Enter the era of Coopetition
“You have to listen to customers, work with suppliers, create teams, establish strategic partnerships – even with competitors.” (Nalebuff & Brandenburger, 1996, p. 3). These early words of Nalebuff & Brandenburger on coopetition were pioneering a strategy that has never been of such relevance in today’s fast paced economic landscape. Entire industries have disappeared, geographical barriers are almost gone and competition to survive economically is increasingly cut throat and complex. In this context, a vast shift is noticeable in firm relationships; they have increasingly set their strategy on collaboration and innovation. In the current state of play, companies are involved in open innovation and find themselves surrounded with blurred, fluid boundaries on innovation and imitation. This has led entire networks to share knowledge and thus transfer technology and know-how to potential competitors, entering the strategic era of coopetition.
The simultaneous pursuit of cooperation and competition is considered a winning strategy for the twenty first century (Yami et al., 2010). With competitors typically striving for growth, increased market share and simultaneously higher returns and margins, the complex relationship of combining collaboration and competition constitutes a new approach in Strategic management. This hybrid behaviour initially presented by Ray Noorda, the founder of Novell technologies (Bengtsson & Raza-Ullah, 2016, p. 23), reached popularity when Nalebuff and Brandenburger (1996) released their best-selling book Co-opetition.
Originally, the authors of Co-opetition regarded the strategy from a network perspective (Nalebuff & Bradenburger, 1996, p.16), and used the baking of a pie to illustrate their findings. “Business is cooperation when it comes to creating a pie and competition when it comes to dividing it up.” (Nalebuff & Brandenburger, 1996, p. 4). With coopetition, the pie would be larger so the share of each player would also be larger. Dagnino and Padula (2002) emphasize the merging of both cooperation and competition to create new value. Pulling resources together in order to achieve a competitive advantage is one of the main reason for coopetition, as it provides benefits for all actors involved (e.g. Bengtsson, Kock, 2000, p. 424; Wang, Krakover, 2008, p. 128; Walley, 2007, p. 17; Luo, 2007, p. 130; in Czakon, Mucha‐Kuś, & Rogalski, 2014, p. 129). The cooperation can exist on different levels, such as standards setting and market development, and competition on others such as prices and design (Chin, Chan, & Lam, 2008, p. 438), but encourages a co-evolution of the involved parties to enable greater innovation capabilities.
Positive outcomes may be seen in financial, technological or managerial areas (Zineldin & Doldourova, 2005, p. 462). Zakrewska – Bielawska’s (2013, p.51) research points out the need for such strategies in technology intensive industries. Can an intensified collaboration between competitors answer the issues of time scarcity and increased costs in R&D? Yes, and examples can be taken from the cases of Sony and Samsung, who developed the LCD TV panels together and created the new standard for the flatscreen industry (Gnyawali & Park, 2011, p. 650); Toyota and General Motors, who joined forces to develop fuel cell-powered cars, or Fujifilm and Kodak, who accepted to recycle single-use camera from both brands to reduce waste (Chin, Chan, & Lam, 2008, p. 438).
On the other hand, the coopetitive relationship between firms implies specific challenges. In this knowledge sharing environment, the risk of leakage and opportunistic behaviours leads to inevitable tensions between partners (Bengtsson et al., 2010; Gnyawali, He, Madhavan, 2008; in Zakrzewska-Bielawska, 2013, p. 341). Therefore, balancing tension between partners is crucial.
As the rate of innovation increases, organizational environments are becoming more complex, posing greater challenges for firms to adapt. The concept of coevolution and coopetition captures the new industry dynamics. Two or more organisation in the same environment depend on the evolution of another member, creating a form of interdependency (Surowiec F. M., 2013, p. 5). They exchange their most valuable asset, knowledge, to remain relevant and establish new competitive advantages.