knowledge management and innovation strategy: the

Knowledge management and innovation strategy:The challenge for latecomers in emerging economies

Jiatao Li & Rajiv Krishnan Kozhikode

Published online: 5 February 2008# Springer Science + Business Media, LLC 2008

Abstract The success of latecomer firms from the emerging economies challengesthe conventional wisdom on entry timing and resource-based competence. Buildingon research on institutions in emerging economies and the resource-basedperspective in strategic management, we propose a model to explain how resourcepoor latecomer firms in emerging economies catch up with the multinationalincumbents. We classify latecomers based on their strategic learning intent as eitheremulators or blind imitators. The strategic learning intent depends on a firm’scomplementary assets and its absorptive capacity. Firms that choose emulationdevelop flexible routines, while firms that choose blind imitation end up with rigidroutines. Over time, when there is a need for resource renewal, firms that haveflexible routines are better positioned to respond. We take the Chinese mobile phoneindustry as an exemplar to illustrate the core issues in latecomer catching up ofemerging economy firms.

Keywords Latecomer catching-up . Absorptive capacity . Complementary assets .

Strategic intent . Emulation . Strategic renewal

In recent years, the international business arena has witnessed the emergence, growthand dominance of a large number of firms from the emerging economies. Thesefirms have essentially had a humble beginning, but over a considerable period oftime, have become challengers for global industry leadership positions. Most ofthem were late to enter their target industries and were far behind the multinational

Asia Pacific J Manage (2008) 25:429–450DOI 10.1007/s10490-007-9076-x

NO9076; No of Pages

J. Li (*) : R. K. KozhikodeDepartment of Management of Organizations, Hong Kong University of Science and Technology,Clear Water Bay, Kowloon, Hong Kong, Chinae-mail: [email protected]

R. K. Kozhikodee-mail: [email protected]

incumbents in terms of their technological capabilities (Mathews, 2006a). Previousresearch that has tried to address the issue of latecomer catching up has mostlyfocused on the macro side of the story, namely the institutional and network levelfactors (e.g., Hobday, 1995; Kim, 1997a). However, less attention has been paid tothe firm level heterogeneities in the catching up process. The pressing questions thatremain are, how do latecomer firms differ in their catching up process and how doesit matter?

Theories on resource-based competence explain firm level heterogeneities andinform us about the types of resources that are required for developing competitiveadvantages (e.g., Barney, 1991; Wernerfelt, 1984). However, most of these studieshave been biased towards resource-rich firms (Collins, 1994). In fact, the startingpoint for most resource-based studies is the firms that possess these resources. As aresult, we know relatively little about how firms attain “rare”, “hard to imitate”,“hard to transfer”, and “highly valuable” resources in the first place. Hence, ourcurrent theories on resource-based competence are inadequate to explain how theseresource poor latecomers from emerging economies, catch-up with and successfullychallenge the resource-rich incumbents from developed countries in their owndomain.

To address this concern, we bridge the institutional and resource-basedperspectives in this study. By examining the institutional context of latecomercatching up in emerging economies, we argue that latecomers essentially start asimitators and differentiate themselves in terms of costs. From the resource-basedperspective, we examine the firm level heterogeneities of caching up and explainwhy some latecomers are better positioned than others at transforming fromimitation to innovation. Specifically, we argue that emerging economy firms, cominglate to technology intensive industries, can be classified as emulators or blindimitators based on their strategic learning intent. A firm’s strategic learning intent isconditioned upon its complementary assets and absorptive capacity. Firms thatchoose emulation develop flexible routines, while firms that choose blind imitationend up with rigid routines. Over time, competition and legitimacy concerns wouldforce firms to renew their resources and develop innovative offerings. When there isa strong need for resource renewal, firms that have flexible routines are betterpositioned to respond. We will first provide a theoretical background on thelatecomer catching up in emerging economies, drawing from both the institutionaland resource based perspectives. We then present our conceptual model andpropositions. Finally, we will take the Chinese mobile phone industry as an exemplarin illustrating the core issues in catching up, and discuss implications for researchand practice.

Institutions and latecomer catching up

Institutions in emerging economies

We define a firm as a latecomer when it is a domestic player in an emerging economythat enters (or diversifies) into a global industry that resource rich incumbentsdominate. This definition emphasizes the importance of the institutional context of

430 J.T. Li, R.K. Kozhikode

emerging economies within which the latecomer firms are embedded. Hence, beforedelving into heterogeneities between latecomers and the ensuing differences in theirstrategic postures, it is important to examine the institutional context of firms inemerging economies and the implications for latecomer catching up.

Institutions set forth the “rule of the game” and provide the legitimacy for thefirms embedded within them. Firms that violate the rules of the games set by theirrespective institutions are de-legitimized (Meyer & Rowan, 1977). Scott (2001)identifies three pillars of institutions namely, regulative, normative and culturalcognitive. Each of these can have varying influences in an emerging economycontext. Below, we discuss some of the key observations of this line of enquiry intoemerging economies that is relevant to the current paper.

Regulative institutions in emerging economies The regulative institutions play a vitalrole in the legitimacy of firms. In developed economies, the regulative institutionsare well developed and they facilitate firm actions. However, in emerging economiesthe regulative institutions are highly transient and interventionist in nature at leastduring the initial years of transition (Peng & Heath, 1996). For instance, bothproperty rights and capital markets remain underdeveloped during the initial stagesand they improve as time progresses (Peng, 2003). While the regulative institutionsare expected to develop over time, it is important to take the stages of markettransition into account explicitly when studying firms in emerging economies.

Normative institutions in emerging economies Peng and Heath (1996) argued that,while a typical firm in a developed economy is one with high discretion on itsresource allocations and its strategic choices, the typical firm in an emergingeconomy is devoid of such discretion, as they have typically been state owned andinexperienced in market competition. Private ownership had only been a recentoccurrence and these new private firms are highly inexperienced, leading todissolution of many of them in their early years of formation (Boisot & Child,1996). This under-preparedness of the emerging economy firms, coupled with theinefficiency of the regulative institutions make way for the normative institutions.Boisot and Child (1996) argued that in the case of China, the fall of state bureaucracyled to the domination of modern variants of the fiefs. In the context of knowledgemanagement in emerging economies, Bruton, Dess, and Janney (2007) argue thatorganizational knowledge is a collectively held resource, and firms need to engage inactive interactions with other firms in knowledge management. Similarly, otherresearchers (Guthrie, 1997; Khanna & Palepu, 2000; Peng, 2003; Peng & Zhou,2005) have emphasized the importance of networks and business groups, forms ofnormative institutions, in the success of organizations in emerging economies duringthe initial years of market transition. However, the role of normative institutions canswitch from pivotal to facilitative, as the economies develop further (e.g., Peng,2003; Simons & Ingram, 2003).

Cognitive institutions in emerging economies Cognitive institutions play a vital rolein firm actions throughout the development of the emerging economies. In theabsence of prior experience and in the face of uncertainty, firms learn from otherfirms (Haunschild & Miner, 1997). In emerging economies, firms would try to

Knowledge management and innovation strategy 431

reduce their uncertainty by imitating the most widespread and highly successfulstrategies used by firms most similar to themselves. Although imitation helps firmsin emerging economies to flatten their learning curve and reduce the uncertainty inthe outcomes, imitation robs these firms of their identities. To be successful in ahighly competitive market, firms have to be able to differentiate themselves (Baum& Haveman, 1997). In emerging economies, the markets are initially underdevelopedand later on become highly competitive (Kim, 1997a, b). Hence, as time progressesand as individual firms gain experience, the effect of cognitive institutions on thesurvival of new firms will also be likely to change with the market transition (Kim,1997a; Mathews, 2006a).

Institutions and latecomer catching up

What would be the implications of the emerging economy institutions on latecomercatching up? We first examine the role of the government policies in the catching upprocess. Hobday (1995) and Kim (1997a), for instance, explored in detail thecatching up process of firms in the late industrializing East Asian tigers like HongKong, Korea, Singapore, and Taiwan. They argued that governments of theseeconomies played a pivotal role in the initial stages of catching up. Kim (1997a)argued that the government’s intellectual property regime in Korea was supportive ofthe local firms, such that the local firms had the freedom to imitate the technologiesof multinational players during the early stages of catching up (see also Mahmood &Rufin, 2005). Subsequent studies in this research stream (e.g., Hobday, 2000; Kim,1997b; Kim & Nelson, 2000) examined the processes more closely and observedthat once a country reaches a stage where innovation is possible, then strongerintellectual property laws are instituted and the government serves more as afacilitator. Kim (1997a) observed that, in such situations firms could no longersurvive with imitation alone and they had to develop their own innovations.Similarly, Dunning (2006) observed that although the FDI of emerging economyfirms during the initial stages was targeted at exploiting their home country specificadvantages (e.g., low cost of manufacturing), during the later stages, the FDI of thesefirms was directed at accessing innovative offerings from technologically developedcountries. Although the initial innovations of these firms were not ground breaking(Hobday, 1995), over time with enhanced investment in research and development,both in terms of financial capital and human capital, firms in these economies wereable to provide more innovative offerings.

Another stream of research relevant to latecomer catching up is the literatureabout business groups in emerging economies (e.g., Amsden & Hikino, 1994;Guillen, 2000; Hikino & Amsden, 1995; Khanna & Palepu, 2000). For example,Amsden and Hikino (1994) explored the nature and functions of business groups, aprominent phenomenon among many of the late industrializing economies. Theyargued that the presence of a firm within a business group gave it the access tosome idiosyncratic resources like the accessibility to technological and marketingexpertise of other member firms in the group. They also argued that knowledgediffusion was faster in the case of firms affiliated with business groups thanstandalone firms.


The business-groups literature also focuses on the differences in the institutionalcontexts and sources of competitive advantages between advanced and emergingeconomies in explaining value-creating functions of business groups (e.g., Guillen,2000; Khanna & Palepu, 2000; Kim, Hoskisson, Tihanyi, & Hong, 2004; Peng &Delios, 2006). Guillen (2000) showed that business groups could create asymmetriesin the access to resources, thus providing advantages to the firms that are part of thebusiness groups. Similarly, Khanna and Palepu (2000) argued that emergingeconomies suffer from institutional voids and that business groups fill in this voidby providing quick and easy access to idiosyncratic resources to the member firms.They see business groups as a type of neo-institutions formed by the network offirms. The institution thus formed acts as a replacement for formal institutions thatare lacking in emerging economies (Khanna & Palepu, 2000; Peng & Delios, 2006).However, not all firms could benefit equally from the network of their businessgroups. Networks are not altruistic entities. A latecomer firm would receiveresources and support from its network only if it was in a position to contributeback to the network at least over a period of time (Narula, 2006). Therefore, weargue that the role of the network or business groups would vary depending upon thecomplementarities the focal firm could provide to the network. Both the institutionsand firm specific resources are important factors that act in tandem to contributetowards firm specific advantages (Peng & Delios, 2006; Peng, Wang, & Jiang,2008). Hence, as Peng et al. (2008) pointed out, emerging economy firms need to bestudied from three perspectives, namely, the institutional perspective, the resourcesbased perspective and the industry perspective.

Implications for the initial catching up process

Resource asymmetry In establishing and maintaining a market share, industrypioneers would normally rely on their internal resources and they would try to maketheir resources as idiosyncratic as possible. In terms of the resource-based view ofthe firm, such early movers would like to make their resources more valuable andrare, and make them hard to imitate and difficult to substitute (Barney, 1990). Byrelying on such internal resources, the pioneers would be able to shield themselvesfrom the threat of competitors and new entrants and at the same time steer their wayinto new market spaces (Barney, 1990; Lieberman & Montgomery, 1988). Latecomers, on the other hand, will normally lack at least some internal resources criticalfor their access to the target market, such as core technologies. Hence, these firmsmust seek out externally to acquire such critical resources. Such acquisitions arelikely to be expensive, yet not particularly rare, easily imitable, and highlysubstitutable (Bowman & Gatignon, 1996). Moreover, these firms would try theirbest not to compete head on with the multinational incumbents. They would seekmarket spaces which are under-served by the multinational incumbents and whichlate comers could easily penetrate with minimal resources, either available internallyor acquired externally.

Initial catching up In this context, owing to the stark asymmetry between theknowledge levels of the pioneers and the latecomers, when the latecomers seekcutting-edge technology from the pioneers, the pioneers would be able to appropriate


disproportionately higher rents (Cho, Kim, & Rhee, 1998). Hence, a more feasibleplan for the technology deficient firms would be to develop innovative technologyon their own in a phased manner, but in the meantime to focus on applying any lessadvanced technology that is readily available at less expense. Thus, the preferredcatch up strategy during the initial stages would be that of being efficient rather thanbeing effective (Kerin, Varadarajan, & Peterson, 1992). Therefore, technologydeficient firms in emerging economies often prefer to imitate what is readilyavailable rather than search for cutting-edge technologies and differentiate theirofferings in terms of cost.

Hence, we propose that:

Proposition 1a The survival of technology deficient domestic latecomers duringthe initial stages of catching up is positively related to the firms’ ability to imitate themost readily available technology.Proposition 1b The survival of technology deficient domestic latecomers duringthe initial stages of catching up is positively related to their ability to differentiatetheir offerings from that of the incumbents in terms of cost.

In the following section, we propose a framework on how firms in late industri-alizing countries learn and accumulate sustainable technological capabilities (Figure 1).

Latecomer catching up—a theoretical model

Hamel and Prahalad (1989) argue that firms seeking a leadership position from acurrent position of backwardness need a “strategic intent”. This, they argue,“envisions a desired leadership position and establishes the criterion the organizationwill use to chart its progress” (Hamel & Prahalad, 1989: 64). Although Hamel and

Technological Backwardness

Blind Imitation

Absorptive Capacity/ Complementary Assets

Rigid Routines

Flexible routines

Technological Innovation

Resource Substitution

Resource Evolution

Prolonged Imitation

Sustainable Competence

Technological Backwardness

Legitimacy Concerns

Emulation

P2a,b - -

P2a,b +

P3 +

P4 +

P4 +

P4 +

P5a +

P5b +

P6a +

P6b +

Figure 1 How late coming firms progress from imitation to innovation.


Prahalad (1989) spoke about the dilemma of choosing to imitate or not to imitatefaced by Western firms encountering competition from new entrants from the Eastand elsewhere, the same dilemma seems to be confronting technology deficient latecoming firms in emerging economies. Latecomers usually start as imitators and thenlearn. Although imitation is the first possible course of action, the way firmsapproach imitation would differ. For some firms imitation would be a strategy andfor some others this could be a short-term tactics. In sections that follow, we drawinsights from the developmental psychology literature and discuss the characteristicsof firms that follow these two different approaches and how these characteristicsaffect the overall outcomes related to catching up.

Blind imitation vs. emulation: absorptive capacity and complementary assetsas drivers

In developmental psychology, two means of social learning that humans adopt areclassified as emulation, which “involves learning about the properties of, or causalrelations between, objects (rather than just about their presence in the environment)”(Want & Harris, 2002: 3), and imitation, which involves “recognition andreproduction of the goal of the observed behavior, as well as the specific actionsthat brought about that goal” (Tomasello, 1990: 275). Want and Harris (2002) arguedthat, “these two forms of social learning are useful in different circumstances and, interms of what an observer learns from a model, the two processes may be thought ofas complementary. While a “blind” imitator learns to perform actions for a specificgoal, but does not learn the [nuances] involved in those actions, an emulator learnsthe [nuances] involved, but not the actions or the goal. Intuitively, emulation offers ahighly flexible form of knowledge.” (p. 5). They also argued that there is a tradeoffbetween emulation-based learning and blind-imitation based learning. Learning byemulation would require more effort than learning by imitation; however, learningby emulation might give flexibility in terms of knowledge acquisition. At the sametime, emulation might provide results only over a considerable period of time, henceit proves relatively less effective in the short run when compared to blind-imitation,because the opportunities to witness the effect of an action (which is the core toemulation) is limited.

This logic applies to firms as well. Firms entering an industry for the long termwould tend to learn by emulation, but might initially imitate the incumbents to helpthem build baseline competence and get into the race. Once these firms are up andrunning they would start building capabilities that would help them develop theirown cutting edge technology in the future. Firms which just want to use anopportunity bestowed on them to generate as much value as is possible in the shortterm and then exit when their resources become obsolete or when they find itdifficult to imitate any longer would prefer to learn through blind imitation. Theywill try to get access to the most readily available technology and capitalize on ituntil it becomes obsolete, then start looking for the next set of readily availabletechnology. In the event of the readily available technology becoming too expensive,they would be prepared to quit the industry. Two key factors which decide whether alatecomer firm chooses emulation or blind imitation are the absorptive capacity andthe complementary assets they possess.


Absorptive capacity is a firm’s ability to recognize, assimilate, and apply externalknowledge which helps the firm better internalize external resources. In other wordsorganizations need absorptive capacity (AC) to make learning possible (Cohen &Levinthal, 1990). According to Cohen and Levinthal, absorptive capacity is, “…largely a function of the firm’s level of prior related knowledge… and it is history-or path-dependent” (p. 128).

The second factor to examine is complementary assets, which include assets suchas specialized manufacturing capabilities, access to distribution channels, servicenetworks and related technologies (Teece, 1987: 288). Like absorptive capacity,complementary assets are also path-dependent resources, and can be an importantcontributor to organizational success.

According to Rothaermel and Hill (2005), a firm’s complementary assets mightbe expected to influence its learning processes and their outcomes significantly,supplementing the effect of absorptive capacity. Shenkar and Li (1999) havereported that in the case of international cooperative ventures, local firms are morelikely to choose venture-partners based on the complementarities that their potentialpartners could bring to the venture, rather than the relevance of the internalabsorptive capacity of the focal firm with respect to that of their potential partners’knowledge domain.

Koza and Lewin (1998) have emphasized that the strategic intent of a firm thatenters into strategic alliances is driven by the absorptive capacity and comple-mentary assets of that firm. Specifically they have argued that a firm’s motivationto enter an alliance depends on how its current level of absorptive capacity couldhelp the firm learn from a given alliance partner and how its existing complementaryassets would help it attain its objective. In another study, Schilling and Hill (1998)have emphasized that a firm’s ability to develop new products in the futuredepends on its ability to match its strategic intent with its existing resources andcompetencies.

Thus, given the idiosyncratic background of latecomers, such firms withabsorptive capacity and complementary assets that are closely linked to their newventures would choose emulation rather than blind-imitation. In other words, weargue that firms that have the ability to recognize, assimilate, and apply externalknowledge, and at the same time have the ability to appropriate rents from anyknowledge gained will take up emulation. They will intend not just to imitate themultinational incumbents, but to start innovating on their own in a much moresystematic manner. However, when firms lack the requisite absorptive capacity andappropriate complementary assets, they would end up adopting blind-imitation. Thuswe propose the following:

Proposition 2a The more relevant the absorptive capacity of a technologydeficient late coming firm to the knowledge domain of the industry that it enters,the higher the likelihood that the firm will choose emulation rather than blindimitation.Proposition 2b The more appropriate the complementary assets of a technologydeficient late coming firm are to the industry that it enters, the higher the likelihoodthat the firm will choose emulation rather than blind imitation.


Creating asymmetries—from catching up to developing competencies

After striking the right linkage with the industry’s dominant technology andsubsequently leveraging this linkage with their complementary assets, late movingtechnology deficient firms can often make inroads into their target industry. Theycan then start thinking about attaining partial or even full self-reliance in term oftechnology (Tellis & Golder, 1996). They are no longer in a rush to obtaintechnological expertise. This relative comfort allows them to think about increasingtheir learning activities, which could lead to their developing proprietarytechnologies (Haunschild & Miner, 1997). During the later stages of the catchingup process, new entrants can thus develop intentions similar to those of the pioneerfirms—market dominance through cutting-edge technology.

Seeing the growing market share of the latecomers, the incumbents would normallytake up counter strategies designed to nullify any advantages possessed by thelatecomers. A common attack is through prices (Lieberman & Montgomery, 1988,1998). Such attacks in the market segments occupied by the latecomers can result ina price war (Bowman & Gatignon, 1996). From the consumer’s point of view, whenfaced with the opportunity to choose between the late comer and an industry leader,both of whom are equally competitive in terms of price, they are most likely tochoose the industry leader (Bond & Lean, 1977; Bowman & Gatignon, 1996;Carpenter & Nakamoto, 1989). Thus, latecomers would start to feel the pressure ofcompetition and the pressure to attain legitimacy (Zimmerman & Zeitz, 2002).

Through learning, technology deficient latecomers not only catch up with thedominant technology of the industry, they may also learn to confront competitionbetter and gain legitimacy among their stakeholders (Khaire, 2005). Acceptance ofthe firm as a long-term player by the firm’s stakeholders in the value chain, primarilyits customers and suppliers, is a very important form of legitimacy (Ahlstrom &Bruton, 2001; Kerin et al., 1992). Firms need legitimacy because, from the point ofview of customers, only those which offer quality products consistently would beseen as firms that are serious about staying in the market (Kerin et al., 1992).Secondly, when a key component is in heavy demand, the suppliers will cater first tothe needs of those firms that they expect to stay in the industry (Ahlstrom & Bruton,2001).

Therefore, to gain acceptance among consumers and suppliers, late entrants needto enhance the quality of their offerings. As argued earlier, the need to enhance thefirms’ offerings is further strengthened by the fact that latecomer firms would nolonger be able to differentiate themselves by their prices. Thus to differentiate itselffrom its competitors and to gain legitimacy among its stakeholders the latecomerfirm would have to be continuously innovative (Tellis & Golder, 1996). To beinnovative a firm needs to replace obsolete resources with new, sustainable, andmore competitive ones, either by total substitution or through sequential evolution(Lavie, 2006). Although Lavie (2006) does not provide an explicit definition ofresource substitution and resource evolution, we could still draw from his argumentsthat resource substitution is a resource renewal process whereby firms have theoption of totally scrapping out an existing resource in the event of a new resourcebeing available to the firm that renders the old resources obsolete. We could also


derive from Lavie (2006) that resource evolution is a process of resource renewalwhereby firms have the option to systematically replace older resources, bydeveloping resources that use the existing resources of the firm as a baseline. Insummary, we argue that late coming firms which had been imitating the resources ofthe multinational incumbents during the initial stage would face the abovementioned legitimacy concerns. As a result, the late coming firms need to renewtheir resources either by totally substituting their old and obsolete resources withnewly available ones or by letting their existing resources to evolve systematicallyinto new resources. Hence we propose that:

Proposition 3 Owing to legitimacy concerns and competitive pressure, technologydeficient late entering firms that took up imitation during the initial stage of catchingup will be forced to renew their resource base to expand or maintain their marketshare.

Resource renewal: between substitution and evolution

Lavie (2006) has argued that when incumbent firms find that they must reconfiguretheir resources in response to technological change, they do this primarily throughsubstitution or evolution. Resource substitution can be seen as the process of resourcereconfiguration involving a total replacement of existing resources with newly acquiredresources, and resource evolution can be viewed as the resource reconfiguration processinvolving a gradual evolution of new capabilities from existing ones. Hence, we defineresource renewal as a process that involves reconfiguration of firm resources by eitherevolving new resources from systematically improving the old resources or completelyscrapping out old resources by grafting in new resources. Lavie (2006) observes thatthese are the extremes of a continuum, and that a mix may be the best solution forresource reconfiguration at a particular time. He also argues that effective resourcereconfiguration often involves replacing some old, obsolete resources with new oneswhile at the same time letting other old resources evolve.

Late coming firms during the later stages of catching up often face such renewalchallenges. Their current resources are not sufficient to take them to the next level ofcompetence. Legitimacy concerns would also force them to look at resource renewalas a strategic choice. The key questions are usually which resources to replace andwhich to let evolve, and how to balance the process (Lavie, 2006).

During the initial stages of catching up, even if imitation is the only solutionavailable, some firms might have taken up emulation while others have preferredblind imitation. These choices may have different effects when the firms evolve to thepoint of contemplating resource renewal. Emulating firms will have launched internalR&D or other forms of learning such as alliances with research based educationalinstitutions. The knowledge thus acquired may give them the opportunity to focus onresource evolution by investing further in R&D, perhaps as a supplement to resourceacquisition through merger, acquisition or a joint venture. This luxury will not beavailable to firms that chose blind imitation. When such firms decide to renewresources, they must do so from external sources. This “inorganic” route could beexpensive, given that they are likely to be highly valuable, and perhaps rare anddifficult to reproduce or substitute for. In such situations, these firms would end up


either compromising on resource quality or losing market share. Hence, we proposethat:

Proposition 4 When technology deficient latecomer firms renew their resources,firms that chose emulation during the initial stage will be able to better balancebetween resource substitution and resource evolution than firms that chose blindimitation during the initial stage.

Resource renewal and flexible routines

Resource renewal is challenging in part because most resources are path dependent(Barney, 1991). They typically entail sunk cost in the form of commitment toorganizational routines, which tend to rigidify over time. Firms that are better inrenewing resources develop flexible routines (Feldman, 2000). Becker (2004) haspointed out that routines are often triggered, which can make them more flexible(See also earlier work by March & Olsen, 1976; Nelson & Winter, 1973; Winter,1984). Triggers can be either externally controlled or internally controlled (Becker,2004). For example, when there is a change in the external environment (e.g., theintroduction of 3G technology in mobile phones), a focal firm’s routines aretriggered to adjust to the new environmental development and thus force itself tofind solutions (e.g., to acquire the technology).

The past two decades have seen a great amount of research on organizationalroutines (see Felin & Foss, 2006 for a review). Researchers have often portrayedorganizational routines as path dependent and hence highly rigid (Cyert & March,1963; Levitt & March, 1988; Nelson & Winter, 1982; North, 1990), but otherresearchers have recently observed that routines can be flexible as well (Feldman,2000; Howard-Grenville, 2005). Feldman has shown that the routines of organ-izations change over time and that these routines, “…are not inert, but are as full oflife as other aspects of organizations” (Feldman, 2000: 626). Certainly, havingflexible routines should help latecomer firms to transit from an imitation regime toan innovation regime.

As was explained earlier, firms that look at learning from an emulationperspective can later move from imitation to innovation over a period, and thosethat choose blind imitation may have short-lived objectives and quit when imitationbecomes either worthless or too expensive. In terms of technology management,firms in the first category would be more likely to commit themselves to bothresource substitution and resource evolution. They would substitute resources thatare externally acquired from their linkages with the incumbents, or in other words,substituting for resources which were acquired for imitation. They would at the sametime nurture the resource evolution process, investing in R&D and allying with otherincumbents in hope of coming up with their own innovative technology. We arguehere that this dual commitment to resource evolution and substitution would lead tothe formation of flexible knowledge management routines, characterized byambidexterity, or in other words the open minded approach to simultaneously focuson twin-skilling (resource substitution and resource evolution, in this case). Flexibleroutines would thus enable these firms to transit smoothly from an imitation basedregime to an innovation-based regime over time.


Presumably, firms in the second category (which chose blind imitation) arelimited to resource replacement. These firms, as argued earlier, should be constantlyon the look out for readily available new technology to keep their momentum. Weargue that this narrow outlook would lead to the formation of rigid knowledgemanagement routines, which would be characterized by single minded dedication toone task alone (in this case, resource substitution). In the event of a failure to turn upnew imitative technology, the whole system would come to a stand still, calling foradverse measures like closing operations.

Proposition 5a Technology deficient latecomer firms that take up emulation willbe more likely those that take up blind imitation to develop flexible routines due totheir dual commitment to resource substitution and resource evolution.Proposition 5b Technology deficient latecomer firms that take up blind imitationwill be more likely than those that take up emulation to develop rigid routines due totheir commitment to resource substitution alone.

Figure 1 portrays the catching up process we have discussed. It shows thattechnologically deficient firms compete with technologically advanced incumbentsprimarily by imitating the most readily available technology, and then developinginnovative capabilities on their own or in collaboration with other incumbents. Theoverall model classifies late coming firms as choosing either emulation or blindimitation. Firms in the former category commit resources to both resourcesubstitution and resources evolution, developing flexible routines that are capableof taking those firms from imitation to innovation. Firms in the latter category areshortsighted owing to their lack of absorptive capacity and complementary assets,and end up committing to resource substitution alone. This focus on resourcesubstitution leads to the formation of rigid routines that make these firms incapableof moving from an imitation regime to an innovation regime.

Proposition 6a Technology deficient late entrants with flexible routines, andwhich are capable of resource substitution and resource evolution, will be better ableto develop innovative technology on their own than their counterparts with rigidroutines that are capable of resource substitution alone.Proposition 6b Technology deficient late entrants with rigid routines, and whichare incapable of resource evolution, will be more likely to remain technologicallybackward than their counterparts who possess flexible routines and are capable ofboth resource substitution and resource evolution.

Two vignettes to elucidate the model

To elucidate the theoretical model, two cases from the Chinese mobile phoneindustry will now be presented briefly. Certain features of the Chinese mobile phoneindustry, which help relate to the model, will first be introduced.

In emerging economies, global firms have always led the technologically intensiveindustries (Bartlett & Ghoshal, 2000). The mobile phone industry in China is anexample. Since emerging economies have been technologically backward, themultinationals introduce new technologies to these markets. The domestic markets


of these economies become a battleground for global firms. Local players venturelater into the arena due to their inherent lack of technological resources and, in somecases, restrictions to entry enforced by local governments (Mathews, 2002, 2006a).However, as the industry develops there is a gradual and steady entry of local playersinto these industries. Some of these local firms eventually progress to dominance inthe domestic market and beyond.

The Chinese government did not generally allow mobile phones among the publicuntil 1987. From 1987 to 1995, Motorola was almost the only supplier of handsets inthis market. At this stage, due to the prohibitive prices and the underdevelopedinfrastructure, the increase in users was slow, from only 3,200 in 1988 to 3.6 millionin 1995 (China Statistical Yearbook, 2005). From 1996 to 2000, there was a rapidtransition of the mobile network technology from analog to the digital GSMstandard. Global competitors such as Nokia and Ericsson began to grow in theChinese market with this transition. According to a survey conducted in 1998, themarket shares of Motorola, Ericsson, and Nokia in that year were 37.3, 28.6 and15.6%, respectively. The big three multinationals’ combined market share was over80%. In addition, other competitors such as Alcatel, Panasonic, Philips, Siemens,and Sony had entered. Remarkably, Chinese local competitors began to play a role in1998, although in 1998 the overall market share for Chinese local competitors wasstill almost undetectable. But after 2000, the big three multinational competitors,especially Ericsson, experienced a dip in their respective market shares, partly due tothe rapid growth of other global competitors such as Samsung and Siemens, andpartly due to the entry of the Chinese local competitors such as Bird, Kejian, andTCL into the local market. Figures 2 and 3 illustrate the evolution of thisindustry. Figure 2 shows the number of handsets sold in millions between 1998and 2005, i.e. since the entry of the local players. Figure 3 shows the market shareof local players since 1998.

Mobile Phone Production in China

8.323

52.57

83.97

120

186.44

231.75

303.67

0

50

100

150

200

250

300

350

1998 1999 2000 2001 2002 2003 2004 2005Year

Sources: Chinese Enterprise Management, 1998; Chinese MII.

Pro

duct

ion

(mill

ion

unit)

Figure 2 Mobile phone handset production in China (1998–2005).


In 1999, to minimize competition among local firms, the Chinese Ministry ofInformation Industry (MII Website) decided to permit only a few local firms tomanufacture handsets. By November 1999, only ten local firms had successfullyobtained the authorization. These included four TV and appliance manufacturers,namely Haier, Konka, Panda, and Xiahua, two firms manufacturing for Motorola(Eastcom) and Samsung (Kejian), and four high technology or telephone firms,namely Bird, Southern Technology, TCL, and Zhongxin. Later on, another OEMfirm, Capital Information Group (OEM for Nokia) also obtained a permit.

After entering this market, the domestic manufacturers obtained their technologyfrom various sources and grew very quickly. This effect is displayed in Figure 3,which shows the growth of market share of the local brands from the period between1998 and 2005. From a paltry 5% market share in 1999, the local players went on togain 53% of the domestic market by the year 2003. However, the market share oflocal players had declined after the entry of global players into the low end segmentof the market in China.

Resource renewal at Bird Telecom

Bird Telecom was a pager manufacturing company founded in 1992 as a townshipenterprise in Ningbo, Zhejiang Province. In 1999, it made the transition tomanufacturing mobile phone handsets. Bird had complementary assets in terms ofa popular brand name and a strong distribution network. In addition, it had highlyrelevant absorptive capacity passed on from its earlier operation in communicationtechnology. This availability of relevant absorptive capacity enabled it to developinternal technological competencies over time. Although the company firstpurchased core technologies from Sagem, a French telecom firm, in 2002, it alsofocused on its own internal R&D. Moreover, Bird and Sagem founded “Ningbo Bird

Market Share of Local Brands

0

5.46

10.65

21.77

39.37

52.949.1

40.6

0

10

20

30

40

50

60

1998 1999 2000 2001 2002 2003 2004 2005Year

Mar

ket

Sha

re (

%)

Sources: Chinese Enterprise Management, 1998; Chinese MII.

Figure 3 Chinese mobile telephone handset production: the market share of local brands (1998–2005).


Sagem Electronics”, a joint venture with each holding a 50% stake. The joint venture(JV) has been a processing and production center, with Bird leveraging itspurchasing power and supply chain resources to manufacture handsets for Sagem’sglobal operations at a reduced cost; at the same time, Sagem’s technologicalcontributions have helped Bird improve the quality of its phones. Through itscooperation with Sagem and its Chinese market knowledge acquired through itsprevious pager manufacturing, the company was able to quickly enter the handsetmarket with its own brand, and grew at an astonishing speed. Although Bird enteredthe market later than other local players, its innovative products and marketinghelped it achieve the market leader position in production and sales among the localfirms for the 2000–2005 period. The sales of this company grew from 2.3 millionunits in 2001 to 7.8 million units in 2005, peaking at 11.8 million units in 2003. In2005, Bird formed another JV with Sagem, specializing in R&D. The new JVagreement provides for a broad scope of cooperation between the two companies,from purchasing to management of global sales. Sagem continues providingtechnology for Bird, while Bird provides a competitive manufacturing base forSagem’s sales outside China. Bird has thus been capable of resource evolutionthrough internal R&D as well as through its R&D alliance with Sagem. Thiscapability was available to Bird basically due to its approach to knowledgemanagement. Although Bird initially was depending on Sagem for access to keytechnologies, it also looked at internalizing the knowledge in a phased manner.

Making hay while sun shines at TCL

Before entering the mobile phone business, TCL evolved from phone to TV and tocomputer manufacturing. It has been one of the largest telephone manufacturingfirms, and also one of the largest TV manufacturers in China, with a well-knownbrand. In March 1999, TCL established a subsidiary to manufacture mobile phonehandsets. Although TCL was a popular brand name, which was a majorcomplementary asset, the firm didn’t process the relevant capabilities to startinternal R&D, forcing it to look for external sources of technology. At first, TCLcooperated with Wavecom, an Italian firm, to acquire the necessary coretechnologies, but the cooperation was not successful. In 2000, it began to cooperatewith Qualcomm for the core technologies. TCL’s sales grew substantially, from 0.2million units in 2000 to 3.4 million units in 2005, with the highest sales of 9.5million obtained in 2003, yielding a China market share of about 11% that year. Itcould be noted here that this achievement of TCL was possible through outsourcingof core technology. TCL acquired readily available technology from incumbents anddid not (or rather, was not able to) focus on internal development of technology.

In September 2004, TCL set up a JV with Alcatel, with TCL holding a 55%share. TCL’s intention was to acquire Alcatel’s mobile phone technology and R&Dcapabilities. However, the joint venture did not work out well, and TCL sufferedsignificant losses as a result, leading to a restructuring in which TCL had to buy outAlcatel’s stake in the venture in 2005. TCL has not been able to develop anyinnovative product. With its inferior resource position, TCL hasn’t been able tonegotiate with technology partners to acquire cutting edge technology. Adding to itswoes has been their lack of internal R&D activity.


TCL primarily used licenses to obtain core technology. In fact, its alliances withincumbents like Alcatel were only directed at obtaining the technology, rather thanas a means of developing in-house innovative capabilities over time. This wasevident in its inability to initiate joint R&D activities with its alliance partners. Bird,on the other hand, was using licenses for technology acquisition and alliances forboth technology acquisition and technology development. Along with technologyacquisition, Bird was developing internal R&D, and it eventually started focusing onthe co-development of technology with its partners as time progressed. Usinglicensing strategies helped these firms gain market share initially. Licensing allowedthe latecomers immediate access to the core technologies, thereby shortening thecatching up process (Table 1).

The mobile phone industry in China has been growing fast, but at the same time ithas been challenging for late entering local firms to develop internal technologicalcompetencies. Both Bird and TCL were able to acquire through licensing, technologythat was already being applied by more technologically advanced global firms.However, Bird, unlike TCL, was committed to internal development of R&D as ameans for resource evolution as well as external acquisition of technology licenses as ameans of resource substitution. This should have resulted in the formation of flexibleroutines at Bird and rigid routines at TCL. The aftermath of these choices is evident.Bird was able to better maneuver in response to the advent of 3G technology, whileTCL was stuck with an inferior technology.

Discussion

Emerging economies have been a key focus of research over the past two decades.This is not only because these economies are a sort of pampas over which themultinationals can graze, but also because these regions have begun producing theirown multinationals. They have been late to enter the global marketplace, but havefast been making their global presence felt (Kohn, 1997; Lall, 1983; Mathews, 2002,2006a). These latecomers have made the incumbents work harder for their profits.

This study has focused on the initial stage in the development of indigenousmultinationals in emerging economies. The aspirant firms have just broken a historicalbarrier by acquiring a license to operate in the domestic market, and now face stiffcompetition from the larger multinationals already operating there. The problem thatthese late entrants face is two fold. First, they lack the technology needed to penetratethe market, and second, they are racing against time. If they do not find the necessarytechnology in time, they expect to miss out on a golden opportunity.

Our present theories of the firm are insufficient to explain the strategies of theselate coming firms, as most of our existing theories are developed based onobservations from the developed economies of the West (Mathews, 2006b).However, as explained earlier, the phenomena of the late comer firms are relativelynew to the strategy field; moreover, most of these firms are from the developingnations of the periphery (Mathews, 2002, 2006a). Although there have been someattempts in the literature (e.g. Kim, 1997a; Mathews, 2002, 2006a, b; Westney,1996) to explain some of the reasons why certain strategies are adopted by the late


Table 1 Comparison between Ningbo BIRD and TCL electronics on the various dimensions of catching up.

BIRD TCL

Previous activity(ies) Pager manufacturing TV and computer manufacturing/assembling

Relevance of absorptivecapacity

High relatedness to the mobilemanufacturing technology

Low relatedness to the mobilemanufacturing technology

Complementary assets at thetime of entry

Popular brand name in China Well known brand and high brandequity in China

Sales network consisting of 30,000outlets in China market

Distribution channel and massivereach of end customers

450 service centers and 1,500maintenance shops nationally

Appropriateness ofcomplementary assets

Highly appropriate Highly appropriate

Knowledge managementactivity(ies)

Licensing agreement for coretechnology with Sagem in 2001

Licensing agreement for coretechnology with Wavecom, 1999

JV with Sagem manufacturingmobile phones in 2002

Licensing agreement withSiemens on chips in 1999

Alliance agreement with Siemensin 2004

Licensing agreement withQualcomm on CDMA mobilephone solutions starting from2000

Cooperation with Dopod fordeveloping high-end mobilephones in 2005

Licensing agreement withMicrosoft on voice and dataprocessing technology in 2002

Cooperation with Vimicro for 3Gmulti-media chips in 2005

Licensing agreement withTTPCom on GPRS platform in2002

JV with Sagem for mobile phoneR&D in 2005

Licensing agreement withWavecom on platform in 2002

Cooperation with Chinese Academyof Sciences for fingerprintidentification technology in 2005

Licensing agreement withEricsson on GPRS platform in2003

Licensing agreement with Intel onPXA800F-M chips in 2003

Licensing agreement with ADI onchips in 2003

The Intel-TCL 3C JointLaboratory established in 2003

JV with Alcatel to take mobilephone business globally in 2004Further investment to buy-outAlcatel in the JV in 2005

Mode of social learning Predominantly emulation Predominantly blind imitationInnovative outputs IS-95 small bandwidth CDMA

phones, IS-2000-1x broadbandwidth CDMA phones in 2001

No notable innovation on themobile technology front

S1200, S1800, SC, and V seriesmodels (except chips) in 2002

Ultra-thin GSM S228 phone basedon Royal Philips’ NexperiaCellular System Solution in 2003

CDMA1X C625/C620 (exceptchips) in 2004

Handsets with FingerprintIdentification in 2005


comers, the prior research has been largely looking at the outcome rather than theprocess of latecomer catching up.

Integrating several streams of research on latecomer catching up and drawing onthe institutional and resource based perspectives, this study has focused on the firmlevel heterogeneities in learning as the key theoretical driver on latecomer catchingup in emerging economies. We have drawn metaphors for organizational learningfrom the social learning literature in developmental psychology. Based on the sociallearning theory we have classified latecomer firms as blind imitators and emulators.This classification differentiates the catching up processes chosen by the latecomerfirms. While some firms will have the complementary assets and absorptivecapacities needed to emulate, other firms would lack such assets and capacities,forcing them to choose blind imitation. We have developed a conceptual model thatlinks the learning theories explicitly to the catching up process.

The outcome of learning is generally performance, but this should be a dynamicrelationship. We have drawn from the literature on organizational routines andtracked the subsequent stages involved in the learning-performance relationship ofthe latecomer firms. We have argued that latecomer firms that imitate blindlydevelop rigid routines, and those that emulate develop flexible routines. The flexibleroutines will be critical for these firms to renew their resources and make thetransition from imitation to innovation. These have significant implications forperformance and sustainability of the catching up process. We believe that these arethe main contributions of our study.

While the study focuses on the acquisition of technological assets as one of thekey drivers for latecomer catching up in emerging economies, catching up willalso involve acquisition of other types of resources such as management andmarketing know-how. The related resources and knowledge of the latecomers will becritical in the catching up process, and we have developed propositions linking thepresence of absorptive capacity and complementary assets to the likelihood ofcatching up success in our study. Future research is clearly needed to collect field-based empirical data to test the preliminary propositions developed here.

Similarly, the issue of catching up of latecomer firms in emerging economiescould be examined from multiple levels such as a country level, an industry level, afirm level, or a resource level. There are also a large number of factors that need tobe considered if we were to examine the broad context of latecomer catching up; andthere could be different kinds of catching up as well. In this study, we have focusedon the firm level heterogeneities in the catching up process in the technologicaldomain, and the sustainability issue of the catching up. We believe it is critical toexamine the effects of country level factors such as the role of institutions andgovernment policies in the catching up process (Guillen, 2000; Hoskisson et al.,2000; Mahmood & Rufin, 2005). This should be another promising direction forfuture research.

Implications

We have proposed that firms which were good at imitation in the initial stage are theones which gain market share, and that firms which took up emulation as a strategyare in a better position later on to survive retaliatory pressures from multinational


incumbents. They are the ones which are likely to make the transition from imitationto innovation. This suggests to aspiring late entrants that when entering the market,while it is good to gain access to the most readily available technology to get thebusiness rolling first, it is important to keep in mind that blind imitation alone willnot lead to a sustainable position in catching up over the long term. Firms inemerging economies have to invest in their own internal technological competencein order to make the transition from imitation to innovation.

Of course, not every firm will be successful in making this transition. As we havediscussed, firms which are stuck in the rigid routines of blind imitation, as comparedwith those developing flexible routines, will face a particularly difficult challenge,and the sustainability of their performance will become doubtful. While it might bechallenging for many emerging economy latecomer firms to develop truly worldclass capabilities, there are certainly some immediate steps that emerging economyfirms can take to ensure their performance. For instance, emerging economylatecomer firms such as those from China can consider expanding to other emergingeconomies with similar institutional infrastructure as their own. Although in globalmarkets, Chinese firms may still be pursuing imitation strategies, they are able tocompete more strongly relative to global firms given their lower costs structure. Thismay be particularly true in other emerging economies in Southeast Asia whereChinese firms may have more potential for developing technological and brandtransfer possibilities because of similarities in cultural and institutional development.

Conclusion

A growing number of firms in emerging economies had started off as technolog-ically inferior “me too” firms in technology intensive industries, but went on toattain global market dominance. While there has been some research examining thetiming of market entry and the advantages conferred on early movers, the literaturehas paid inadequate attention to the question of how technology lagged latecomerfirms in emerging markets develop sustainable technological competence. Themodel of the catching up process developed here, by making a logical resource-based distinction between the latecomers and the early moving incumbents, proposesmeans through which latecomer firms in emerging economies can catch up andeventually surpass the multinational incumbents. Future research on latecomers maybe able to use this model to empirically examine the issues of catching up in diversesettings.

References

Ahlstrom, D., & Bruton, G. D. 2001. Learning from successful local private firms in China: Establishinglegitimacy. Academy of Management Executive, 15(4): 72–83.

Amsden, A. H., & Hikino, T. 1994. Project execution capability, organizational know-how, andconglomerate corporate growth in late industrialization. Industrial and Corporate Change, 3: 111–147.

Barney, J. B. 1990. The debate between traditional management theory and organizational economics:Substantive differences or intergroup conflict? Academy of Management Review, 15: 382–393.

Barney, J. B. 1991. Firm resources and sustained competitive advantage. Journal of Management, 17: 99–120.


Bartlett, C. A., & Ghoshal, S. 2000. Going global: Lessons from late movers. Harvard Business Review,78: 132–142 (Mar–Apr).

Baum, J. A. C., & Haveman, H. A. 1997. Love Thy Neighbor? Differentiation and agglomerations in theManhattan Hotel Industry, 1898–1990. Administrative Science Quarterly, 42: 304–338.

Becker, M. C. 2004. Organizational routines: A review of the literature. Industrial and Corporate Change,13(4): 643–677.

Bond, R. S., & Lean, D. F. 1977. Sales, promotion, and product differentiation in two prescription drugmarkers. Washington, DC: Federal Trade Commission.

Boisot, M., & Child, J. 1996. From fiefs to clans and network capitalism: Explaining China’s emergingeconomic order. Administrative Science Quarterly, 41: 600–628.

Bowman, D., & Gatignon, H. 1996. Order of entry as a moderator of the effect of the marketing mix onmarket share. Marketing Science, 15(3): 222–242.

Bruton, G. D., Dess, G. G., & Janney, J. J. 2007. Knowledge management in technology-focused firms inemerging economies: Caveats on capabilities, networks, and real options. Asia Pacific Journal ofManagement, 24(2): 115–130.

Carpenter, G. S., & Nakamoto, K. 1989. Consumer preference formation and pioneering advantage.Journal of Marketing Research, 26: 285–298.

China Statistical Yearbook. 2005. Beijing: China Statistics Press.Cho, D. S., Kim, D. J., & Rhee, D. K. 1998. Latecomer strategies: Evidence from the semiconductor

industry in Japan and Korea. Organization Science, 9(4): 489–506.Cohen, W. M., & Levinthal, D. A. 1990. Absorptive capacity: A new perspective on learning and

innovation. Administrative Science Quarterly, 35(1): 128–152.Collins, D. J. 1994. Research note: How valuable are organizational capabilities? Strategic Management

Journal, 15: 143–152 (Winter).Cyert, R. M., & March, J. G. 1963. A behavioral theory of the firm. Englewood Cliffs, NJ: Prentice-Hall.Dunning, J. H. 2006. Comment on dragon multinationals: New players in 21st century globalization. Asia

Pacific Journal of Management, 23(2): 139–141.Felin, T., & Foss, N. J. 2006. Organizational routines: A sceptical look. In Becker, M. (Eds.). Handbook of

Organizational Routines. Cheltenham: Edward Elgar.Feldman, S. M. 2000. Organizational routines as a source of continuous change. Organizational Science,

11(6): 611–629.Guthrie, D. 1997. Between markets and politics: Organizational responses to reform in China. American

Journal of Sociology, 102: 1258–1303.Guillen, M. F. 2000. Business groups in emerging economies: A resource-based view. Academy of

Management Journal, 43: 362–380.Hamel, G., & Prahalad, C. K. 1989. Strategic intent. Harvard Business Review, 67(3): 63–76.Haunschild, P. R., & Miner, A. S. 1997. Models of interorganizational imitation: The effects of outcome

salience and uncertainty. Administrative Science Quarterly, 42: 472–500.Hikino, T., & Amsden, A. H. 1995. Entrepreneurship in late developing countries:What is unique about East

Asia? In G. Corbetta, M. Huse & D. Ravasi (eds.). Crossroads of Entrepreneurship. US: Springer.Hobday, M. 1995. Innovation in East Asia: The challenge to Japan. London: Edward Elgar.Hobday, M. 2000. East versus Southeast Asian innovation systems: Comparing OEM- and TNC-led

growth in electronics. In L. Kim & R. R. Nelson (eds.). Technology, learning, and innovation. NewYork: Cambridge University Press.

Hoskisson, R. E., Eden, L., Lau, C. M., & Wright, M. 2000. Strategy in emerging economies. Academy ofManagement Journal, 43(3): 249–267.

Howard-Grenville, A. J. 2005. The persistence of flexible organizational routines: The role of agency andorganization context. Organization Science, 16(6): 618–636.

Kerin, R. A., Varadarajan, P. R., & Peterson, R. A. 1992. First-mover advantage: A synthesis, conceptualframework, and research propositions. Journal of Marketing, 56(4): 33–52.

Khaire, M. 2005. Great oaks from little acorns grow: Strategies for new venture growth. The Academy ofManagement Best Paper Proceedings.

Khanna, T., & Palepu, K. G. 2000. The future of business groups in emerging markets: Long-run evidencefrom Chile. Academy of Management Journal, 43(3): 268–285.

Kim, L. 1997a. Imitation to innovation: The dynamics of Korea’s technological learning. Boston: HarvardBusiness School Press.

Kim, L. 1997b. The dynamics of Samsung’s technological learning in semiconductors. CaliforniaManagement Review, 39(3): 86–100.


Kim, L., & Nelson, R. R. 2000. (Eds.). Technology, learning, and innovation. New York: CambridgeUniversity Press.

Kim, H., Hoskisson, R. E., Tihanyi, L., & Hong, J. 2004. The evolution and restructuring of diversifiedbusiness groups in emerging markets: The lessons from Chaebols in Korea. Asia Pacific Journal ofManagement, 21(1–2): 25–48.

Kohn, T. O. 1997. Small firms as international players. Small Business Economics, 9: 45–51.Koza, M. P., & Lewin, A. Y. 1998. The co-evolution of strategic alliances. Organization Science, 9(3):

255–264.Lall, S. 1983. The new multinationals: The spread of third world enterprises. Chichester: Wiley.Lavie, D. 2006. Capability reconfiguration: An analysis of incumbent responses to technological changes.

Academy of Management Review, 31(1): 153–174.Levitt, B., & March, J. G. 1988. Organizational learning. American Review of Sociology, 14: 319–340.Lieberman, M. B., & Montgomery, D. B. 1988. First-mover advantages. Strategic Management Journal,

9: 41–58.Lieberman, M. B., & Montgomery, D. B. 1998. First-mover (dis)advantages: Retrospective and link with

the resource-based view. Strategic Management Journal, 19: 1111–1125.Mahmood, I. P., & Rufin, C. 2005. Government’s dilemma: The role of government in imitation and

innovation. Academy of Management Review, 30(2): 338–360.March, J. G., & Olsen, J. P. 1976. Ambiguity and choice in organizations. Bergen, Norway: Universitesforlaget.Mathews, J. A. 2002. Dragon multinational: Towards a new model of global growth. New York: Oxford

University Press.Mathews, J. A. 2006a. Dragon multinationals: New players in 21st century globalization. Asia Pacific

Journal of Management, 23(1): 5–27.Mathews, J. A. 2006b. Response to professors Dunning and Narula. Asia Pacific Journal of Management,

23(2): 153–155.Meyer, J., & Rowan, B. 1977. Institutional organizations: Formal structure as myth and ceremony. The

American Journal of Sociology, 83: 340–363.MII Website “Ministry of Information Industry of People’s Republic of China”: http://www.mii.gov.cn/mii/

hyzw/tjxx.html. Accessed on 01/05/2006.Narula, R. 2006. Globalization, new ecologies, new zoologies, and the purported death of the eclectic

paradigm. Asia Pacific Journal of Management, 23(2): 143–151.Nelson, R. R., & Winter, S. G. 1973. Toward an evolutionary theory of economic capabilities. American

Economic Review, 63: 440–449.Nelson, R. R., & Winter, S. G. 1982. An evolutionary theory of economic change. Cambridge, MA:

Harvard University Press.North, D. C. 1990. Institutions, institutional change and economic performance. New York: Cambridge

University Press.Peng, M. W. 2003. Institutional transitions and strategic choices. Academy of Management Review, 28(2):

275–286.Peng, M. W., & Delios, A. 2006. What determines the scope of the firm over time and around the world?

An Asia Pacific perspective. Asia Pacific Journal of Management, 23(4):385–405.Peng, M. W., & Heath, P. S. 1996. The growth of the firm in planned economies in transition: Institutions,

organizations, and strategic choice. Academy of Management Review, 21(2): 492–528.Peng, M. W., & Zhou, J. Q. 2005. How network strategies and institutional transitions evolve in Asia. Asia

Pacific Journal of Management, 22(4): 321–336.Peng, M. W., Wang, D. Y. L., & Jiang, Y. 2008. An institution-based view of international business

strategy: A focus on emerging economies. Journal of International Business Studies (in press).Rothaermel, F. T., & Hill, C. W. L. 2005. Technological discontinuities and complementary assets: A

longitudinal study of industry and firm performance. Organization Science, 16(1): 52–70.Schilling, M. A., & Hill, C. W. L. 1998. Managing the new product development process: Strategic

imperatives. Academy of Management Executive, 12(3): 67–81.Scott, W. 2001. Institutions and organizations. Rev. Ed. Thousand Oaks, CA: Sage.Shenkar, O., & Li, J. T. 1999. Knowledge search in international cooperative ventures. Organization

Science, 10(2): 134–143.Simons, T., & Ingram, P. 2003. Enemies of the State: Interdependence between institutional forms and the

ecology of the kibbutz, 1910–1997. Administrative Science Quarterly, 44: 592–621.Teece, D. J. 1987. The competitive challenge: Strategies for industrial innovation and renewal.

Cambridge, MA: Ballinger.


http://www.mii.gov.cn/mii/hyzw/tjxx.html

http://www.mii.gov.cn/mii/hyzw/tjxx.html

Tellis, G., & Golder, P. 1996. First to market, first to fail? Real causes of enduring market leadership.Sloan Management Review, 37(2): 65–77.

Tomasello, M. 1990. Cultural transmission in the tool use and communicatory signaling of chimpanzees?In S. Parker & K. Gibson (eds.). Language and intelligence in monkeys and apes: Comparativedevelopmental perspectives: 274–311. Cambridge, UK: Cambridge University Press.

Want, S. C., & Harris, P. L. 2002. How do children ape? Applying concepts from the study of non-humanprimates to the developmental study of ‘imitation’ in children. Developmental Science, 5(1): 1–41.

Wernerfelt, B. 1984. A resource-based view of the firm. Strategic Management Journal, 5: 171–180.Westney, E. 1996. Mass media as business organizations: A U.S.–Japanese comparison. In S. J. Pharr & E.

S. Krauss (eds.). Media and politics in Japan. Honolulu: University of Hawaii Press.Winter, S. G. 1984. Schumpeterian competition in alternative technological regimes. Journal of Economic

Behavior and Organization, 5: 287–320.Zimmerman, M. A., & Zeitz, J. G. 2002. Beyond survival: Achieving new venture growth by building

legitimacy. Academy of Management Review, 27(3): 414–431.

Jiatao (J. T.) Li (PhD, Univesity of Texas) is Professor and Head of the Department of Management ofOrganizations, and Director of Hang Lung Center for Organizational Research, Hong Kong University ofScience and Technology. He was previously with McKinsey & Company in Hong Kong. His currentresearch interests are in the areas of strategy, organization theory, and entrepreneurship, with a focus onissues related to global firms and those from emerging economies.

Rajiv Krishnan Kozhikode is a PhD Candidate in the Hong Kong University of Science and Technology,Hong Kong. Prior to this, he had worked as Sales Manager—investments, in the largest private bank inIndia. His research interest includes stakeholder management, mergers and acquisitions, competitivedynamics, and organizational identity.


knowledge management and innovation strategy: the

Documents