PurposeThe purpose of this study is twofold. First, to examine the contingent role of the product life cycle on the efficacy of purchasing practices. Second, to use the results of the first investigation to explore the adequacy of the profit‐maximization framework for explaining purchasing decision making. This second investigation is motivated by growing evidence on the role of institutional factors in explaining supply chain management practices.Design/methodology/approachSurvey data from a sample of North American manufacturing firms, across four standard industry sectors, are analysed using ANOVA and linear regression, to examine the hypotheses.FindingsThe results indicate that product life cycle has a contingent effect on the efficacy of some purchasing practices but not on others. Interestingly, the results suggest that the profit‐maximization framework is capable of explaining only some purchasing decisions but not others; firms adopt certain purchasing practices in certain product life cycle stages, even when these practices have no apparent effect on purchasing performance. This raises a need for an alternative framework to profit‐maximization, to better understand purchasing decision making.Originality/valueThe paper pioneers an empirical examination of how product life cycle moderates the relationship between purchasing practices and purchasing performance. The paper presents novel insights on the inadequacy of the rational profit‐maximization framework to explain purchasing decision making. Furthermore, the paper presents testable propositions on the role of institutional factors that are potentially driving purchasing decision making in managing the product life cycle contingency.
Imitation and innovation are two primary R&D approaches that firms follow in technology development, especially in R&D‐intensive industries. That imitation and innovation share R&D resources and investments gives rise to what is coined in this article as the imitator's dilemma. The imitator's dilemma tells a story of why firms should break out of imitation‐oriented R&D and move toward innovation‐oriented R&D in order to sustain their innovation output and profit performance. This article contributes to the technology and innovation management literature by illuminating the imitator's dilemma both theoretically and empirically. To this end, this study develops and tests hypotheses to investigate the influence of a firm's imitation activity on its innovation output and profit performance, which represent a gap in the current literature. A longitudinal research design is followed on an unbalanced panel dataset between 1991 and 2010 from a sample of 227 firms in three R&D‐intensive manufacturing industries in the United States, including computer, semiconductor, and pharmaceutical. The results of this research reveal a dilemma for imitators. Imitation activity can generate positive returns in terms of a firm's innovation output and return on assets ROA (a measure of short‐term profits). However, these returns are unsustainable. Excessive levels of imitation activity within the firm results in negative returns in terms of its innovation output and ROA. Additionally, any level of imitation activity, low or high, negatively impacts a firm's Tobin's Q (a measure of long‐term corporate valuation). Accordingly, this article makes novel contributions to the technology and innovation management literature by explaining the imitator's dilemma and how firms may effectively manage it.
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