Replication as Strategy

TLDR

Replication strategy, widely adopted across more than 60 industries, has been under‑studied and is often reduced to a simple business formula, yet evidence shows it involves a process of exploration to refine the business model followed by exploitation to scale it. The paper aims to present the key elements of a theory of replication strategy. It outlines the broad scope of knowledge transfer, the central organization’s role, and introduces the template and Arrow core concepts to formulate hypotheses about when replication strategy succeeds. The authors demonstrate that replication strategy offers clear examples of leveraging knowledge assets, which they discuss in the conclusion.

Abstract

Replication, a familiar phenomenon sometimes referred to as the “McDonalds approach,” entails the creation and operation of a large number of similar outlets that deliver a product or perform a service. Companies pursuing this strategy are now active in over 60 industries. Although replicators are becoming one of the dominant organizational forms of our time, they have been neglected by scholars interested in organizations. As a result of this neglect, replication is typically conceptualized as little more than the exploitation of a simple business formula. Such a view clouds the strategic subtlety of replication by sidestepping the exploration efforts to uncover and develop the best business model as well as the ongoing assessment that precedes large-scale replication of it. Empirical evidence supports an alternative view of replication strategy as a process that involves a regime of exploration in which the business model is created and refined, followed by a phase of exploitation in which the business model is stabilized and leveraged through large-scale replication. In this paper we present the key elements of a theory of replication strategy. We discuss key aspects of a replication strategy, namely the broad scope of knowledge transfer and the role of the central organization, and the analytical concepts of template and Arrow core as a preamble for specifying hypotheses about the conditions under which a replication strategy is more likely to succeed in a competitive setting. Replication strategy provides unusually transparent examples of the process of leveraging knowledge assets; we exploit this in our concluding discussion.