Reproducing knowledge: Replication without imitation at moderate complexity

The complexity of a firm's strategy affects both the ease with which the firm can replicate the strategy in a new setting and the ease with which rivals can imitate it. Simple strategies are as readily imitated as replicated, and highly intricate strategies resist imitation and replication equally. At moderate levels of complexity, however, a wedge develops between the ease of replication and the difficulty of imitation, so long as the replicator has better information than the imitator about the original success. An agent-based simulation model clarifies the structural reasons that this is so. The model also shows how the wedge-maximizing level of complexity varies with the replicator's informational edge over the imitator. The results help to pinpoint situations in which strategies requiring replication are likely to defy imitation and generate sustained competitive advantage. More generally, the analysis sheds light on the value of superior but imperfect information about good solutions to hard problems. Finally, the results suggest that a pattern long observed by organization scholars-that "loosely coupled organizations" are especially effective competitors-may arise for a very different reason than is normally posited.