Replication as strategy

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 thi s strategy are now active in over 60 industries. Although replicators; are becoming one of the dominant organizational forms of our time, they have be en neglected by scholars interested in organizations. As a result of this n eglect, replication is typically conceptualized as little more than the exp loitation of a simple business formula. Such a view clouds the strategic su btlety of replication by sidestepping the exploration efforts to uncover an d develop the best business model as well as the ongoing assessment that pr ecedes large-scale replication of it. Empirical evidence supports an altern ative view of replication strategy as a process that involves a regime of e xploration in which the business model is created and refined, followed by a phase of exploitation in which the business model is stabilized and lever aged through large-scale replication. In this paper we present the key elements of a theory of replication strate gy. We discuss key aspects of a replication strategy, namely the broad scop e of knowledge transfer and the role of the central organization, and the a nalytical 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 u nusually transparent examples of the process of leveraging knowledge assets ; we exploit this in our concluding discussion.