Imitation, Technology, and Firm Performance: The Korean Firms Case in China

Purpose - The main purpose of this study is thus to investigate the contingent effect of imitation strategies on firm performance in transition economies such as China, focusing on pure and creative imitation. Design/methodology - We conducted a survey targeting department heads of each company who have more than 10 years work experiences. We assessed that the ability to gain trust and to access information from high-ranking informants would be greater if the firms were from the same country - Korea - as the lead researcher. A total of 200 highly reliable samples were obtained, which could effectively explain the nine variables set in the study. Relevant hypotheses were tested using a hierarchical linear model (HLM). Findings - The findings suggest that SMEs’ technology level also had a positive impact on performance. Firms with better technology had a positive impact on performance, irrespective of pure or creative imitation. This reflects the cases where many Korean SMEs entering China without high technology level lose their competitiveness due to Chinese firms’ technology catch-up within a short period of time. Originality/value - SMEs that lack technology and know-how need to focus on pure imitation strategies. It is possible that SMEs can perform creative imitation, but it seems difficult under the current circumstances. Therefore, SMEs with limitations in technology and know-how should maintain their competitive advantage for a while, by maintaining their pure imitation strategy.