Why (un)willing to adopt a failed strategy in other firms

When observing others' failures of a strategy, a firm generally responds by avoiding the strategy. We argue that the intensity of the response depends on the salience of each failure and the perceived causes associated with the failures. Our analysis of 925 Japanese firms' entries into China from 1979 to 2000 demonstrates that a Japanese firm is unlikely to enter China when observing salient failures that occurred more recently, had longer duration in the market, or were invested by more experienced firms. We also find the effects become weaker when the causes to the failures were perceived ambiguous or transient.