Vicarious Experimentation: Do Innovators Learn by Being Imitated?

Abstract

Strategy scholars conventionally view imitation as a one-way knowledge transfer from an innovating firm to an imitating firm. We propose that being imitated also serves as a source of learning for the innovator. An innovator learns by being imitated—observing the imitator’s choices and outcomes and comparing them to its own. A key challenge in such learning, and in vicarious learning more broadly, is causal ambiguity in identifying the factors that drive observed performance outcomes. We theorize that an innovator’s learning by being imitated is particularly effective in overcoming causal ambiguity when it takes the form of vicarious experimentation, where an imitator’s near-clone of the innovator’s product functions as a quasi-experimental treatment from which the innovator can learn. This concept extends the logic of strategic experimentation by highlighting how firms can learn from experiments they do not control. We test our theory in the video game industry, demonstrating that vicarious experimentation enhances the quality of the innovator’s next-generation product and offering support for the theorized boundary conditions under which this effect holds.