INNOVATION, IMITATION, AND IPR STRATEGY IN THE GLOBAL TIRE INDUSTRY

Abstract

This dissertation research aims to illuminate the interdependence of inimitability, competitive landscape, and the factors that bind them. Specifically, this study examines the antecedents and effectiveness of investments in inimitability within a historical context of innovation and competition in a mature sector, the global tire industry. The findings here contribute to our understanding of the complexity of inimitability that works for competitive advantage in light of the dynamics of competition in an industry as the adoption of innovation and intellectual property rights (IPR) protection continues to change. The contribution of this dissertation is two-fold. First, this dissertation highlights the dynamic nature of resource inimitability and protection. Although it is conventionally assumed that firms have strong incentives to protect valuable innovations with weak inimitability, this study shows that weak inimitability of a key resource does not necessarily trigger protection from imitation. Moreover, the link between resource inimitability and imitation protection is not static. When imitating a key resource would destroy the imitator’s other valuable resources, the key resource stays inimitable, and the owner firm of the resource does not engage in active protection. The findings of this study deepen our understanding of why firms choose not to invest in imitation protection and the timing when firms finally decide to deter imitation. This research aims to shift the resource-based view (RBV) toward a more dynamic and practical setting in which firms can delay their investment in inimitability and alter their protection strategy according to a newly emerged competitive landscape. Second, this dissertation reveals the strategic choice of emerging economy firms between innovation and imitation beyond global agreements of IPR protection. Formal IPRs under global agreements are a policy linchpin of the new global knowledge economy. However, while some emerging economy firms have successfully transitioned from imitation to innovation, others persist in imitation, sometimes resulting in IPR violations. To understand the divergent behaviors, this study follows design innovation in the global tire industry, uncovering patterns of IPR violations after the establishment of a global IPR protection standard. The findings show that the presence of “keystone organizations” in a national industry ecosystem matters because these organizations enforce innovation in the ecosystem. This study thus emphasizes the importance of linkages to keystone organizations as crucial elements supporting operations that comply with global IPR regulations. Policymakers are recommended to devise policy instruments to facilitate the growth of keystone organizations and their close alliances with embedded actors to build a critical mass of innovation capability and IP stocks.