Blog of the GREITM resarch group, with a focus on generation and dissemination of knowledge in Innovation, IT Management and Entrepreneurship. 

09 May 2022 | Posted by Editorial Team GREITM

WHY COMPETE IF WE CAN COOPETE?

Katalina Soto, researcher at GREITM, shares with us her studies on coopetition, a business strategy that she had the opportunity to study in depth during her MBA final project, and proposes three steps to achieve it.

What is coopetition?

Coopetition means to cooperate and compete at the same time. It is an attempt to establish an opposite dynamic to the traditional one: instead of competing fiercely with the rival company, it is proposed to cooperate with it. The concept of coopetition began to appear in the literature in the 1990s. The term was coined by Ray Noorda, founder of Novell, the company that dominated LAN connectivity in the 1980s. Finally, the term was brought into the business literature by Brandenburger and Nalebuff (1996) in their book "Co-opetition". In it, they propose a paradigm shift in the dynamics of competition between companies, a shift "from war to peace". Brandenburger and Nalebuff (1996) suggest that using the war mentality in business leaves little to salvage later. Price wars, for example, are characterized by a sacrifice of profits for the participants, which creates scenarios of diminishing value contributed and perceived, resulting in the opposite of what is desired: value creation and market retribution for the playing companies. In general, they propose that in order to win it is not necessary to destroy the other; on the other hand, if it is proposed to collaborate and compete at the same time, much more constructive dynamics emerge than those of "cooperating" and "competing" individually (Brandenburger and Nalebuff, 1996). 

Coopetition as a business strategy has the capacity to challenge the limitations of what is understood by cooperation and competition, since it implies that two things that were thought to be contrary happen at the same time, i.e., that both concepts lose their preconceived notions and enter into confrontation on the same plane (Bengtsson et al., 2010).
 

Models and types of coopetition

The literature explains that the dual characteristic of coopetition can be seen in four combinations between strong or weak interactions between cooperation and competition (Bengtsson et al., 2010): 1) Strong cooperation and competition, 2) Weak cooperation and strong competition, 3) Weak cooperation and competition, and 4) Strong cooperation and weak competition.

However, although some authors have established the benefits of strong competition and cooperation, the study by Bengtsson et al. (2010) argues that a moderate mix of both situations, because of their dynamism, is more advisable. Their arguments indicate that the efforts that the parties may make to overcome the tensions of the extremes of the relationship may bring disadvantages on the cooperation side, such as distancing or over-involvement, or on the competition side, issues of unfair competition and collusion, situations that are not very advantageous for a long-term relationship (Bengtsson et al., 2010).

Field research

It is projected that there is a new field to be explored with respect to coopetition (Dorn et al., 2016). That is, coopetition is raised, not only for innovation purposes in exploration activities but to solve everyday problems of economic sustainability, productivity, sales, or supply chain, especially in small companies and ventures that are still being established. For this reason, field research was conducted in vegan restaurants in the Gracia neighborhood in Barcelona, since this neighborhood meets the parameters of proximity, number of establishments, and neighborhood identity compatible with the study being conducted. The objective of the field study was to understand whether coopetition could be beneficial for this type of entrepreneurship, and what are the facilitators and barriers for it not to be adopted.

According to the above, it could be said that coopetition can help the entrepreneurs in the study in a slightly different way from what is proposed in the literature, because until now coopetition has been seen as a business strategy, being used to innovate in the business model, marketing strategies, supply chain or product or service innovation (Möller and Rajala, 2007). In addition, value creation occurs through the pooling of resources between competing parties to achieve greater value than they could do separately (Gnyawali and Park, 2009). By generating alliances, coopetition would allow small firms to group together to access economies of scale and benefit from aggregate demand (Gomes-casseres, 1997). This would allow them to reduce costs and have a greater presence in the market, as well as access to knowledge that would allow them to learn and develop (Michael and Morris, 2007).  

Due to this, this Master's work concludes that it is imperative to show that this type of coopetition seeks to solve problems in a quick and practical way, where it is very clear what type of effort is needed and what the benefits obtained will be (Michael and Morris, 2007). Consequently, an attempt has been made to simplify the strategy, so that it can be easily accessed and implemented quickly by small businesses, by proposing the following three steps.

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Three steps to coopetition: Katalina Soto's practitioner proposal to help adopt coopetition. 

First step: Be different!

At this stage, it will be explained that in order to coopete it is necessary to ensure that there is a space for everyone who wants to undertake; therefore, it is necessary to verify that the offer of each venture is different, thus enriching the offer in the market and taking advantage of all customer segments. 

Second step: "We have a lot in common!"

At this stage, you need to foster communication with your trusted known peers, as you need to tap into the fertile ground of "high willingness to collaborate" so that you can discover in which spaces you can do so, what common motivations you have and what goals you can set out to achieve.

Third step: "Make it real and trust".

The main idea behind this step is to promote the exercise of coopetition from small activities, so that little by little, the ventures start to get used to coopetition, and as they see the benefits, they can think about daring to coopetition in activities with greater commitment and responsibility.

If you are interested in following her research, do not hesitate to contact her: sashakatalina.soto@salle.url.edu

Authors: Katalina Soto Rivera and GREITM Editorial Team
 

Bibliography

Bengtsson, M., Eriksson, J., & Wincent, J. (2010). Co-Opetition dynamics - an outline for further inquiry. Competitiveness Review, 20(2), 194–214. https://doi.org/10.1108/10595421011029893

Brandenburger, A. M., & Nalebuff, B. J. (1996). Co-opetition. In Currency (Ed.), Currency/Doubleday (Vol. 6). Doubleday.

Dorn, S., Schweiger, B., & Albers, S. (2016). Levels, phases and themes of coopetition: A systematic literature review and research agenda. European Management Journal, 34(5), 484–500. https://doi.org/10.1016/j.emj.2016.02.009

Gnyawali, D. R., He, J., & Madhavan, R. (2009). Coopetition : Promises and challenges. 21st Century Management: A Reference Handbook, 2, Chapter 38.

Gomes-casseres, B. (1997). Alliance Strategies of Small Firms. 33–44.

Michael, H., & Morris, M. H. (2007). Coopetition as a Small Business Strategy: Implications for Performance. Journal of Small Business Strategy, 18(1), 35–56.

Möller, K., & Rajala, A. (2007). Rise of strategic nets - New modes of value creation. Industrial Marketing Management, 36(7 SPEC. ISS.), 895–908. https://doi.org/10.1016/j.indmarman.2007.05.016

 

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