Substitutes in Creating Complementarities
| Lasse Lien |
I have just been reading the Porter and Siggelkow paper in the most recent issue of Academy of Mgmt. Perspectives. The paper summarizes the status of the “complementarity/NK-modelling/activity systems” perspective in competitive strategy. I am anything but an expert in this theory, but I thought I would share one reflection, mainly because it allows me to use the fancy title above.
As many O&M readers will know, a main take-away from this perspective is that an activity system with strong complementarities may enjoy protection against imitation. Some choices in an activity system will presumably be unobservable for outsiders, and getting everything right at once is less likely the more linkages there are between activities. Furthermore, the penalty for failing to get everything right increases with the strength of the complementarities.
My problem is that more and stronger complementarities should presumably speed up learning, because there are more and stronger feedback mechanisms putting pressure to move each activity in the beneficial direction. An increasing number of complementary activities presumably imply that each individual activity is encouraged to move in the “right” direction by many other activities, and stronger complementarities imply stronger pressure from each of them.
So while many and strong complementarities reduce the likelihood of perfect imitation and increase the penalty for imperfection, the rapid learning produced by an improved feedback mechanism may conceivably make the road to perfection rather short. Couldn’t these effects conceivably cancel each other out, or the latter effect even dominate the former? Or in other words — forgive the pun — aren’t these two mechanisms (precise imitation and rapid learning) substitutes in the pursuit of complementarity?