Is Product Imitation Good for Firm Performance? An Examination of Product Imitation Types and Contingency Factors

Abstract

Despite the prevailing phenomenon of product imitation in transition economies, theoretical development of product imitation strategies still lags behind anecdotal evidence. The authors distinguish between pure imitation and creative imitation and examine their contingent effects on firm performance. They test hypotheses on data collected from multiple sources, including top and middle managers and archival financial data from 192 firms in China. The findings indicate that creative imitation has a stronger positive effect on financial performance (i.e., lagged return on assets) than pure imitation. Furthermore, pure imitation and creative imitation, when coupled with strong marketing capability, positively affect market performance (i.e., market share). Finally, compared with their local counterparts, foreign firms operating in China benefit less from pure and creative imitations in terms of financial performance.