Management Research, vol. 5, no. 2 (Spring 2007), pp. 71–82.© 2007 M.E.Sharpe, Inc. All rights reserved.

ISSN 1536-5433 / 2007 $9.50 + 0.00. DOI 10.2753/JMR1536-5433050201

Because of the progressive internationalization of markets, the economic framework in which companies operate is char-acterized by a considerable increase in the degree of competi-tion. Given this situation, companies have been obliged to use various mechanisms in their strategies for obtaining and maintaining competitive advantage.

Innovation has become fundamental for achieving com-petitive advantage (Brown & Eisenhardt, 1995; Darroch & McNaughton, 2002; Hamel, 1998; Martinez-Ros & Salas-Fumás, 2004; Van de Ven, 1986; Van de Ven & Poole, 1995; Zhou, 2006) and is currently one of the principal topics of debate in the management literature (Sørensen & Stuart, 2000). There is a wealth of studies that claim to demonstrate the positive effect of innovations on company competitive-ness. However, the management literature has forgotten that imitation is an organizational behavior that can also generate sustainable competitive advantages and, apart from recent ex-ceptions (Adner & Zemsky, 2006; Hodgson & Knudsen, 2006; Lieberman & Asaba, 2006; Zhou, 2006), imitation has only been analyzed from the point of view of a company that wishes

to avoid being imitated (Barney, 1991; Kogut & Zander, 1993; MacMillan, McCaffery, & Van Wijk, 1985; McEvily, Das, & McCabe, 2000; Rivkin, 2001) or of a company that may wish to encourage others to imitate it (Conner, 1995; McEvily et al., 2000). This situation, together with the lack of consensus on the conceptual delimitation of the terms innovation and imitation, has led us to raise several research questions: What are the differences between innovating and imitating? What factors explain these differences? Can imitation be a source of sustainable competitive advantage? Obtaining answers to these questions is the aim of this paper. First, after a bibliographic review of different conceptualizations utilized for the term innovation, we delimit the concepts of innovation and imita-tion by analyzing the factors identified in the literature as the typical features of innovation. Then, basing our arguments on the factors indicated, we aim to identify different types of innovative and imitative companies in terms of the char-acteristics taken by the features that define the two concepts (innovation and imitation). Our third objective is to examine the circumstances that must apply to an organization so that imitation, like innovation, may become a source of sustainable competitive advantage.

Johan Wiklund is a professor of entrepreneurship at Jönköping In-ternational Business School (Sweden). His research interests include entrepreneurship, growth, and competitiveness.

Financial support from the Ministry of Science and Technology of Spain, grant SEC2003–07741, is gratefully acknowledged.

Ana Pérez-Luño is a Ph.D. candidate in organization and strategic management at Pablo de Olavide University (Spain). Her interests are in innovation, knowledge, and entrepreneurship.

Ramón Valle Cabrera is a professor in the Business Administration Department, Pablo de Olavide University (Spain). His main research areas are strategic human resource management and innovation management.

INNOVATION AND IMITATION AS SOURCES OF SUSTAINABLE COMPETITIVE ADVANTAGE

ANA PÉREZ-LUÑO, RAMÓN VALLE CABRERA, AND JOHAN WIKLUND

ABSTRACT: The present study fills some of the void in the literature on the concept and phenomenon of innovation and imitation. Basing our arguments on features that the literature indicates are characteristics of innovation, we delimit the concepts of innovation and imitation. Using these features and considering a company’s degree of entrepreneurial and market orientation, we devise a typology of companies ranging from radical innovators to strict imitators. We also argue that some key factors and the choice of appropriate strategy determine whether innovative and imitative companies can obtain and maintain their sustainable competitive advantages.

RESUMEN: El presente estudio trata de cerrar alguno de los vacíos existentes en la literatura sobre el concepto y fenó-meno de la innovación y la imitación. Basando nuestros argumentos en rasgos que la literatura señala como característicos de la innovación, delimitamos los conceptos de innovación e imitación. Utilizando estos rasgos y teniendo en cuenta el grado de orientación emprendedora y de mercado de la empresa, desarrollamos una tipología de empresas que va desde las innovadoras radicales a las imitadoras estrictas. También argumentamos que el uso de factores clave y la elección de una estrategia adecuada determinan que una organización, ya sea innovadora o imitadora, pueda obtener y mantener ventajas competitivas sostenibles.

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Through these established objectives, we hope to contribute to the scarce literature on the phenomenon of imitation by providing conceptual aspects that help to differentiate and understand the behavior of this type of organization. To this end, the classification of innovative and imitative companies that we propose may allow us to fill the void in the literature on how to identify the innovative or imitative behaviors of organizations. The paper demonstrates to both managers and academics that, by utilizing appropriate resources and capa-bilities, imitation can be as interesting as innovation for the competitiveness of the organization and that, with the appro-priate strategy, innovators and imitators can coexist without losing their competitive positions.

The theoretical framework selected for working toward our objectives is the resource-based view of the firm (Barney, 1991; Peteraf, 1993; Prahalad & Hamel, 1990; Wernerfelt, 1984), as it provides the conceptual support that allows us to argue that the features characterizing innovation and imitation can be utilized as sources of sustainable competitive advantage.

INNOVATION VERSUS IMITATION: CONCEPTUAL DELIMITATION

The review of the literature demonstrates that the results in the field of innovation have been inconclusive, inconsistent, and characterized by limited explanatory power (Becheikh, Landry, & Amara, 2005; Wolfe, 1994; Zmud, 1982). One pos-sible explanation for the lack of similarity in the conclusions of researchers is the diverse range concepts, contexts, charac-teristics, types, stages, and so on, used by different authors to study innovation. As a consequence, the current state of the organizational innovation literature offers little guidance to those interested in this concept (Wolfe, 1994). Because of the different value judgments attached to the term, there are many problems in establishing a complete and tight definition of innovation. The only feature common to all the definitions is that innovation implies novelty (Cabello Medina, Carmona Lavado, & Valle Cabrera, 2006; Damanpour, 1991; Grossman & Helpman, 1991; Knight, 1967; Li & Atuahene-Gima, 2001; Mahmood & Rufin, 2005; Quinn, 1979; Schumpeter, 1961; Thompson, 1967). Regarding the term imitation, there does seem to be a consensus in the literature that to imitate is to copy (Adner & Zemsky, 2006; Brozen, 1951; Conner, 1995; Grossman & Helpman, 1991; Hodgson & Knudsen, 2006; Lieberman & Asaba, 2006; Mahmood & Rufin, 2005; Mansfield, Schwartz, & Wagner, 1981; Zhou, 2006), although the vagueness inherent in this statement does not clarify what is understood or implied by this copying activity or behavior.

As stated in the introduction, the first objective of this paper is to delimit conceptually the terms innovation and imitation. This does not mean summarizing the existing literature, but

rather extracting the most characteristic factors of innovation and setting them against imitation and, in this way, obtaining definitions that allow the two concepts to be differentiated. The reason for this objective is that there are articles that, in our judgment, speak of imitation when they are really referring to incremental innovations (Lieberman & Montgomery, 1988; Zhou, 2006), or of innovations when really they are explaining imitation behavior (Damanpour, 1991; Li & Atuahene-Gima, 2001). As an example of the first case, Zhou (2006) speaks of “creative followers” to refer to companies that make incre-mental innovations based on the radical innovations of others. Regarding authors who utilize the term innovation to refer to imitations, we would include all those who consider that in-novation covers “the adoption of an idea that is only new for the organization adopting it” (Damanpour, 1991). Arguments supporting our position are developed next.

To achieve our first objective, we start with an analysis of the principal definitions formulated for the term innovation and extract the factors that best characterize this behavior so that they may then be utilized to delimit the concept of imitation.

We have mentioned that the only common element among all the definitions of innovation is that it implies novelty. However, there is not a consensus in the rest of the param-eters that define this term (Wolfe, 1994). For example, some authors consider that innovations should represent a positive benefit, especially in the form of an economic improvement, and should be of value to the organization that adopts them (Knight, 1967), while others do not mention such consid-erations. Table 1 classifies the principal authors who have analyzed this concept, in terms of whether they consider the subsequent market or commercial success of an innovation as a necessary factor for innovation. In other words, Table 1 examines whether these authors take into account innovation’s positive impact on the market.

Having considered the various definitions given by the authors indicated in Table 1, we proceed to study two classic conceptualizations that are representative of the two alterna-tive views—that of Schumpeter (1961) and that of Thompson (1967).

Schumpeter (1961) dealt with innovation within the theory of economic development as a process of putting into practice new combinations of materials and forces. These new combi-nations imply producing new things, or the same things but using new methods. For Schumpeter, innovation is the key determinant of growth of the capitalist economy; that is, for him, innovation by the capitalist company includes creat-ing new markets and new forms of industrial organization. Some years later, Thompson (1967) defined innovation as the generation, acceptance, and implementation of new ideas, processes, products, and services. Both definitions are generic, but introduce interesting aspects. Schumpeter’s (1961) defini-

Innovation and Imitation as Sources of Sustainable Competitive Advantage 73

tion contains implicit conditions such as the positive effect of the innovation, economic improvement, and the creation of value for the company that adopts it; that is, it implies market success. Thompson’s (1967) definition, however, refers to the generation, acceptance, and implementation of new ideas, without mentioning the need for the idea to have a positive impact in the market.

There are authors who combine the two necessary factors, the generation of new ideas and their resulting commercial success, when referring to innovation. Grossman and Helpman (1991) and Mahmood and Rufin (2005) define innovation as a form of technological development that expands not only a firm’s existing knowledge set but also the existing world knowledge set, whereas imitation is defined as the form of technological development that expands the firm’s existing knowledge set but not the existing world knowledge set.

The first notable aspect of these definitions is that they state that, whereas innovation expands the knowledge existing in the world, imitation expands only the knowledge existing in the company that adopts something new. This is a key deter-mining factor that differentiates between the two concepts, because only the company that innovates actually generates the idea, whereas the rest (imitators) apply knowledge that already exists (Mahmood & Rufin, 2005). Put another way, for imitation, the search for knowledge and its implementation is sufficient but, for innovation to take place, the generation of ideas from new knowledge or from the novel combination of existing knowledge is required (Galunic & Rodan, 1998; Mahmood & Rufin, 2005). The generation of the idea is our point of departure for distinguishing between innovation and imitation. Only those companies that generate new ideas can be analyzed as possibly innovative, whereas those that take a previously existing idea should be considered imitators. The generation of the idea is the necessary condition for obtaining an innovation, but we should make it clear that this is not a sufficient condition in itself because, for innovation rather than merely invention, this idea must be put into practice (Damanpour, 1991; Schumpeter, 1961; Utterback, 1971). Accepting that only the company generating the idea can be considered innovative suggests to us that the factor of tim-ing must also be considered for the differentiation of the two concepts, because generating a new idea means being the first to implement it and launch it on the market (Hodgson & Knudsen, 2006). Knight (1967) indicates that the innovation must be new for the organization and for its environment of reference. This consideration introduces the variable space. In terms of restrictive conditions, when considering innovation, all the known space—in effect, the global marketplace—must be considered, because this allows us to separate the company that generates the idea, produces it, and applies it for the first time anywhere (the innovator) from another (an imitator) that later applies and markets that same idea (Guellec, 1999). By

introducing the space variable, we also make it possible to distinguish between a company that follows the innovator in the same market (an imitator) and another that adopts an in-novation so as to launch it in a different or new market segment or territory. These three factors, the generation of ideas, timing, and space, will help us establish a typology of innovators and imitators that corresponds better to the real world.

TYPOLOGY OF INNOVATIVE AND IMITATIVE COMPANIES

In the previous section, we stated that the basic differentiating factor between innovation and imitation resides in whether the original idea is generated by the company. In this section, we specify how a company can be classified as one or another type by examining, among other factors, the source of knowledge that enables the company to generate these ideas. To gener-ate an idea means to conceive something that no one else has imagined. It is the germ of the innovation and implies a sig-nificant element or input of creativity (Knight, 1967; Roberts, 1988). We have already commented that only a product, service, or process obtained from novel ideas generated within the organization should be considered an innovation, whereas all those that other companies adopt later, derived from such ideas without adding any novel element of their own, should be classified as imitations.

The literature distinguishes between entrepreneurial (Miller, 1983) and market-oriented (Narver & Slater, 1990) organizational attitudes as factors influencing innovation (Atuahene-Gima & Ko, 2001; Hult, Hurley, & Knight, 2004). However, previous researchers have not proposed that it is precisely the choice of one or both orientations that directly influences the provenance (internal or external sources) of the knowledge to be applied, and indirectly influences the strate-gic decision to innovate or imitate. Those companies with an entrepreneurial orientation are “exploiters” of the knowledge

TABLE 1Classification of Authors Who Have Defined

Innovation

Definition requires Definition does not requirepositive market impact positive market impact

Afuah (1998) Becker and Whisler (1967)Grossman and Helpman (1991) Damanpour (1991)Knight (1967) Damanpour andMahmood and Rufin (2005) Gopalakrishnan (1998)Quinn (1979) Downs and Mohr (1976)Schumpeter (1961) Li and Atuahene-Gima (2001)Van de Ven (1986) Pennings and Harianto (1992)Vrakking (1990) Sharma (1999) Thompson (1967)

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generated by the “explorations” of their scientists or R&D personnel, which leads them to propose new ideas that are brought into material form as new products, services, or pro-cesses (Wiklund & Shepherd, 2003). The entrepreneur’s role is to initiate and design changes intended to make the enterprise more profitable, and to continually seek new opportunities and solutions to problems. Hence, the entrepreneurial approach implies a profound knowledge of the organization and its en-vironment. In light of this, we consider that companies with an entrepreneurial orientation will have a greater propensity to generate their own ideas (innovation) rather than to adopt ideas generated by others (imitation).

Miller (1983) defines the entrepreneurial orientation as the approach characterized by innovativeness,1 high-risk projects, and proactivity. In other words, companies with this kind of orientation are disposed to assume the risks inherent in in-novation or entry into new markets, and generally display proactive attitudes. A proactive attitude or stance is identified with technological leadership and with the desire to be first or a pioneer (Ansoff, 1965; Lieberman & Montgomery, 1998; VanderWerf & Mahon, 1997), whereas the reactive attitude or stance better describes those companies that are always followers or imitators (Ansoff, 1965; Porter, 1985; Sharma & Vredenburg, 1998). Expanding knowledge on a worldwide scale represents a proactive attitude, whereas expanding it within an organization can be a symptom of a mere reaction to the changes that are taking place in the environment of an organization. Only those companies with a proactive behavior will be able to launch innovations to the global market. Thus, proactive behavior implies a dynamic research and development policy with a main objective of ensuring a continuing flow of new products or services for introduction into the market. In some cases, it also implies securing technological leadership through the design of innovative productive processes (Miles & Snow, 1978; Slater & Narver, 1993). It is an attitude that also implies the acceptance of high levels of risk (Baucus, Golec, & Cooper, 1993; McNamara & Bromiley, 1999; Wiseman & Bromiley, 1996), both technological and commercial.

The risk factor has been analyzed in the literature from sev-eral perspectives (Lumpkin & Dess, 1996), and it is considered one of the main dimensions of the entrepreneurial orientation (Miller, 1983). The degree of risk incurred by launching an innovation is understood to be much greater than that accepted by the company that adopts an imitation. This is because the innovator confronts a change in the knowledge existing at the global level, and incorporates the commercial risk and the technological risk inherent in true innovation (Wiseman & Bromiley, 1996; Zhou, 2006). The case of the imitator is different in that imitation assumes only an expansion of inter-nal or local knowledge of an idea that is already functioning in the market; hence, the technological risk is much less and the commercial risk should be lower when the market of the

imitator is similar to that being successfully supplied by the innovator.

It has been stated that an essential prerequisite for the development of successful innovations is a good knowledge of the industry and markets in which the organization oper-ates (Deshpandé, Farley, & Webster, 1993). An organization’s knowledge of its environment will be more extensive the stronger its market orientation (Atuahene-Gima & Ko, 2001). Kohli and Jaworski (1993) define market orientation as the set of behaviors and activities related to the generation and dis-semination of ideas in response to market intelligence, carried out with the aim of satisfying customer needs. Although the traditional literature considered that market orientation was centered exclusively on customers and their needs, more recent studies have given it a wider focus and understand it as the concern with or study of the business environment in general, including customers, competitors, suppliers, and other external forces that affect the behavior of the organization (Deshpandé et al., 1993). Thus, we understand that companies with this type of orientation are disposed to continually modify their “offer”—their products, services, and processes—to satisfy the needs of their market (Narver & Slater, 1990). In line with these assumptions, the process of modification or adaptation of their offer may be understood as coming naturally to or-ganizations with this type of orientation. Market orientation can thus be considered an organizational attitude that can be materialized either in a proactive type of behavior, whereby the company always wants to be the first to satisfy possible customer needs, or in a reactive strategy, whereby the company seeks continually to adapt its products in line with the move-ments of the market (by focusing on competitors’ activities).

The proactive attitude of market-oriented companies can be observed in the continuous acquisition of knowledge from the market and, based on this information, the disposition to invent and adapt products, services, and processes with the pur-pose of continually satisfying customers’ needs. Quinn (1979) observed a strong market orientation in most innovative com-panies, and stated that this is due to the capacity of responding continually to the changing needs of their clients.

The reactive attitude is the approach chosen by those com-panies that do not want to be or are not able to be the first to the market with a new product, service, or process, nor do they wish to be “left behind” (Porter, 1980). This choice may form part of a series of policies based on avoiding the risks inherent in innovation and on constantly monitoring the environment so that the company is in a position to implement the innova-tions launched by other, more adventurous companies and to exploit the experience that it has in other areas (Twiss, 1974). A company that maintains a reactive form of behavior must be capable of imitating the successful innovations made by its more proactive competitors within a relatively short time; therefore, it may wish to retain a more modest R&D capacity,

Innovation and Imitation as Sources of Sustainable Competitive Advantage 75

and must make use of license agreements and correctly apply the know-how acquired. Through this approach of exploiting the successes of the pioneers while avoiding their failures, com-panies should incur less technological and commercial risk.

The choice of a proactive posture can be seen as implying a greater focus on customers leading to innovations, and the choice of reactive posture can be seen as implying a greater focus on competitors, and could thus be associated with imi-tation (MacMillan et al., 1985). With this line of reasoning, market-oriented companies with a corresponding focus on their clients should have a greater propensity to generate ideas to satisfy their customers’ needs and innovate. Conversely, those companies with a focus on competitors should have a greater propensity to adopt ideas generated externally and imitate.

Schumpeter (1961) emphasized that entrepreneurs are critical for the progress of capitalism, because they generate radical innovations that change the rules of the game in an industry or in an economy. If entrepreneurs’ activities can lead to radical and even destructive results (Galunic & Rodan, 1998), we need to reconsider the source of knowledge necessary for developing innovations. Miller (1983) stated that radical innovations emanate from scientific research supported by an entrepreneurial orientation. On the other hand, the strategy aimed at continually satisfying customer needs, characteristic of a market-oriented company, will lead to specialization in the development of incremental innovations (Atuahene-Gima & Ko, 2001).

Authors such as Darroch and McNaughton (2002) suggest that incremental innovation can be classified as a “pull”-type innovation (Zmud, 1984), whereas a “push”-type innovation is radical innovation. An incremental innovation is “pulled” in the sense that it utilizes information obtained from the micro-environment of the innovator, and is applied by companies that are more oriented to the market and are more skillful in collecting and disseminating ideas and responding to intel-ligence about their environment (Kohli & Jaworski, 1990). This type of organization tends to act proactively and assumes a moderate level of technological and commercial risk. The technological risk is moderate because its innovations consist mainly of improvements to an existing product, process, or service. Although such improvements will have a certain de-gree of novelty, they do not represent a clear break with the ruling and, hence, proven technology (Damanpour, 1991). Commercial risk is also limited because such improvements are introduced after detecting a need in the market, which should increase the chances of commercial success. The com-panies with the propensity to develop this type of innovation are designated, in this paper, as incremental innovators. Note that those companies that are too attentive to the current needs of the market can fall into the trap of learning myopia. This is a type of organizational shortsightedness that slows or prevents an organization’s creative response in the face of

emerging technologies (Atuahene-Gima & Ko, 2001) and that, in the medium or long term, can lead to the company losing competitive capabilities. From our understanding that the development of incremental innovations implies being the first to introduce a modification to an existing product, service, or process, and following the reflections offered on the characteristics of incremental innovator companies, we formulate our first proposition.

Proposition 1: “Incremental innovator” companies are positively associated with a strong market orientation and a moderate entrepreneurial orientation, which implies a proactive attitude and the assumption of moderate levels of technological and commercial risk.

Radical innovations can be destructive of existing compe-tences and often cause an organization’s abilities to become out of phase with its current knowledge (Henderson & Clark, 1990). These types of innovations are normally originated by scientific research and hence are usually classified as push-type innovations, with their main impulse being an advance in science or technology (Zmud, 1984). They often put the whole business at risk because they are more difficult to mar-ket successfully and involve significant investment; however, they are important for the long-term competitiveness of the company because they involve the development and application of new technologies (Atuahene-Gima & Ko, 2001; Darroch & McNaughton, 2002). Companies with the propensity to develop this type of innovation are designated, in this paper, as radical innovators. The incorporation of radical changes in a technology implies a proactive attitude and readiness to accept a high degree of technological and market risk. The high tech-nological risk is related to the technology being new and hence unproven and to the need to obtain additional information on components, methods, and techniques that would help make the new product function correctly. The high market risk is related to uncertainty regarding the possible acceptance of the innovation. Note also that technological and market uncertain-ties are very closely related: when an organization knows more about its customers’ requirements, it will be better placed to take the correct technological decisions regarding the specifica-tion of the new product/service (Afuah, 1998). If we assume that the development of radical innovations implies being the first to introduce something that is a radical departure from the existing technology and if we accept the arguments presented for characterizing the radical innovator companies, we can put forward the second proposition.

Proposition 2: “Radical innovator” companies are positively associated with a moderate market orientation and a strong entrepreneurial orientation, which implies a proactive attitude and the assumption of high levels of technological and com-mercial risk.

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Some recent articles argue that attitudes of extreme en-trepreneurial or market orientation lead a company to be ineffective against its competitors and, for this reason, claim that companies seek equilibrium between the two attitudes (Atuahene-Gima & Ko, 2001). Radical innovations often open new opportunities for developing incremental improvements in the future. In fact, Afuah (1998) stated that radical innova-tions are those in which the technological knowledge neces-sary for their exploitation is very different from the existing knowledge, whereas the knowledge necessary for developing incremental innovations is based on existing knowledge. Thus, companies should be capable of obtaining market knowledge from the existing customers and at the same time should make efforts to obtain new combinations from the technology generated by their researchers (Freeman, 1982). The organiza-tions that operate with the objective of balancing these two approaches, which we designate here as mixed innovators, tend to show better results than those adopting either a push or pull type of innovation strategy exclusively (Cooper, 1985), because of the benefits and synergies derived from combining the approaches. Normally, this type of company maintains a proactive attitude by satisfying customer needs by introducing incremental innovations, without risking its competitiveness in the long term, because at the same time, they are research-ing ways to introduce radical innovations (Atuahene-Gima & Ko, 2001). The commercial risk assumed by this type of company is moderated by having a profound knowledge of its business environment; its technological risk will depend on how revolutionary or radical it dares to be in its innovations. The development of both radical and incremental innovations by a company implies that it aims to be the first to introduce a new product that represents either a significant advance beyond the existing technology or merely a modification of that technology, respectively. This reasoning and the reflections regarding mixed innovator companies allow us to establish the following proposition.

Proposition 3: “Mixed innovator” companies are positively associated with a strong market orientation and a strong entrepreneurial orientation, which implies a proactive attitude and the assumption of moderate levels of technological and commercial risk.

If we incorporate into this debate the possibility that the company may not aim to be the first to introduce something new, we can distinguish between those that imitate and oper-ate in the same markets as the innovators, and those that do so in different markets. In the first place, taking into account the factor of timing, we argue that only the first to generate an idea and apply it as a new product should be considered an innovator, and that all the rest are imitators. Schumpeter (1961) considered that the probability of two or more com-panies simultaneously developing the same innovation was so

small that it could be ignored, and so we will not consider this possibility here. The real problem arises when we ask how to classify the companies that are the second, third, and so on, at the global or absolute level, in launching an innovation, but that are the first to do so in their market. To understand this situation, we can use the terminology proposed by Guellec (1999) and define global innovation as an innovation that is new for the economy as a whole and local innovation as an inno-vation that is new in a limited environment. In this analysis, we have designated this latter type as imitation. Further, within the local type of innovation (imitation), we can distinguish between innovations that are applied in a particular market and those that are new only internally. A company that adopts an innovation that is new for the company but has already been successfully applied or marketed in its reference market will be considered an imitator in the strict sense, whereas we propose to designate a firm as an explorer company if it introduces innovations in a market different from that supplied by the strict innovator company.

The companies that are imitators in the strict sense (those that adopt an imitation of a product already being offered in their reference market) are considered to be acting reactively (D’Aveni, 1994), showing a lack of entrepreneurial orienta-tion (Covin & Slevin, 1989), and having only a weak market orientation (Narver & Slater, 1990) by paying more attention to competitors’ actions than to customers’ needs. They are as-suming a minimum degree of technological and commercial risk, because there is little uncertainty about the technology involved or about the acceptability of their “new” product (which has already been launched by another company in its market). They are companies that have not detected the cor-responding need in their specific environment until another company has implemented the innovation to meet it. Further-more, they either do not have the capability or are too cautious or conservative to introduce a new technology in their industry sector. This type of organization will be able to imitate the products launched by its competitors whenever this policy does not require great technological capacity and, because it lacks entrepreneurial orientation, it is unlikely to have invested in the technological resources or in the knowledge necessary to be able to launch radical imitations (McEvily et al., 2000). This argument leads us to think that the strict imitator companies tend to develop incremental imitations, and that, to adopt imitations that are radical for their own organization, they would need to acquire the necessary knowledge in a relatively simple and explicit form (for example, through licenses). These reflections allow us to put forward the next proposition.

Proposition 4: “Strict imitator” companies are positively associ-ated with a weak market orientation and a lack of entrepre-neurial orientation, which implies a reactive attitude and the assumption of low technological and commercial risk.

Innovation and Imitation as Sources of Sustainable Competitive Advantage 77

Those companies that adopt innovations developed by oth-ers in order to introduce them into different markets—that is, companies that are alert to what is happening at the global level so that they can be the first to transfer new ideas into their own environment and satisfy the needs of their custom-ers—are designated, in this paper, explorer companies. Such companies show features of entrepreneurial orientation (Covin & Slevin, 1989) and a strong market orientation (Narver & Slater, 1990). The strong market orientation of this type of company is seen from the companies’ readiness to collect and analyze information in order to respond to the needs of their customers (Kohli & Jaworski, 1990), although, for this, they may have to study unrelated industries. Their proactive at-titude of seeking opportunities and their capacity to assume the commercial risk involved in the launching of new products for their market indicate that organizations of this type are entrepreneurial in their approach (Miller, 1983); however, this orientation is limited, because they are unlikely to have the capacity to generate the original ideas that culminate in such innovations. These companies aim to satisfy the needs of their customers by adopting incremental innovations and are ready to accept the commercial risk of adopting radical innovations and launching them in their market of reference. The technological risk is low because it is unlikely that there will be much uncertainty in the manufacture of the product adopted. These arguments allow us to put forward the next proposition.

Proposition 5: “Explorer” companies are positively associated with a strong market orientation and a limited entrepreneurial orientation, which implies proactive attitude and the assump-

tion of low levels of technological risk and moderate levels of commercial risk.

Figure 1 shows the different types of company that we have identified in terms of their entrepreneurial and market orientation.

The innovative companies, whether radical, incremental, or mixed, are generators of original ideas and aim to be the first to apply them as new products, and so on, on a worldwide scale; this behavior can be considered the result of a proactive attitude. The degree of technological risk that companies are prepared to incur will be determined by the radicalness of the innovation developed, and the degree of commercial risk by the organization’s knowledge of the market. Porter (1985) stated that those companies that aim to respond to their customers before their competitors will assume a considerable technologi-cal risk, whereas those whose policy is to react to the actions of their competitors will minimize this risk. The commercial risks run by market-oriented companies is much less than the risks facing companies with an entrepreneurial orientation, because the possibilities of achieving commercial success are higher if the company is more attentive to the signals from its environment. These statements demonstrate the existence of the risk inherent in the innovation process, whether these derive from the technological implementation or from the commer-cial exploitation. It is desirable that the innovative company keeps a balance between its strong entrepreneurial and market orientations, with the object of being able to launch its new products in the most effective way (Atuahene-Gima & Ko, 2001), as occurs in the case of the “mixed innovator.” Those companies with greater propensity for radical innovations will

Figure 1 Typology “Map” of Innovator and Imitator Companies

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have a stronger entrepreneurial orientation than those opting to implement incremental innovations. If they demonstrate a strong entrepreneurial orientation and a weak market orienta-tion, they might fail to understand or identify the needs of their customers and consequently be unsuccessful in their innovations. If the company has a weak entrepreneurial and strong market orientation, it is unlikely to have the R&D capacity to meet the customer needs identified. The “explorer” companies may not generate original ideas, but they aim to be the first to apply them as new products, and so on, at the level of their reference market. These organizations demonstrate a proactive attitude while running less technological risk than the innovator com-panies, although they accept a significant level of commercial risk by launching an innovation in a market different from that of the innovator. To be successful, they need to present a strong market orientation and at least a moderate entrepreneurial ori-entation. Last, the imitator companies will not aim to be the first in their market of reference, will present a reactive attitude, and will be prepared to accept only low levels of technological and commercial risk.

INNOVATION, IMITATION, AND COMPETITIVENESS

Barney (1991) stated that a company obtains competitive advantages when it implements a value-creating strategy that is not being utilized simultaneously by any of its current or potential competitors. This competitive advantage will be sustainable when the resources on which this strategy is based cannot be duplicated. The review of the literature leads us to believe that innovation is the main source of competitive ad-vantage (Barney, 1991; Galunic & Rodan, 1998), and this will be sustainable when it is based on strategic resources. These statements could lead us to consider that imitations cannot be a source of sustainable competitive advantage. However, in this section of the paper, we argue that this is not so: we believe that imitation, like innovation, can be a source of sustainable competitive advantage, provided the company is capable of designing a strategy that differentiates it from the innovator.

There is a wealth of literature explaining how to maintain sustainable competitive advantages by developing barriers to imitation (Barney, 1991; Kogut & Zander, 1993; MacMillan et al., 1985; McEvily et al., 2000; Peteraf, 1993). Barney (1991) stated that, for a resource to be strategic (and be a source of sustainable competitive advantage), it must be valued, origi-nal, imperfectly imitable, and impossible to substitute. These characteristics constitute barriers to imitation. Peteraf (1993) stipulated that, for strategic resources to influence organiza-tional performance—that is, for the resources to be impossible to imitate—they should meet four conditions: they should be superior to those of the competitors (heterogeneity), there

should be ex ante limitations preventing competitors from obtaining similar benefits (imperfect imitability and irreplace-ability), the resources should be imperfectly mobile, and there should be ex post limitations for the competitors. Daft (1983) assumed that one of the conditions that makes a resource im-possible to imitate is that it should arise from the combination of particular abilities, knowledge, and organizational learning, and thus should exhibit causal ambiguity. Reed and DeFillippi (1990) proposed that the tacit nature of knowledge, and the complex and specific nature of the resources and capabilities of a company, are the factors that generate the causal ambigu-ity necessary to maintain the competitive advantages derived from innovation over time. More recent studies, such as that by McEvily et al. (2000), established that causal ambiguity pro-tects competitive advantages from imitation, but can increase the vulnerability of the company to product substitution. In other words, if the company establishes too many barriers to imitation, it may motivate competitors to seek to satisfy the same market need with different technologies that, if they achieve better distribution, could succeed in substituting the product or service introduced by the innovator. McEvily et al., among others, explained that the company should deal with this dilemma by identifying the reasons its innovation generates more value and customer benefits, and then use this knowledge to get the customers committed to its product. In this respect, those sustainable competitive advantages based on innovations that meet the four requirements of Barney (1991) will not be at risk because one of the conditioning factors is the impossibility of substituting the product.

Rivkin (2001) carried out an extensive review of the lit-erature on the replication and imitation of knowledge, and provided various factors that constitute barriers to imitation. This author divided these barriers into four groups. In the first group, strategic maneuvers related to games theory were analyzed, including spatial superiority, superiority in capaci-ties, and the advantage obtained through the high costs that customers would incur to change products. The second group of barriers includes those related to the difficulty of access to resources by the imitator. Examples of this category include the lack of a recognized brand or of complementary resources, lack of experience, the protection of patents, difficulty in accessing to necessary materials and channels of distribution, and so on. The third group comprises various impediments or organizational weaknesses of the imitator, such as a limited absorptive capacity (Zahra & George, 2002), poor motivation (Porter, 1985), the lack of incentives, and the desire to preserve the scarce income available. Last, there are barriers to the effective acquisition of knowledge because of causal ambiguity (Reed & DeFillippi, 1990), the tacit nature of the knowledge (Polanyi, 1966), the difficulty in codifying the knowledge (Zander & Kogut, 1995), the complexity of the knowledge (Gopalakrishnan & Bierly, 2001), and so on.

Innovation and Imitation as Sources of Sustainable Competitive Advantage 79

In this study, we consider that the barriers identified by Rivkin (2001) can be grouped into formal barriers to imita-tion, such as patents, and informal barriers, such as the spatial superiority of the innovators. In turn, the informal barriers can be divided into those derived from the superiority of the innovator (the capacity for generating causal ambiguity, etc.) and those derived from the weaknesses or lack of resources and capacities of the imitator (poor capacity for absorption, etc.).

If the innovator company bases its innovation on a strategic resource, it will be able to establish sufficiently strong bar-riers (formal or informal) to prevent being imitated; if it is successful in doing this, neither the explorer nor the imitator behaviors would be viable. This reasoning leads us to the next proposition.

Proposition 6: The establishment of barriers to imitation pro-motes the maintenance of the competitive advantage achieved by the successful innovator, provided this innovation is impossible to substitute.

Occasions can exist when a good strategy for the innovator may be to promote imitations (Conner, 1995). The innovator company must consider two elements before allowing itself to be imitated. The first is the potential benefit to the innova-tor from the possible opening of additional markets that the imitator may achieve. Occasions exist when the innovator company does not have the resources and capabilities necessary to launch its innovation on the market globally; it can be to its advantage to permit other companies with greater distri-bution capabilities to imitate and develop different markets not accessible to the innovator. This benefit is derived from the increase in the number of potential customers following the opening of additional markets. Another important factor is that strengthening the presence of the new product in an economy will help to establish it as the technological standard and constitute an obstacle to the entry of possible competitive products (McEvily et al., 2000). Against this possible benefit, a disincentive for the innovator to consider before permitting imitators to appear is the possibility of losing sales because of the imitation. The relative importance and weight of these countervailing factors will depend on the power of the inno-vator and of the explorer (or imitator) and of the distinctive strategy chosen by each company.

Some studies have attempted to identify the causes that would permit innovators and imitators to obtain competi-tive advantages. In this context, Zhou (2006) attempted to associate the loss of competitive advantage of the innovator, in favor of the imitator, with characteristics of the particular business environment such as the uncertainty or dynamism of the market, technological turbulence, and the intensity of competition. In that study, the author argued that the reasons imitators might be able to gain a better position than the inno-vator are found in the instability of the demand (uncertainty),

the big changes taking place in the technology (turbulence), and in the great number of competitors active in an industry. However, contrary to expectations, his empirical study found that these factors did not alter the competitive advantage of the innovator.

To understand how the imitator can obtain sustainable com-petitive advantages, we must return to the variables of timing and space. It was proposed in P6 that the innovator (first in the world) will obtain competitive advantage if the innova-tion launched is valued, original, and impossible to substitute (Barney, 1991; Daft, 1983; Peteraf, 1993). This competitive advantage will be sustainable when it is imperfectly imitable (Barney, 1991). In the event of being imitated, the innova-tor company will keep its competitive position—that is, the imitation will be imperfect—if the copy is not distributed in its market of reference or if it maintains distinctive features that allow it to operate in the same geographic market but in different customer segments (Lieberman & Montgomery, 1988, 1998; VanderWerf & Mahon, 1997). There is sufficient evidence to state that, in situations where imitation is possible, the strategy chosen by the innovator to maintain its competi-tive advantage is the strategy of differentiation (Becheikh et al., 2005; Beneito, 2003). Through an empirical study, Conner (1995) demonstrated that a Nash equilibrium was reached when the innovator follows a strategy of differentiation, and the imitator a strategy of leadership in prices. Along these lines, Adner and Zemsky (2006) demonstrate that innovators and imitators can coexist viably in an economy, with both maintain-ing their competitive advantages, if the first can successfully differentiate itself and the second can successfully maintain leadership in prices. Adner and Zemsky state that the innova-tor should maximize the resources that strengthen its product and be very attentive to the timing variable, to maintain its differentiation, and the imitator should aim to maximize the resources inherent in its processes so as to be cost efficient and to secure its advantage on price. Thus, there is evidence to as-sociate the maintenance of the respective competitive advantage of innovator and imitator with a correct alignment between the organizational resources and capabilities and the choice of the appropriate strategy (differentiation or leadership in prices). These considerations lead us to the next proposition.

Proposition 7: The innovator will obtain a sustainable com-petitive advantage based on an innovation if it maintains a strategy of differentiation against the imitator, whereas the imitator will obtain a sustainable competitive advantage based on an imitation if it maintains a strategy of price leadership against the innovator.

P7 concerns the situation in which there is a global in-novator and an imitator. That is, if the innovator is the first to launch a product, it will keep the advantage of being the creative firm by a differentiation strategy, and its followers

80 Management Research

should focus on price leadership. The problem appears when we take into account the explorer. This special type of imitator adopts innovations developed by other companies in order to introduce them into different markets.

The explorer company will be able to maintain a competi-tive advantage in its market if the product adopted (imitated) is valued, original, and difficult to substitute. This competitive advantage will be sustainable if, in this particular market, the product is imperfectly imitable. This company runs two risks. On one hand, similar to the innovator, the explorer company must be alert to possible imitators, against whom it must follow a strategy of differentiation to establish its sustainable competitive advantage (Becheikh et al., 2005; Beneito, 2003; Conner, 1995). On the other hand, the original innovator may decide to widen its target market and compete in the market of reference of the explorer company; in this case, the explorer must follow a strategy of price leadership. This is because, although the explorer is the first mover in the specific market, it cannot compete with the innovator in terms of products, because, as we explained before, the explorer does not have the potential for developing product improvements. This leads us to conclude that if the innovator decides to enter the explorer’s market, it will have the potential to offer the best quality and a differentiated product. This leads to the next proposition.

Proposition 8: The explorer will obtain a sustainable competitive advantage based on a local imitation if it maintains a strategy of price leadership vis-à-vis the innovator, and a strategy of differentiation against future imitators.

In short, the innovator companies, the explorers, and the strict imitators can obtain and maintain competitive advan-tages if the innovation or imitation is based on a strategic re-source and if the correct strategy is designed and implemented (Martinez-Ros & Salas-Fumás, 2004).

FINAL REMARKS AND CONCLUSIONS

The primary objective of this paper is to contribute to the litera-ture by conceptually delimiting the terms innovation and imita-tion. To this end, the features and characteristics of organizations have been identified that enable those that adopt innovatory behavior to be differentiated from those that opt for imitatory behavior. Taking support from the existing literature on inno-vation, we have shown that variables such as idea generation; delimitation of the space in which the innovation is launched; timing, technological, and commercial risk; and the proactive or reactive attitude of the organization are necessary to explain and understand the terms innovation and imitation.

Taking as our point of departure the different orientations that the stated variables may adopt or may involve, we have argued that entrepreneurial companies are identified with in-novation, whereas those that focus on their existing market

and, more specifically, on their current competitors tend to behave as imitators. The different positioning of companies with regard to the factors of timing, proactive or reactive attitude, and space has, in turn, allowed us to establish a typology of innovative and imitative companies. To charac-terize these types of firms, we have incorporated the source of the knowledge employed together with the degree of risk (technological or market) that they are prepared to incur. The combination of these factors has allowed us to identify five types of company—radical innovators, incremental innovators, mixed innovators, explorers, and strict imitators.

The principal contributions offered by the present study are the following. First, a clear conceptualization has been obtained for the terms innovation and imitation, such that the division between each can be drawn and explained. This contribution is fundamental for the literature. A comprehensive analysis has been made in the fields of innovation, imitation, and the lit-erature on leaders and followers. From this, we have concluded that, although there are many studies, most lack a terminol-ogy for delimiting the terms. Because of this void, the results obtained in the various empirical analyses are contradictory. This first contribution is complemented by the second—that is, by the establishment of a typology of innovators and imi-tators. This categorization allows these behaviors to be made specific and eliminates possible overlaps between types such as the incremental innovator and the imitator, or the explorer and the imitator. Together with the contributions already men-tioned, the identification of factors that differentiate between innovation and imitation and the typology of companies, a third contribution is that relating to the reasoning of how an imitator company can obtain competitive advantage. From our analysis, we have been able to explain how innovation or imitation do not necessarily make companies adversaries, but can lead them to become allies in a market. Last, the work contributes to the theory of resources and capabilities in that it provides a terminology and typification of behaviors that should allow for empirical testing.

The principal limitation evident in this study is that, by being theoretical in character, there is a need to test whether the propositions that have been formulated are confirmed in practice. However, we are able to identify useful lines of re-search for the future and to make specific plans for undertaking such research. Thus, the contributions mentioned constitute a working basis for future investigations of the relationships that, as stated, we consider are yet to be adequately explored in the literature.

NOTE

1. Innovativeness is defined as the tendency or wish of an organi-zation to support experimentation and creative processes intended to give rise to innovations (Lumpkin & Dess, 1996).

Innovation and Imitation as Sources of Sustainable Competitive Advantage 81

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