Companies were not willing to take risks and venture into path that was not trodden earlier by some one else.
In the information technology sector, imitation became inevitable as emerging economies allowed inwards flow of FDI. When multinationals started expanding to low cost countries they had to enter in joint venture with a local partner,
which means they had to transfer technology. When firms entered India, they had to opt for joint ventures. While older technologies are transferred through licensing agreement, new technologies or those with fewer previous transfers or where the transferors have little experience with technology transfers opt for FDI (Eapen & Hennart, 2002).
Porter further says, in high-tech industries this imitation phase often continues much longer than it should. This is because once the companies become established they do not plan for anything new and do not have any clear strategic. Stagnation occurs, which results in mediocre returns. Companies that come out with fundamental advantages prosper such as Toyota in the automobile sector.
The Big Three in the US automotive industry namely, Ford Motor Company (Ford), General Motors Corporation (GM) and DaimlerChrysler (DC) played a prominent role in the evolution of the automotive industry till the 1990s. The industry adopted the lean production technique from Japan in the 1990s. The auto industry is the most globalized in the world and has undergone turbulent changes. The industry has been facing issues such as facing issues such as slow time to market, costly inventories, overcapacity, and low customer satisfaction and loyalty (Deloitte, 2003). The Big Three did not take initiatives to bring about fundamental changes as technology evolved. This allowed others such as Toyota and Hyundai to dominate the world market. Today Toyota is America’s third most admired organization and enjoy a 17.4 percent share of the US retail market (SD, 2007).