Product counterfeiting, non‐consensual acquisition of technology and new product development: An innovation perspective

To examine the literature on counterfeit products and explore whether imitation and counterfeit product activities can actually facilitate the development of new products.

The paper examines the dominant school of thought on counterfeit products that characterises it as a significant economic and social problem throughout the world, and develops an alternative school of thought, which focuses on the overlooked benefits of imitation and counterfeit activities. The paper suggests that the concepts of counterfeit and imitation are often misrepresented as powerful lobby groups present their cases.

This paper argues that while some counterfeit firms adopt short‐term profit motives other counterfeit firms demonstrate a longer‐term motive which manifests itself in an ability to reverse engineer, imitate and learn. Such firms may be suitable long‐term partners, in particular for multinational firms with operations in transition economies. Thus, firms face a difficult strategic choice when faced with product counterfeiters that of whether to fight or co‐operate.

Companies need to improve their risk management, in particular in their foreign market entry and collaborative strategies. Companies should seek to take a long‐term view and to protect their technology‐based competitive advantage. Furthermore, copyright and trademark holders need to positively identify collaborators and to offer sufficiently attractive prospects for these business partners to keep them “on the straight and narrow” and to benefit from the contribution they can make.

This paper brings together in a clear and coherent way an alternative perspective on counterfeiting products, which challenges the dominant perspective. This is based on recognising that reverse engineering (RE) and imitation form an essential part of the product innovation process.