Innovation vs. Imitation in Entrepreneurship and Org Theory

Innovation and Imitation as Drivers of Economic Development

Innovation and imitation are both important propellers of economic development across different business sectors. The main difference between the two is perhaps best represented by the legitimacy of each concept: innovation is creativity and inventiveness, while imitation is simply copying what somebody else has produced or promoted. There is, however, a middle way — imitation with improvement and development — and this is probably more common throughout the business world. Rather than investing large sums of money in research and development, an organization may prefer to take an existing idea and develop it to a degree at which it is viable, feasible, and capable of maximizing profit.

Imitation limits the costs and risks that are usually associated with innovation. Organizations that imitate tend to invest less in research and development, or they invest a comparable sum but, by building on existing knowledge, obtain better results in a shorter period of time than if they were starting from scratch. This cost-efficiency makes imitation an attractive strategic option, particularly for smaller or newer organizations operating in competitive markets. Understanding where innovation ends and imitation begins, however, is far from straightforward.

Complexity, Modularity, and Competitive Advantage

According to Ethiraj, Levinthal, and Roy, the thin line of separation between innovation and imitation is determined by the complexity of the innovation activity. Notably, complexity is an important factor that tends to deter imitation understood as the simple act of copying existing performances. This in turn solidifies the competitive advantage of an organization. The degree of complexity within an organization is shaped by its organizational culture and by ideas drawn from systems theory. Inputs and outputs can be seen as interconnected by the innovation factor, which varies in terms of complexity. A complex system governing the inputs and outputs of an organization will produce a stronger separation between innovation and imitation, as the rules governing that system become more difficult to interpret, understand, and replicate elsewhere.

This idea can also be extended to the final products or services that an organization produces. If an organization is understood as a combination of management and psychology, that framework will shape the characteristics of the products and services it brings to market. The managerial and psychological forces at work determine the organizational culture of the entity and influence its inclination toward innovation or imitation. An innovative management will tend to be a trend-setter and an innovator — both in terms of leadership and of final output — while a management that copies other ideas will tend to reflect similar imitation in the organization's products and services.

One important theoretical conclusion is that modularity increases innovation within an organization. Modularity has been explored extensively in organization theory in recent years, particularly given that the global expansion of organizations has created a need for decentralization. Modularity refers to the capacity of an organization to function internally and externally with the help of relatively independent modules or units. The degree of interdependence between these modules can vary, but generally, the more decentralized the modules are, the more innovation is fostered within them.

This theoretical framework is especially useful for analyzing the relationship between innovation and imitation within an organization, rather than simply between different organizations. The independence of individual modules is likely to encourage innovation because each module becomes an almost self-contained functional unit within the larger system. This type of environment encourages a unit to seek the maximization of its own activity and, by extension, to innovate as a means of improving its performance. The low interdependence and limited interconnection with other modules deters imitation and directs the unit toward innovation as a path forward.

The Entrepreneur's Role in Shaping Innovation or Imitation

In other theoretical frameworks, the thin line between innovation and imitation is explained through the role of the entrepreneur, who ultimately decides whether the organization will take an innovative or an imitative path. One relevant source uses the example of technology in South Korea, though the argument can be extended to other economic sectors. Entrepreneurship as a concept inherently involves innovation, even when the initial technological input originates from elsewhere — whether from another company or another country.

This argument gains further support when tied to organization theory. It is natural for an organization that began as a start-up to carry the initial entrepreneurial spirit of its founder and to continue innovating throughout its existence, rather than imitating existing models. The act of initial creation is itself seen as entrepreneurial proof that the innovation process can endure throughout the organization's market life.

While this may be partially true, a split can also emerge between innovation at the entrepreneurial and managerial level, and imitation at the level of products and services sold to the market. An entrepreneurial strategic approach may produce an innovative leadership style without necessarily determining what is produced and sold. The entrepreneur may simply decide that imitation is a valid means of improving business performance and maximizing profit. This distinction is crucial: being an innovative leader does not preclude adopting an imitative product strategy.

Conclusion

Organizational behavior helps, to some degree, shape an organization's encouragement of innovation or imitation, and the way by which, internally, one or the other is fostered. The entrepreneur's personality is also often important in defining the relationship between the two and in determining where the line between them is likely to be drawn. At the same time, both imitation and innovation are means by which knowledge can be diffused within an organization or, increasingly in the present day, between different organizations. Rather than being opposites, innovation and imitation are best understood as complementary forces whose balance depends on organizational structure, culture, and entrepreneurial intent.