Imitation of Complex Strategies

Researchers examining loosely coupled systems, knowledge management, and complementary practices in organizations have proposed, informally, that the complexity of a successful business strategy can deter imitation of the strategy. This paper explores this proposition rigorously. A simple model is d...

Full description

Saved in:
Bibliographic Details
Published in:Management science 2000-06, Vol.46 (6), p.824-844
Main Author: Rivkin, Jan W
Format: Article
Language:English
Subjects:
Adaptation
Algorithms
Ambiguity
Business structures
Case studies
Competition
Competitive advantage
complexity
Corporate strategies
Evolution
Heuristic
Heuristics
imitation
Imitations
Innovations
interactions
Knowledge
Knowledge management
Management science
Organizational structure
Parametric models
Polynomials
Product development
Product lines
Studies
Topographical elevation
Citations: Items that this one cites
Items that cite this one
Online Access:Get full text
Tags: Add Tag
No Tags, Be the first to tag this record!
Description
Summary:Researchers examining loosely coupled systems, knowledge management, and complementary practices in organizations have proposed, informally, that the complexity of a successful business strategy can deter imitation of the strategy. This paper explores this proposition rigorously. A simple model is developed that parametrizes the two aspects of strategic complexity: the number of elements in a strategy and the interactions among those elements. The model excludes conventional resource-based and game-theoretic barriers to imitation altogether. The model is used to show that complexity makes the search for an optimal strategy intractable in the technical sense of the word provided by the theory of NP-completeness. Consequently, would-be copycats must rely on search heuristics or on learning, not on algorithmic "solutions," to match the performance of superior firms. However, complexity also undermines heuristics and learning. In the face of complexity, firms that follow simple hill-climbing heuristics are quickly snared on low "local peaks," and firms that try to learn and mimic a high performer's entire strategy suffer large penalties from small errors. The model helps to explain why some winning strategies remain unmatched even though they are open to public scrutiny; why certain bundles of organizational practices diffuse slowly even though they lead to superior performance; and why some strategies yield superior returns even after many of their critical ingredients are adopted by competitors. The analysis also suggests roles for management science and managerial choice in a world of complex strategies.
ISSN:0025-1909
1526-5501
DOI:10.1287/mnsc.46.6.824.11940