Strategies from the counterfeiting battlefield: protecting firms’ identity

Organizations experience both costs and benefits when facing counterfeits. Recent research has highlighted the differences in outcome of entry of counterfeits as being dependent on quality uncertainties, pricing, networks and non-price signaling, however, the role of organizations’ identity remains unexplored. Organizations protect their identity by fighting counterfeiters in their main and ancillary markets, as well as against diffusion of dangerous counterfeit products that can damage their brand and reputation. We describe the strategies of the firm and of the counterfeiters in these two contexts, and test our hypotheses using a unique dataset reporting 3,333 battles taken by a high-tech firm against more than 2000 counterfeiters in 75 countries over a 6-year period. We find broad support for our hypotheses on the strategic behavior of the firm and of the counterfeiters, highlighting the difficulties firms face in protecting their main markets, and their advantages in limiting the diffusion of dangerous counterfeit products. Counterfeits can thereby be understood as a potential source for disruptive identity shifts, which explain the heterogeneous impact from counterfeits.