Cost Reduction First or Innovation First? Latecomer Firms’ Technology Catching-up Strategy Selection

Abstract

Based on the composition-based view (CBV), this paper studies the effect of cost-oriented and innovation-oriented catching-up strategies on the performance of latecomer firms by taking 249 A-share listed firms in the communication and electronic equipment manufacturing industry as samples. In addition, the paper examines the moderating effect of the technological knowledge stock on the relationship between the choice of catching-up strategy and the performance of latecomer firms. The study has found that the more the latecomer firms focus on reducing costs, the higher the performance; the more the latecomer firms emphasize innovation, the lower the performance. In addition, the high technological knowledge stock of latecomer firms can weaken the positive relationship between the cost-oriented strategy and the firm performance, but it has no effect on the negative relationship between the innovation-oriented strategy and the firm performance. The research results have a certain reference value for the selection of catching-up strategies of latecomer firms.