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| Author: | Ethiraj, S.K. Zhu, D.H. |
| Title: | Performance effects of imitative entry |
| Journal: | Strategic Management Journal
2008 : AUG, VOL. 29:8, p. 797-817 |
| Index terms: | pharmaceutical industry new products innovation product differentiation markets competition |
| Freeterms: | product imitation |
| Language: | eng |
| Abstract: | It is examined how waiting to imitate a product affects the performance of the imitator (here as: imtr.) compared to the innovator (as: invr). Specifically, two research questions are addressed: Under what conditions does imitation decrease the advantage of the invr.? What imtr.' strategies help overcome the invr's advantage? This study's main argument is that the increasing availability of information on the invr's product increases the imtr's returns to waiting. It is hypothesized that shifts in the nature of competition over time from horizontal differentiation (as: diff.) to vertical diff. explain why the invr's advantage is not preserved. Detailed data on invr.-imtr. competition in the branded drug industry is used to test the hypotheses. All hypotheses are supported. The main contribution is in showing that the nature of product diff. in product categories is endogenous to the imitative entry decisions of firms. |
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