Innovative Responses to Copycats: Insights From China's Restaurant Industry

ABSTRACT This study delves into a pressing issue in the restaurant industry: the challenge of catering copycats, which are unauthorized imitations of menu items and services that can lead to lost market share and hinder innovation. Focusing on Chinese restaurants, it employs multi‐wave surveys and analyzes 929 responses to investigate the impact of copycat threats on innovation. The study reveals both linear and nonlinear effects of these threats, highlighting the role of customer and supplier co‐creation as mediators. It underscores the importance of understanding how different types of restaurants vary in their innovative responses to imitation. The research enriches the behavior of the firm theory by demonstrating how restaurants can proactively drive innovation in the face of imitation. It extends the applicability of value co‐creation theory, illustrating the role of interactions with suppliers and customers in shaping innovative strategies, thereby enhancing dynamic capabilities to adapt to market demands and changes.