Political and Legal Lens
In the case of an imitation economy, it is essential that the involvement of government is addressed. Governments want to nourish innovation and competition and regulate the power of monopolies or oligopolies. According to senior reporter Chavie Lieber at Vox, imitation economies are good for a country’s economic climate. For example, fast fashion companies copying clothing designs with knockoff products have generated economic growth. Lieber believes Congress is aware of the large-scale imitation in the market but also sees how fast fashion companies have grown “America’s GDP for fashion [to] $350 billion”. Therefore, Congress is not incentivized to act against the fast fashion industry. The reporter argues that the imitation strategy of the industry in fact influences innovation (Lieber). If heavy copyright protection were invoked, only larger companies would have the financial means to act against similar products, which would lead to stifling innovation in smaller companies. This is compelling evidence that synchrony in a market can not only lead to market growth but innovative products and positive customer experience. An imitation economy lets smaller companies compete in the same markets as larger companies.
While copying another company’s strategies is beneficial, there is a distinction between imitation and collusion. Collusion is illegal, direct cooperation between companies to change strategies to one another’s benefit. It is the government’s role to prevent and penalize collusion between companies, but larger companies can take advantage of the legalities of collusion. A group of companies that control a majority of the market can make decisions that would benefit each other without direct communication is called tacit collusion, which is legal (Ivaldi et al.). An example of tacit collusion is when airline companies American, Delta, United, and Southwest all raised ticket prices, without communicating, to increase revenues because they control the airline market and can set the market price (Peterson). This form of collusion, unlike imitation, does not generate innovation. This price gouging raised government scrutiny and lowered consumer confidence in airline companies. Imitation of business practices is legal and is supported by the government because it contributes to market competition instead of reducing competition like tacit collusion.
Counterargument
However, there are consequences of having synchrony/imitation in branding strategies. Synchrony in groups leads to conformity and lack of innovation due to group norms (Gelfand et al.). From the perspective of a company in the food industry, Burger King recently released a similar menu to that of McDonald’s. Typically, when companies copy marketing, they often create more problems than find success. Susan Waldman, a co-founder and vice president of strategic services for a marketing firm based in D.C, has authored several articles on branding and how to craft unique visions for companies in the Washington Post. She formulated a three-step result of copycat marketing. First, there is confusion among customers about the unique offerings of companies. Second, the copycat company loses its identity as it aligns with another company. Finally, all similar companies lose market share as consumers see no unique value in either company and look for another brand (Waldman). The result is a shared marketing mix that diminishes the unique value of products and decreases all stakeholder companies’ market shares. This provides evidence that it is necessary to have enough differentiation from competitors to offer a unique value to consumers.
Rebuttal
Conversely, synchrony in groups increases cooperation and cohesion, which means making decisions from a group perspective and contributing to group tasks. While it is fundamental for companies to have distinctions to prevent market share loss, innovation is spawned from imitating firms that have superior information to maintain or lower competitive consistency. Firms can imitate products, processes, managerial methods, market-entry, and investment timing. Imitation typically decreases profits for the innovator firm while lowering prices and costs in the market, improving overall economic welfare (Lieberman and Asaba). Imitation prevents firms from falling behind and allows smaller firms to benefit from advancements from top firms. It reduces risk between rival firms because neither will act aggressively because the other will take similar actions, allowing for all firms to maximize profit and make incremental progress.
Conclusion
Collectivism and imitation are foundational to crafting team culture amongst employees and maintaining competitive parity and innovation amongst firms. While individualism promotes creativity, it leads to resistance to cooperation. Collectivism provides a platform for group thinking so teams can converge on the best decisions. Imitation allows competitors to match the advancements of an innovative firm and contribute to the most advanced products or processes. Additionally, companies must make the distinction between imitation and tacit collusion. Collusion does not contribute to economic welfare because it prevents small firms from growing, whereas imitation decreases prices and costs for a market, which benefits consumers and producers. For markets, companies, and employees to be most productive, innovative, and competitive they must imitate progress in other organizations and create a team performance-focused work environment.
Works Cited
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