This paper uses Red Queen competition theory to examine competitive imitation. We conceptualize imitative actions by a focal firm and its rivals along two dimensions: imitation scope, which describes the extent to which a firm imitates a wide range (as opposed to a narrow range) of new product technologies introduced by rivals; and imitation speed, namely the pace at which it imitates these technologies. We argue that focal firm imitation scope and imitation speed drive performance, as well as imitation scope and speed decisions by rivals, which in turn influence focal firm performance. 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, resulting in product variety. We test our hypotheses using imitative actions by mobile phone vendors and their sales performance in the U.K. from 1997 to 2008.
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