The dos and don’ts of imitation
There is no doubt that imitation is a typically human trait. From birth onwards, we learn by imitating. Imitation is also a key learning and decision-making mechanism in the world of business. There are a number of studies on imitation in business decisions with regard to investments, organisational structures or the location of branches, for example. However, the role of imitation in the choice of management control systems and supply chain partners has not yet been researched. Evelien Reusen’s PhD serves to remedy this.
Why choose this particular focus?
In a globalised economy, we should not fail to underestimate the importance of good collaboration. Collaboration can take a number of different forms, but Evelien Reusen focused her research on relationships in the supply chain, i.e. those between buyers and suppliers. ‘If these are successful, they offer the parties involved a considerable number of advantages: lower costs, increased productivity, access to valuable resources and a strengthened market position,’ she explains. ‘However, by no means all forms of collaboration are successful. Previous research has shown that adequate management control systems and partner choice are crucial to success. However, relatively little is known about how managers choose these control systems or their partners, and even less is known about the role that imitation plays in this.’
Yes, we imitate
An initial study researched whether imitation plays any role at all in the choice of a certain management control system, and which factors stimulate imitation. ‘We examined the collaboration aspect of a supply chain with three partners: the buyer, that buyer’s supplier (tier 1 supplier) and the buyer’s supplier’s supplier (tier 2 supplier). Based on questionnaires given to all three parties, we looked at which control systems the buyer uses in his relationship with tier 1 suppliers, and at which control systems the tier 1 suppliers in turn use when collaborating with the tier 2 suppliers.’ What was the result of this? ‘The buyer and the tier 1 suppliers often have the same or similar control systems, which suggests that tier 1 suppliers do actually imitate their buyer’s systems. They also freely admit this.’
In the literature written on the subject, uncertainty1 and affective involvement2 are cited as factors that encourage imitative behaviour. Reusen analysed whether or not this was also the case here. ‘Generally, affective involvement in the relationship will stimulate imitation, but the effect is different for each of the control systems being examined. The impact of uncertainty is less clear.’
But is imitation always a good thing?
Reusen conducted a spin-off study to the first one. She explains: ‘We know that management control systems are copied, but this begs the question of whether imitation is a good strategy. For example: does it have a positive impact on the effectiveness of the collaboration?’
The survey results suggested that copying management control systems can be a good thing, but only if those systems are used in relationships that share a similar context. You might think that this conclusion is unsurprising, and Reusen confirms this: ‘Numerous studies have shown that systems can only be successfully copied if they are compatible with the specific organisation and context. And yet…’
According to Reusen, this gap between knowledge and action can partly be explained by the phenomenon of bounded rationality: ‘Managers generally aim for optimal solutions, but they run up against limitations – a lack of information and/or time. So, in order to be able to make a decision, they will, for example, go and look at what other people are doing and imitate successful actions. Our study reveals that managers will be particularly inclined to copy a system if they believe that it is delivering good results. Unfortunately, when they do this, they often lose sight of the context.’
Finally, in a third study, Reusen explored how imitation influences the choice of a supply chain partner. ‘We used an experiment to research how information about other companies’ experience with a particular supplier determines a buyer’s trust in that supplier, and what impact that trust subsequently has on the buyer’s choice.’
She concluded that in some cases, simply knowing that another company trusted the potential supplier, without any information about the result of the collaboration, was sufficient to enhance the buyer’s trust in the supplier. As expected, she also showed that trust is pivotal to the final choice. ‘Therefore managers trust and choose a certain supply chain partner simply because others are doing so.’
Three tips for managers
As well as filling a number of academic gaps, Reusen’s research also delivers some specific tips for managers.
- As a manager, you act as an example to others. Whether you like it or not, your decisions and choices may be imitated. Now that you know which factors influence imitation, you can use these to stimulate or discourage imitation. Which control systems would you like to see copied, and which not?
- Be aware that you are not immune to imitation yourself. Think carefully before adopting an apparently successful control system. What works in one context may not necessarily work in another.
- In this social media age, purchases are increasingly based on ‘likes’ or on user reviews, which may or may not be reliable. But when choosing a supply chain partner, do not blindly rely on someone else’s choice. Misplaced trust is not a good guideline.
|Which are the best management control systems?
Management control systems are designed to motivate other parties to keep to agreements, with a view to ensuring that the set goals will be achieved. In her research, Reusen looked at formal control systems that record and monitor (1) results (e.g. quality, cost price, delivery periods, etc.) and (2) behaviour (e.g. rules and procedures, progress reports, etc.), as well as at (3) informal or social forms of control designed to develop common goals and values, such as team building activities and workshops.
Source: ‘Management control in interfirm relationships: the role of imitation’ by Evelien Reusen, currently Assistant Professor at Rotterdam School of Management. PhD in Applied Economics from KU Leuven in 2015. Supervisor: Professor Kristof Stouthuysen (Vlerick Business School). Co-supervisors: Professor Filip Roodhooft (Vlerick Business School and KU Leuven) and Professor Alexandra Van den Abbeele (KU Leuven).
1 The uncertainty relates to the environment of the company in question. The (level of) uncertainty is the extent to which the actions and technologies of competitors and the tastes and preferences of customers are unpredictable and change unexpectedly.
2 A party is affectively involved in the relationship if it wants to continue the collaboration based on a general feeling of being valued by and committed to the other party.