Challenges and merits of coopetitive innovation
Johanna Gast, Wolfgang Hora, Ricarda B. Bouncken, and Sascha Kraus
Introduction
The term coopetition is a neologism of the words “coo(peration)” and “(com)petition” (Brandenburger & Nalebuff, 1996). Given that more than half of all cooperative relationships appear between firms within the same industry or competitors (Harbison et al., 1998), the concept of simultaneous cooperation and competition has been introduced to firms’ strategy toolbox as an additional approach to reduce the gap between the traditional approaches of cooperation and competition (Roy & Yami, 2009). In the last two decades, the interest in coopetition has increased tremendously, due to today’s complex, volatile, and dynamic environments (Bengtsson & Kock, 2014).
Since Brandenburger and Nalebuff’s (1996) seminal contribution, rising academic attention to coopetition can be identified, mostly in the fields of management and business. Recent literature reviews have synthesized the state of the art of coopetition literature (Bengtsson & Kock, 2014; Bouncken et al., 2015; Gnyawali & Song, 2016) highlighting that coopetition is analyzed on the inter-firm level between two or more organizations (Bouncken & Kraus, 2013; Quintana-García & Benavides-Velasco, 2004), the intra-firm level within firms and their business units (Luo et al., 2006; Tsai, 2002) as well at the network level (Peng & Bourne, 2009). Context-wise, a range of different settings are examined, including different industries and firm types. Most of the existing literature focuses on large enterprises in different industries such as high- and low-tech industries; few studies examine the role of coopetition for small- and medium-sized enterprises (SMEs) (Gast et al., 2015). Further, researchers applied a variety of methodological approaches, though the majority of the existing studies conducted qualitative research to arrive at an in-depth theoretical understanding of coopetition (Bouncken et al., 2015). Most of the quantitative studies are published within the last decade (Dorn et al., 2016).
A crucial finding of extant research is the fact that inter-organizational alliances and coopetition in particular play an important role in advancing firms’ technological progress and innovative capabilities (Gnyawali & Park, 2011). The special implication of coopetition for innovation stems from the possibility to exchange relevant and complementary resources, capabilities, and knowledge through coopetitive relationships among competitors (Estrada et al., 2016). Since individual firms often do not possess all necessary resources and skills to innovate on their own (Parra-Requena et al., 2015), they typically do not innovate in a complete vacuum (Freel, 2003) but do so in cooperation with external partners. By means of partnerships with suppliers, customers, or even competitors, flows of resources, capacities, and knowledge are facilitated that can then induce mutual innovation development (Bouncken et al., 2015). Existing research even postulated that “the best partner for a firm in a strategic alliance is sometimes one of its strong competitors” (Gnyawali & Park, 2009: 312). Because rivals, generally, share similar contexts, threats, and opportunities and possess complementary resources that are relevant to the other party (Gnyawali & Park, 2009), they represent key sources of resources and knowledge, which may accelerate innovation. Therefore, various studies have attempted to examine the importance of coopetition for innovation (Ritala et al., 2016). Although many articles highlight the importance of coopetition for enhancing a firm’s innovation capacity, research on the relationship between coopetition and innovation is still young and emerging.
To advance the present understanding in this field and to enable additional quantitative inquiries, an overview of the existing findings is necessary. To pave the way for a stronger elaboration on the linkages between coopetition and innovation, this chapter therefore reviews prior quantitative studies with respect to their insights into the coopetition and innovation relationship.
Review approach
To synthesize the literature across the domain of coopetition in innovation, this chapter represents the insights gained from a systematic, evidence-informed literature review (Tranfield et al., 2003). Table 26.1 presents the six electronic databases that were scanned for publications appearing in peer-reviewed academic business and management journals, omitting books, book chapters, discussion papers, and non-referred publications (Ordanini et al., 2008). We deliberately focused our systematic review approach on articles using the search items “co-opet*” or “coopet*” and “innov*” in the respective titles, abstracts, and/or keywords to identify scientific research, which links coopetition and innovation. Further, we concentrated on articles applying quantitative research to provide a summary of the previously tested relationships, variables used, and the respective findings. These selection criteria resulted in a final sample of seventeen scholarly articles.
Table 26.1Systematic review approach
| Databases | •ABI Inform/ProQuest •EBSCOhost/business source Premier •EconLit |
•ScienceDirect •Web of Science •Wiley | |
| Selection criteria | Keywords | “co-opet*” or “coopet*” AND “innov*” in titles, abstract, keywords | |
| Type of publication | Peer-reviewed articles in business and management journals | ||
| Type of methodology | Quantitative research | ||
| Timeframe | Published until 2017 | ||
State-of-the-art review of research on coopetition and innovation
A brief overview of the scope and breadth of existing research
Academic research exploring the relationship between coopetition and innovation through quantitative research methods is relatively young and emerging. Although the first academic article in this field using a quantitative approach was published in 2004, a slight uptrend can only be identified between 2011 and 2013, and from 2015 onwards (Figure 26.1). Overall, the slowly increasing number of publications per year is in accordance with the recent attention paid to coopetition and innovation in specific academic journals. Journals that published special issues on coopetition and, therefore, presented at least two articles on coopetition and innovation are Industrial Marketing Management (four articles); and British Journal of Management, International Journal of Technology Management, Journal of Business Research, and Technovation (each two articles). The remaining contributions are published in International Journal of Production Economics, International Studies of Management Organisation, Journal of Product Innovation Management, and Journal of Service Management (each one article). Regarding the analytical approaches applied in the reviewed studies, it is worth noting that regression and structural equation models (ten and six articles, respectively) are typically used to test the linkages between coopetition and innovation and other control variables.
Empirical insights on the linkages between coopetition and innovation
The rationale behind coopetition for innovation can be explained based on different theoretical frameworks, including transaction cost theory, game theory, and the resource- or capabilities-based view. According to transaction cost theory, coopetition represents a means to transmit tacit knowledge among firms, which is typically not easily shared and formalized due to its tacit nature (Quintana-García & Benavides-Velasco, 2004). Additionally, however, coopetition is seen as a risky endeavor since knowledge spillovers endanger the protection of key knowledge, and incentives to act in an opportunistic way may undermine the potential benefits of coopetition (Estrada et al., 2016; Kraus et al., 2017; Quintana-García & Benavides-Velasco, 2004).
Based on game theory, the cooperative interaction of coopetition is a way to increase the overall size of the business pie, while the competitive one means that each partner tries to compete for the largest share of the mutually enlarged pie (Brandenburger & Nalebuff, 1996). In fact, game theory proposes that it is sometimes more beneficial to look for a win-win situation with a competitor than to act independently to outcompete the rival, as it can be very difficult or even impossible to beat and eliminate the competitor completely (Ritala, 2012; Quintana-García & Benavides-Velasco, 2004).
Following the resource- or capabilities-based view, a competitive advantage stems from unique, valuable, inimitable, and non-substitutable resources and capabilities (Barney, 1991). Since competitors are likely to possess complementary resources, capabilities, and knowledge (Park et al., 2014), coopetition enables access to complementary, but not-yet-internalized resources and capabilities (Estrada et al., 2016; Mention, 2011). This may help coopetitors to create new resources and capabilities based on mutual development (Quintana-García & Benavides-Velasco, 2004) and to generate a joint knowledge base using all partners’ know-how, which can be beneficial for firms’ market and innovation performance, as well as their technological diversity and innovation capacity (Ritala, 2012; Ritala & Hurmelinna-Laukkanen, 2013; Quintana-García & Benavides-Velasco, 2004). When collaborating respectively, cooperating rivals face several ways to share, internalize, recombine, and develop supplementary and complementary resources and knowledge, which then can promote innovation (Estrada et al., 2016).
By exploring the role of coopetition for innovation, several prior studies claim a positive relationship between coopetition and innovation (e.g., Bouncken et al., 2016; Bouncken & Kraus, 2013; Estrada et al., 2016; Park et al., 2014; Ritala & Hurmelinna-Laukkanen, 2013). Findings suggest, for instance, that coopetition has a positive effect on radical and incremental innovation (Bouncken et al., 2017; Bouncken & Fredrich, 2012; Le Roy et al., 2016; Ratzmann et al., 2016; Ritala & Hurmelinna-Laukkanen, 2013) although the findings still tend to be rather ambiguous. On the one hand, coopetition may be more beneficial for radical than for incremental innovation (Bouncken & Fredrich, 2012). For radical innovations, which are particularly resource-demanding and seek to create completely novel products and services, research argues that collaboration between competitors can have positive implications, as coopetitors profit from a greater and more complementary set of resources, experiences, and knowledge, as well as additional risk-sharing possibilities (Bouncken & Fredrich, 2012; Bouncken & Kraus, 2013). On the other hand, however, radical innovations are found to be less frequent in coopetition than incremental innovations (Ritala & Hurmelinna-Laukkanen, 2013). When studying the different implications of coopetition for radical and incremental innovations, research also focusses on coopetition’s effect on the different stages in incremental and radical innovation processes. Bouncken et al. (2017), for instance, find that coopetition is beneficial for early and later stages of incremental innovation. Yet in the case of radical innovation such benefits occur only in less-uncertain later stages.
Besides, coopetition can have a positive influence on new product development and introductions of product innovations (Bouncken et al., 2016; Estrada et al., 2016; Pereira & Leitão, 2016; Wu, 2014; Tomlinson & Fai, 2013; Quintana-García & Benavides-Velasco, 2004). According to Wu (2014), coopetition has an inverted-U-shaped relationship with product innovation performance while Bouncken et al. (2016) and Estrada et al. (2016) emphasize that coopetition can improve product innovativeness or product innovation performance conditioned by the presence of transactional and relational governance mechanisms, or internal knowledge sharing and formal knowledge protection mechanisms, respectively. In contrast, Ritala and Hurmelinna-Laukkanen (2013) note that new product development is the least common type of coopetition. Additionally, Tomlinson and Fai (2013) report that coopetition has no significant effect on innovation in the context of SMEs. This last finding is particularly surprising, since SMEs may significantly benefit from coopetition given their limited access to resources, capabilities, and knowledge (Bouncken & Kraus, 2013; Gast et al., 2017; Quintana-García & Benavides-Velasco, 2004).
Pereira and Leitão (2016) reveal that the acquisition of external knowledge positively affects product innovation in high-tech and medium-low-tech manufacturing firms. Coopetition can foster this effect even further, but it mainly depends on the coopeting firms’ ability to detect and assimilate external sources. This ability, formally known as “absorptive capacity,” is not only relevant for product innovations, but together with the firms’ “appropriability regime,” that is, how firms protect themselves from imitation, it enables incremental innovations of already-existing products or services (Ritala & Hurmelinna-Laukkanen, 2013). Moreover, appropriability regimes are crucial for radical innovations while absorptive capacity has no significant effect (Ritala & Hurmelinna-Laukkanen, 2013). The importance of absorptive capacity and appropriability regimes stems from the fact that cooperation with competitors comes along with the risks of knowledge leakage, imitation, and opportunism. That is why mechanisms are needed to protect core knowledge on the one hand, and to enable knowledge sharing and development on the other hand (Ritala & Hurmelinna-Laukkanen, 2013). In this line, governance mechanisms (Bouncken et al., 2016; Ratzmann et al., 2016; Steinicke et al., 2012) as well as knowledge sharing and protection mechanisms (Estrada et al., 2016) are crucial to improve product innovativeness through coopetition, as they can facilitate the positive effect of coopetition for innovation.
Different governance mechanisms play a key role in fostering innovativeness through coopetition. First, formal and relational governance help to promote coordination and mitigate opportunism among partners to create a setting necessary for innovation through coopetition (Steinicke et al., 2012). Second, product innovativeness benefits from coopetition when combined with transactional and relational governance mechanisms even to the extent that coopetition seems to have no direct positive effect on innovation when governance mechanisms are completely absent (Bouncken et al., 2016). Regarding knowledge sharing and protection mechanisms, Estrada et al. (2016) show that coopetition positively affects product innovation performance only when firms can internalize and recombine new knowledge while simultaneously assuring that their own knowledge is secured and not spilled over unintendedly. Hence, internal knowledge sharing mechanisms and formal knowledge protection mechanisms need to be present for coopetition to have a positive impact on firms’ product innovation performance (Estrada et al., 2016). Additionally, trust, contractual complexity, and dependence determine the relationship between coopetition and innovation in the sense that different governance gestalts can foster or constrain breakthrough and incremental innovations (Ratzmann et al., 2016).
In more detail, Ratzmann et al. (2016) show that breakthrough innovations are promoted by gestalts including low contractual complexity and low trust; high contractual complexity and high dependence; and high contractual complexity, low dependence, and low trust; while they reveal that a gestalt of high contractual complexity, low dependence, and high trust restrains breakthrough innovations. In the case of incremental innovations, the authors find that innovation-fostering gestalts include low contractual complexity and high trust; high contract complexity and high dependence; and high contractual complexity, low dependence, and high trust. At the same time, they report that a gestalt of high contractual complexity, low dependence, and low trust constrains incremental innovations.
Next to these firm-internal factors that can determine the effectiveness of coopetition for innovation, external factors such as market uncertainty, network externalities, coopetition intensity (Ritala, 2012), technological uncertainty (Bouncken & Kraus, 2013), or the firms’ position in a coopetitive network (Baierl et al., 2016) affect coopetition’s implications for innovation. For example, coopetition is advantageous when market uncertainty, network externalities (Ritala, 2012), or technological uncertainty (Bouncken & Kraus, 2013) are high since cooperation among rivals can lead to risk- and cost-sharing opportunities, which are of crucial importance in these environments. Furthermore, a central position in a coopetitive network has a significant impact on innovativeness as it enables information flows and knowledge spillovers, which can result in a more diverse stock of information (Baierl et al., 2016). Moreover, research emphasizes that coopetition is an important strategy in innovation- and knowledge-intensive, dynamic, and complex industries that are confronted with short product life cycles, high R&D investments, and technological standards (Bouncken et al., 2017; Quintana-García & Benavides-Velasco, 2004). In such dynamic and complex environments with high levels of market uncertainty and risks, coopetition represents an important strategy as it allows companies to catch up with the evolving technological progress and avert risks more easily (Bouncken & Kraus, 2013).
Another stream of research within the coopetition literature focuses on the balance between cooperative and competitive forces in coopetition. In the context of innovation, Park et al. (2014) highlight that balanced coopetition with moderately high cooperation and competition has a positive effect on innovation performance.
Since most of the studies analyzing the possible linkage between coopetition and innovation focus on manufacturing firms, Mention (2011) examines the influence of coopetition on innovation novelty in service firms. Interestingly, the author finds that exploiting information from competitors does not stimulate innovation novelty in service firms. Information sourcing from competitors supports an imitation strategy rather than the willingness to introduce new services to the market.
Table 26.2 presents an overview of the existing findings regarding the relationships between coopetition and innovation.
Table 26.2Overview of findings on the linkages between coopetition and innovation
Conclusion and outlook for future research
Over the past two decades, an increasing number of studies has been published in the field of coopetition with the body of knowledge growing as a result. In sum, coopetition has become a well-accepted concept in research whereby the relationship between coopetition and innovation represents an intensively researched topic in this field. To advance future research on coopetition and its linkages with innovation, this chapter presents the insights gained from a systematic literature review of prior quantitative studies with a particular focus on their findings on the coopetition and innovation relationship.
To summarize, coopetition appears to be a beneficial strategy for firms to enhance their overall innovation performance, although differences can be identified for different types of innovations including radical, incremental, product, or process innovations. In addition, governance as well as knowledge sharing and protecting mechanisms are crucial measures that should be incorporated in coopetitive relationships to avoid opportunism among partners and to provide an environment favorable for innovativeness.
Since the reviewed studies partially show contradictory results, further empirical research is required to better validate constructs and variables, to approve already-analyzed relationships, to study new relationships, and to conduct research in different contexts. The latter can be achieved by not only focusing on certain types of innovation and certain organizational, industrial, or geographical settings, but by exploring the relationship between coopetition and innovation in broader contexts including different firm types—for example, SMEs, family firms, and start-ups—by analyzing different innovation types, including business model innovation (Bouncken & Fredrich, 2016), and by applying more cross-industry and cross-geography studies. Despite an extensive search for scholarly articles that conducted a quantitative approach, we only identified seventeen studies. Additional quantitative, experimental, and especially meta-analytic studies would facilitate the synthesis of existing findings and advance the understanding of the impact of coopetition on innovation, and vice versa, in more detail.
Investigating how coopetition influences firms’ innovation capabilities over a longer period of time could be another promising area of further research, as well as the role of management (Le Roy & Czakon, 2016) and coopetition capabilities (Bengtsson et al., 2016) for the implication of coopetition on innovation.
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