How imitation of multiple reference groups drives the evolution of firm strategy

Abstract

This research explores how the strategy of firms evolves as a result of the imitation of several reference groups. In particular, it analyzes the extent to which firms replicate the strategic behaviors of successful firms, direct rivals and firms from the same category. Additionally, it examines potential variations in the speed of imitation depending on the reference group that is considered. Using a sample of firms of the Spanish retail banking sector from 1994 to 2009, our results show that, over time, firms tend to imitate the strategies of the three reference groups considered. The results also reveal significant variations in the speed of imitation depending on the reference group. We find that imitation to firms from the same category is faster than imitation to successful firms and direct rivals.

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Availability of data and materials

The data on the financial statements of banking firms is publicly available from the webpages of CECA (www.ceca.es), AEB (www.aebanca.es) and UNACC (www.unacc.com). Information on market-level factors may be accessed through (www.ine.es). Finally, the addresses of all bank branches in Spain comes from the Guía de la Banca, Cooperativas de Crédito y Cajas de Ahorro, which is published annually by Editorial Maestre Ediban.

Notes

  1. 1.

    We consider that the difficulty of copying is not the cause of the low speed of imitation in the case of direct rivals because strategic similarity increases the capacity to imitate to them. Likewise, we argue that the fear of retaliation is not the reason of the low speed of imitation to successful firms because competitive tension between them and the focal firms is not usually intense as due to competitive asymmetries (Gómez et al. 2020).

  2. 2.

    Banco Santander was classified as the third largest firm in 1997 and 1998. During the rest of our observation window the bank was ranked in the second position.

  3. 3.

    The results of these tests are available from the authors upon request.

  4. 4.

    In Más-Ruiz et al. (2005) and Más-Ruiz and Ruiz-Moreno (2011) size categories are defined in terms of total deposits and total loans. Instead, we define size in terms of total assets. However, our classification does not differ substantially from these studies.

  5. 5.

    Our conclusions are qualitatively the same when we consider a cut-off value of 5%. These estimations are available from the authors upon request.

  6. 6.

    The national classification of economic activities locates firms in the banking industry in class “6419. Other monetary intermediation”. Consequently, commercial banks, saving banks, and credit unions operate in the same industry.

  7. 7.

    The data on the financial statements is publicly available from the webpages of CECA (www.ceca.es), AEB (www.aebanca.es) and UNACC (www.unacc.com). Information on market-level factors may be accessed through (www.ine.es).

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Funding

We acknowledge financial aid from the Spanish Ministry of Economy, Industry and Competitiveness and FEDER (Project ECO2017-85451-R).

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Correspondence to Raquel Orcos.

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Gómez, J., Orcos, R. & Volberda, H.W. How imitation of multiple reference groups drives the evolution of firm strategy. Rev Manag Sci (2021). https://doi.org/10.1007/s11846-020-00422-z

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Keywords

  • Strategic evolution
  • Speed of imitation
  • Successful firms
  • Direct rivals
  • Categories

Jel code

  • M10