Red Queen Competitive Imitation in the UK Mobile Phone Industry

Abstract

The paper uses Red Queen theory to examine imitative competition. We conceptualize imitative actions by focal firms and their rivals along two dimensions: imitation scope which describes the extent to which firms imitate their rivals’ technologies, and imitation speed, the pace at which they imitate technologies that have been adopted by their rivals. We argue that focal firm imitation scope and imitation speed drive performance, and focal firm performance drives imitation scope and speed decisions by rivals, which in turn influences imitation scope and speed of the focal firm. We also argue that the impact of this self-reinforcing Red Queen process on firms’ actions and performance, is contingent on levels of product technology heterogeneity - defined as the extent to which the industry has multiple designs and has high product variety. We derive hypotheses about the impact of imitation scope and speed on focal firm performance and rivals’ response, as well as hypotheses on the moderating impact of product technology heterogeneity. We use data from the UK mobile phone industry from 1997 to 2008 to test these hypotheses.