Innovation and Imitation as Entry Wedges that Lead to Firm Growth

This chapter employs institutional theory and the demand-side approach to discuss the entry of new companies into industries. Theory and empirical evidence provides support for the hypothesis that the industry stage of development is the primary factor that determines whether a company should use innovation or imitation as an entry wedge. The evidence suggests that innovation is most often used successfully during the introduction and decline stages of industry development. Imitation is most often used successfully during the growth stage of industry development. During the mature phase both innovation and imitation are used, but usually with limited success.