Skill improvement by product imitation

Abstract

This article investigates how the process of product imitation affects skill improvement for small- and medium-sized enterprises (SMEs) in developing countries. By distinguishing between sources of information inputs in the imitation process, we identify two types of product imitation—reproduction and adaptation. We argue that compared to reproduction, adaptation is more likely to enhance imitators’ skills. This is because adaptation requires imitators to use information from a variety of sources, which in turn creates more opportunities to gain knowledge and practice complex skills, such as trial-and-error and problem-solving. We find supporting empirical evidence by analyzing SMEs in nine developing countries. Our results indicate that SMEs can achieve skill improvement by imitating products. This finding also suggests that policies guiding SMEs toward adaptation and away from reproduction are likely to enhance SMEs’ long-term growth by enabling skill improvement.