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臺大管理論叢
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27
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3
期
17
As we move to the right panel, high resource similarity facilitates the follower’s
investment in continuous process improvement (see Figure 2d); following this, the resource
similarity increases as expected. Surprisingly, the competitive tension shown in Figure 2f,
with an initial (slight) increase, drops gradually after month 6. We carefully analyze our
results to uncover the cause of this intriguing issue, to be discussed later.
5.2 Process Capability Development Trade-Off with Short-Termism
Under short-termism, we illustrate the operational performance of a start-up follower as
shown in Figure 3. Initially, the firm must accumulate capabilities via modest process
innovation as a result of low resource similarity to the leader. Yet its increased operational
performance soon attracts the leaderʼs attention. The resulting high level of competitive
tension imposes strong survival pressure to the follower at month 6 (see Figure 3b).
Ignorance of such pressure may eventually lead to firm termination. Consequently, the
follower must adjust its capability trade-off to match the leaderʼs responses. As shown in
Figure 3a, the follower almost withdraws all efforts to develop innovation capabilities after
approximately the second year of experimentation. From then on, it turns its attention to
small-scale improvements with predictable short-term outcomes.
The result here is rather similar to those of the capability development trade-offs with
constant fraction. Neither can facilitate sustained process innovation. This suggests that a
steady and continuous investment in innovation capabilities is required to achieve long-term
benefits.
5.3 Process Capability Development Trade-Off with Long-Term Growth
The long-term growth shown in Figure 4 sheds light on the answer to the opening
question: how does a new best-practice process emerge to replace an existing best-practice
process? In this setting, competitive tension first increases resulting from the followerʼs
large-scale efforts to learn the leaderʼs process. In hopes of relaxing the ever-increasing
competitive pressure, the follower increases investments in process innovation capabilities.
This smart move effectively distracts the leaderʼs attention from the followerʼs escalation of
competition due to its perception of the followerʼs subordinate (i.e., weaker) role. However,
the less intense competitive market environment allows the innovated process to develop,
facilitating increased operational performance. Ultimately, in the long run, the follower can
take over the leaderʼs position. Thus, the competitive tension eventually rises between the
follower and leader.