Abstract for: Strategy Convergence Creates Opportunities for Strategic Innovators
Widespread imitation of successful strategies by rival firms within an industry can lead to strategy convergence over time. This dynamic process involves migrating to strategic positions perceived to be more profitable while abandoning less attractive positions. As the once profitable strategy positions become overcrowded, average industry profit erodes. But this may present opportunities for managers to adopt innovative strategic positions. Re-colonizing once-abandoned positions or identifying unexploited, viable positions can drive the emergence of specialist firms in the industry and may rejuvenate mature industries. We develop a simulation model to explore how firm-level imitation affects the evolution of industry profitability and to assess the key factors that influence this process. The model includes stocks, feedback, time delays, and important behavioral assumptions. In addition, the lattice-based cellular automata simulation architecture enables representation and analysis of spatial relationships among agents. When spatial relationships are deemed important for understanding a dynamic issue, as is the case in our study, modelers should choose an appropriate simulation architecture to capture these relationships.