane, 2000) as well as minor technology transferred from other business sector can become a high-value component of a spectacular new business venture (Park, 2005, p. 742).
Imitaton as a market entry strategy
There are not many publicatons in which imitaton is considered on par with other strategic optons without negatve connotaton. The literature is dominated by dismissive attude towards imitatve actvity of frms (Schmitz, 1989; Schnaars 1994; Shenkar, 2010; Schewe, 1996) even though imitaton is “actually a much more prevalent road to business growth and profts” (Schnaars, 1994, p. 1). Thus, the business practce indicates that innovaton and imitaton are utlized as alternatve pathways to successful business performance (Teece, 2002). Hence, the choice of market entry strategy should be considered in terms of managerial decision which involves in-depth analysis of potental benefts and drawbacks of each available opton.
The limited atenton devoted to imitaton is primarily focused on illegal copying of original products. This adds up to a widespread bad impression of imitaton as a criminal actvity and leaves out of sight a whole spectrum of diﬀerent forms of imitatve practces. The literature does not provide many sophistcated typologies of imitaton that would reﬂect the diversity of such actvity. The most common approach is to distnguish two main types: pure imitaton (Lee, Zhou, 2012) or duplicatve imitaton (Luo, Sun, Wang, 2011) and creatve imitaton (Lee, Zhou, 2012) or innovatve imitaton (Luo et.al 2011). However according to Schnaars (1994) imitaton is exercised in diﬀerent forms that can be arranged along the creatvity contnuum with counterfeits on one extreme and original innovatons involving the highest degree of creatvity and experimentaton at the other (Figure 1):
- Counterfeits – illegal duplicates carrying the same brand name or trademark as the original product;
- Knockoﬀs – close legal copies of original products carrying their own brand names developed due to absence or expiraton of legal protecton (patents, copyrights) of compettors’ products;
- Design copies – copies of style, design of compettor’s product carrying its own brand name and possessing its own unique engineering specifcatons, may be based on a unique and innovatve technology;
- Creatve adaptatons – creatve improvements of compettor’s products, adaptatons of existng ideas to new applicatons as well as truly innovatve solutons merely inspired by compettor’s oﬀering.
The content of diﬀerent kinds of imitatve practces indicates the existence of potental for direct knowledge producton that sometmes blurs the boundaries between imitatons and original innovatons (Schmitz, 1989; Shenkar, 2010). In the literature it is a widely used practce to reserve term innovator for a company that commercializes a novel value for the frst tme while launching this partcular innovaton in a new context by another company is recognized as an imitatve behavior (Fagerberg, 2005, 8). However, according to approach presented in Oslo Manual the concept of innovaton is not limited to the frst practcal use of the soluton but also applies to product, processes, methods assimilated from other enttes and adapted to a new context (Oslo Manual, 2005, p. 53). Consequently creatve adaptatons are ofen equated with incremental innovatons, whereas as pointed by Luo et al. (2011) these actvites diﬀer from each other since incremental innovatons improve on a frms’ own original product and creatve adaptatons add value to products introduced by other units. Nevertheless, assuming that “every new innovaton consists of a new combinaton of existng ideas, capabilites, skills, resources” (Fagerberg, 2005, p. 10), it has not been defned at which point the creatve adaptaton ends and starts the novel innovaton. Hence, the essental problem concerns proper distnguishing between related but distnct positons of pioneers, innovators, imitators and late market entrants. There are two main criteria used for the correct identfcaton of them: the originality of the value created and introduced to the market, and the sequence in tme of market entry (Schnaars, 1994, p. 12-13) (Figure 2).
Thus, according to the resultng two-dimensional matrix imitators can be found among late entrants as well as pioneers when they manage to enter the market with copied soluton before the original innovaton passes the commercializaton phase. Hence, being innovator does not exclude the possibility of late entry to the market. Parallel but independent development of a highly similar soluton is not a rare case in business practce (Schnaars, 1994). Consequently, the distncton between imitators and late-entry innovators is not always clear. Equally difcult is to defne a pioneer in actual case stories observed in high-technology industries where for one innovatve category there is a bundle of potental pioneers in the pursuit of market success
Undoubtedly achieving market success is the main goal of the market entry and, what is important, proftng from the new value is neither restricted nor guaranteed to frst-movers. In fact economic reality indicates that an advantageous positon of pioneers, commonly proclaimed on the theoretcal ground, is signifcantly overstated (Teece, 2002; Shenkar, 2010) (Table 1). As bluntly stated by Gibson “the trouble with being a pioneer is that the pioneers get killed by the Indians” (Schnaars, 1994, p. 20). It is not a rare case when shortly afer a successful commercializaton pioneer gets push out from the established market positon by the followers (Teece, 2002; Shenkar, 2010; Schnaars, 1994). Unfortunately the majority of discussions on the problem of proftng from innovatve value are narrowed to the innovator-pioneer perspectve and focused on the value appropriaton strategy based on the management of value protecton mechanisms (Fischer, 2011; Teece, 2002). Since innovaton process provide opportunites for both pioneers and followers (Teece, 2002, p. 123), there is an apparent defcit of research containing analyses of diﬀerent market entry strategies treated as alternatve pathways to market success (Lee, Zhou, 2012). Knowledge about the specifcity of each alternatve strategy forms the basis for managerial decision on selectng the most appropriate market entry strategy in the given internal and environmental circumstances.
|Source: Author’s own work based on Schnaars (1994), Teece (2002).|
The analysis of available research works on imitaton and innovaton allowed for identfcaton of conditons forming a favorable environment for implementng the imitator strategy in high-tech sectors:
- low degree of intellectual property protecton – The impact of intellectual property regimes is rather confned to a fairly narrow segment of the economy (Teece, 2002, p. 116). Hence, as declared by managers, the level of legal protecton aﬀorded to innovatve products is in most cases ineﬀectve (Mansfeld, 1985; Fischer, 2011). An empirical study of Mansfeld (1985) found that patents commonly recognized as the most powerful legal protecton mechanism and a symbol of innovaton, in practce are not a very challenging barrier to imitators. Within four years 60 percent of the patented products covered by the study have been copied (Mansfeld, 1985). Therefore, an extensive usage of patents in high-tech sectors is based not only on their limited protectve power but even more likely due to their strategic functon in strengthening the bargaining power of frms in cross-licensing. Developing hightech products requires multple sourcing of industry knowledge and building a wide patent portolio protects frms more ofen against claims of intellectual property infringement rather than imitatve practces of compettors (Fischer, 2011).
- inherent immitability of the new value – Advancement in informaton processing provides beter perspectves for knowledge codifcaton and further accelerates its transfer and diﬀusion. The greater range of codifed knowledge about innovaton the beter chances for imitaton (Teece, 2002). According to Mansfeld (1985) informaton about new R&D projects tends to leak out to compettors within 12-18 months. Assuming that it takes on average three years to translate an idea into an innovatve product ready for market introducton, then “there is a beter-than-even chance that the decision [to innovate] will leak out before innovaton is half-completed” (Mansfeld, 1985, p. 219). The studies indicate that product and marketng innovatons are more easily copied since their knowledge content is readily observable to compettors. In hightech sectors it is a common practce to utlize reverse engineering to learn the new solutons. However, process innovatons are more immune to such practces since being not as much visible they do not reveal how their unique characteristcs have been obtained (Teece, 2002).
- breakthrough innovaton rendering existng industry standards obsolete – Introducing a radical innovaton to the market initates the batle for setng the new industry standard (e.g. VHS – Betamax, HD-DVD – Blu-ray). An opportunity to set or have a signifcant contributon to a new industry standard atracts imitators since “the best inital design concepts ofen turn out to be hopelessly wrong” (Teece, 2002, p. 98). In their search for dominant design imitators modify the innovatve product relying on the breakthrough solutons pioneered by the innovator. According to Teece (2002, p. 98) “when imitaton is possible and occurs in conjuncton with design modifcaton before the emergence of a dominant design, followers have a good chance of having their modifed product anointed as the industry standard, ofen to the great disadvantage of the innovator”. Once a dominant design emerges the competton shifs from design fundamentals to price, thus making again room for imitators that introduce improvements providing lower prices and/or beter quality of the inital innovaton (Teece, 2002, p. 97).
- modularizaton of the innovators’ value chains – Modularizaton lowers the threshold for entering technology and capital intensive markets (Shenkar, 2010, p. 48). The knowledge and resource base formerly maintained within the boundaries of the frm is being more and more dispersed through intensive usage of modularizaton and outsourcing strategies. Technological expertse is therefore in the hands of module suppliers. Hence, modularity enables innovaton at a distance from the focal frm (Henkel and Baldwin 2009). Thus, as observed in high-tech sectors in partcular, by modularizing focal frms open itself up to potental competton from the module suppliers that may outperform the integrator (IBM – Microsof, Intel) as well as to imitaton from compettors contractng high value components from the same module suppliers (Henkel & Baldwin, 2009; Shenkar, 2010; Afuah, 2010).
- access to complementary assets – Technological innovatons are characterized by strong functonal interrelatedness and dependencies between their internal sub-systems and incumbent solutons. Therefore successful innovaton requires a careful management of those linkages to complementary technologies, e.g. entering the market with new data storage technology requires availability of its complementary readers. In high-tech industries complementary assets are very ofen more important than the innovaton itself (Teece, 2002, p. 108). Thus, possession or reliable access to specialized complementary assets signifcantly increases the potental of extractng profts from innovatons. Since small pioneering frms rarely have at their disposal necessary specialized assets the richly endowed large later entrants in most cases prevail those small upstarts (Schnaars, 1994). “Because the market of complementary assets is itself riddled with imperfectons, compettve advantage can be gained or lost on how expertly the strategy for gaining access is executed” (Teece, 2002, p. 25).
Taking into account the conditons presented above innovaton may not be the best strategic choice for market entry. Afer deciding to follow and surpass the frstmover a potental imitator needs to defne how to realize this goal, whether by oﬀering lower prices than the pioneer, selling a superior product in terms of its functonality and quality, or using market power to prevail the smaller pioneer. As evidenced in case studies presented by Schnaars (1994) and Shenkar (2010) imitators most ofen utlize a combinaton of those three optons.
Entrepreneurial orientaton of high-tech imitators
A thorough observaton of business actvity in the high-tech industries leads to the conclusion that imitaton is becoming more feasible, more benefcial and faster than ever before (Shenkar, 2010, p. 168). The impact of various imitatve practces on knowledge diﬀusion and development of high-tech industries forces to consider the strategic functon and orientaton of imitators. Taking into account the characteristcs of EO dimensions and the specifcity of imitatve practces utlized by high-tech frms it appears to be possible to assign the fundamental features of EO not only to the technological pioneers.
Considering the frst EO dimension, the innovaton, and the acceleratng pace of technology advancing a very popular phrase comes to mind – “innovate or die”. Unfortunately, this is a somewhat misleading slogan suggestng existence of only one appropriate strategic path to success or even survival and disregarding imitaton as an ineﬀectve actvity of minor importance. Meanwhile “imitaton is not only as critcal as innovaton to business survival and prosperity but is also vital to the eﬀectve exercise of innovaton itself” (Shenkar, 2010, p. 4). By imitatng frms provide evidence that there is more than one way to move forward and those alternatve pathways provide opportunites for further improvements and innovatons (Shenkar, 2010). While most defnitons and discussions in the literature might suggest that entrepreneurial frms implement only radical and original innovatons, their actual actvity in many cases focuses on modifcaton of existng products, services, processes and their incremental improvements (Droege & Dong, 2008, p. 55). Hence, working on existng products does not exclude the creatvity and experimentaton in searching for improvements that add signifcant value to the original product (Shenkar, 2010). “The subsequent improvements in an inventon afer it frst introducton may be vastly more important economically, than the inital availability of the inventon in its original form” (Kline, Rosenberg, 1996, p. 283, afer: Fagerberg, 2005, p. 6). Those improvements, as presented in previous secton of the artcle, can be introduced equally by original innovators and their followers. The results of Shenkar’s (2010) research confrms that “imitaton is not a mindless repetton, it’s an intelligent search for cause and eﬀect (Schenkar, 2010, p. 28). As Schmitz (1989) modeled, by implementng current knowledge through imitaton entrepreneurs create new knowledge and “augment the existng stock of industry knowledge in a learning-by-doing fashion” (Schmitz, 1989, p. 724). Furthermore, in high-tech sectors it is ofen extremely difcult to clearly identfy actual imitators and true original innovators. Developing complex electronic or sofware products involves a very broad sourcing from existng industry knowledge, to the extent that original innovatons can and ofen do result from imitatve actvity (Park, 2005; Henkel & Baldwin, 2009, pp. 30-31). Even widely acknowledged innovators such as IBM, Apple, Microsof, General Electric are also consummate imitators that use imitaton to outmaneuver innovatve compettors and beneft economically from inventons made by others (Shenkar, 2010; Schnaars, 1994). A good example of multple sourcing in sofware-intensive systems is Java programming language of Sun Microsystems. When Sun decided to change its product to an open source sofware it turned out to be a very tedious task as commented by Sun General Counsel Mike Dillon: “Java Standard Editon contains about 6 million lines of code. […] Our legal team [of 190 lawyers] had to go over it, line by line, and look for all copyrights marks and third-party involvements. Where Sun didn’t have the correct licenses, we had to contact the owners, one by one, and determine rights” (Henkel & Baldwin, 2009, p. 29-30). In most cases the majority of proftable innovatons introduced to high-technology markets contains a strong dose of imitaton. The visible illustraton is the large number of patent infringement suits against market leaders (Fischer, 2011). In the high-tech sectors inspiraton goes in both directons – imitatons are driven by innovatons and creatve imitatons foster innovatons. Moreover, a currently observed trend of utlizing open innovaton systems undoubtedly will lead to further fusion of innovaton and imitaton by blurring already fuzzy boundaries between them (Najda-Janoszka, 2011).
Nevertheless imitaton is not always successful. Any form of a business actvity is accompanied by risk of failure. Hence, the assumpton that imitaton reduces risk of the market entry is not always supported by the business practce. In fact, the follower strategy provides opportunity for lowering some kinds of risk (Schewe, 1996, p. 56) and at the same tme substtutes for other types (Shenkar, 2010, p. 163). Research confrms that the costs of imitatng are signifcantly lower than those incurred by innovators. A successful market entry performed by innovators requires higher expenditures by an average of 25 to 35 percent (Shenkar, 2010, p.161). Nevertheless costs incurred by the followers in high-tech industries are not trivial, since most successful imitators exhibit high levels of R&D actvity, develop new projects on their own in order to develop necessary startup experience for the new ventures (Schnaars, 1994). Convertng technological innovatons into a copy that will preserve the favorable outcome observed in the original requires specialized knowledge and capabilites providing the view inside the innovatve soluton and ways to overcome its causal ambiguity (Shenkar, 2010, p. 159). There are many cases of the imitaton failure or underperformance due to the lack of adequate capabilites necessary to understand and further copy the new technology, because “if you fail to decipher causality in the original model, it is virtually impossible to establish causality in the recipient system” (Shenkar, 2010, p. 160). Therefore technological imitators take a considerable risk by investng tme, eﬀort and capital in replicaton projects which in a halfway through their executon may turn out to be unfeasible. Hence, rapid technology progress renders innovatve technologies obsolete sometmes even before the potental imitator manages to replicate them. The risk of such unproductve use of tme and resources while operatng on a highly dynamic and compettve market might jeopardize the existence of a frm. Similarly as for pioneers heavy and ofen irreversible investment in a partcular technology lowers the incentve to develop other solutons that might prove more promising and thus increases risk of future growth of the imitator (Shenkar, 2010, p. 164). Further, patented innovatons drive up imitaton costs by an average of 11 percent (Mansfeld, Schwartz, Wagner, 1981 afer: Schnaars, 1994, p. 29) and raise the legal risk of possible patent infringement suits. Although inventng around the patent due to disclosure of the inventon is tme-consuming and costly, it provides modifcatons that avoid patent infringements. But in high-tech industries “it is ofen impossible to identfy with certainty all patents that the product might infringe” (Baldwin & Henkel, 2009, p. 30). Therefore, replicatng and improving complex, mult-sourced technological solutons may be as risky in terms of possible legal allegatons as walking through a minefeld. Furthermore, entering the market with an imitaton involves a substantal investment in marketng areas – market research, advertsing, promoton, distributon in order to convince customers to the new features added to the innovaton, to overcome the brand loyalty to the original product and to reduce risk of preserving the image of a copycat (Shenkar, 2010; Schnaars, 1994). Analogically as in case of a pioneer, a follower introducing an imitaton to the dynamic and highly compettve technology market may have to face the numerous group of other followers that worked in parallel on the same technological soluton. Moreover, as evidenced in the literature followers of pioneers are quite ofen further imitated and even surpassed by later entrants (Teece, 2002). Consequently innovators as well as imitators have to take into account the risk of imitaton.
As presented in the previous part of the artcle entrepreneurial proactveness has two features: an aggressive competton with rival frms and an organizatonal pursuit of favorable business opportunites (Kreiser, et al. 2002, p. 78). According to the literature high levels of compettve aggressiveness suggest implementng strategies based on imitaton (Droege & Dong, 2008, p. 57). Thus observed acceleratng pace of imitaton and highly compettve environment in high-tech sectors corresponds precisely to the formulated assumpton. Imitators exhibitng high level of compettve aggressiveness invest heavily to quickly overcome the advantages of pioneers and structure their tactcs to address any vulnerabilites in pioneers’ value creaton processes (Droege & Dong, 2008, p. 57). Since compettve aggressiveness implies quick responses to rivals actons and pricing tactcs modifcatons are the fastest to introduce they are the most common practce used by technology followers (Schnaars, 1994). In such dynamic and considerably hostle environment imitators operate under severe tme and compettve pressure feeling the breath of other potental imitators and later entrants behind their back. Therefore imitators are less likely to become complacent, are more aware of game-changing technologies (Shenkar, 2010, p. 10). Technology imitators know that one innovatve technology can give rise to multple market opportunites (Shane, 2000). Proactveness exhibitng in recognizing and sizing market opportunites does not require being frst to the market (Lumpkin & Dess, 1996). In high-tech sectors ofen “the most successful entrant is not the frst frm to enter but the frst to enter when demand explodes” (Schnaars, 1994, p. 200).
The research fndings, theoretcal discussions presented in the literature as well as the observed business practce support the assumpton that high-technology imitators can be characterized by entrepreneurial orientaton. Imitators ofen present a proactve attude in searching and pursuing business opportunites based on compettors’ oﬀering and aiming at challenging their positons on the market. Hence, following a high-technology innovator is a considerably risky path to market success. Building on existng innovaton allows for reducton of some kind of risks while substtutng them for other types. The greater complexity, causal ambiguity of the novel, multsourced technology, the higher risk of imitaton failure. Imitaton and innovaton are intertwined processes, thus pioneers as well as followers bear the risk of further imitaton. Considering the last but the fundamental dimension of EO, it has been observed that “what we think as a single innovaton is ofen result of a lengthy process involving many interrelated innovatons” (Fagerberg, 2005, p. 6). This observaton is especially valid in the high-tech environment, where developing complex solutons requires mult-sourcing from existng knowledge base to the extent that original innovatons ofen result from imitatve actvity. In the high-tech sectors inspiraton goes in both directons – imitatons are driven by innovatons and creatve imitatons foster innovatons. Imitaton ofen involves creatvity, experimentaton and knowledge creaton in learning-by-doing fashion. The business practce exhibits a substantal impact of various imitatve actvites on knowledge diﬀusion and development of hightech industries.
Naturally, not all followers in high-tech sectors exhibit the entrepreneurial behavior since there are diﬀerent kinds of imitatve actvity and all of those types are widely utlized in business practce. Unquestonably, the further on the creatvity contnuum, the higher probability of entrepreneurial orientaton of an imitator. Moreover, a highly compettve and dynamic environment forces high-tech companies to engage in numerous ofen concurrent projects, and for each of those projects a diﬀerent market entry strategy can by utlized. Therefore it is possible for a frm to be considered an innovator and imitator at the same tme. Hence, it seems to be more appropriate to analyze imitaton and innovaton strategies by focusing not on the frm but on partcular projects carried out by that frm. This leads to another important reﬂecton. Assuming that innovatve approach is not always the best choice and the high-tech frms need to engage in a wide range of projects, then it is crucial to develop and master entrepreneurial capabilites that allow for eﬀectve developing and implementng both market entry strategies. Implementng and utlizing those capabilites enable transforming the incidental approach to imitaton into strategic one, which is necessary in the face of high competton, rapid technology advancing and development of open innovaton systems in high-technology sectors.
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