Market insights exploration and product technology build-up: latecomer firms’ catch-up strategies

Prior research on catch-up strategies often provides insights from the technology-related perspective and ignores some non-technological factors. Through the multi-case study of China’s smartphone industry, we develop a theoretical framework explaining how latecomer firms catch up through diverse strategic choices. We identify two strategic paths that latecomer firms follow to catch up and surpass the incumbents. One path is to explore new business opportunities via deep market insights and then combine them with building up product technologies. Another path is from product technology build-up to market insights exploration. Firms following this path usually start with building up essential technologies and act as fast followers for new market insights. Then, as they continue developing their technological strengths, these firms devote efforts to improving their ability to capture new market insights. This study challenges the ‘first imitation, then innovation model’ discussed in the literature and shows that latecomer firms can pursue cutting-edge innovations in their early activities. The research also shows that, unlike previous studies, the technology build-up is not the only path to help latecomers catch up and challenge incumbent leaders.