Why Do Firms Imitate Each Other?

Abstract

Scholars from diverse disciplines have proposed numerous theories of business imitation. We organize these theories into two broad categories: (1) information-based theories, where firms follow others that are perceived as having superior information, and (2) rivalry-based theories, where firms imitate others to maintain competitive parity or limit rivalry. We describe conditions under which each type of imitation is most likely and offer guidance on identifying imitation in practice. Amplification effects and other performance implications of imitation are also addressed.