From rivals to allies: Building and benefiting from coopetition capability

Abstract

Cooperating with competing firms, a phenomenon also known as coopetition is increasingly seen as a viable resource-pooling strategy that enhances competitiveness and growth. The role of coopetition is particularly important to small and medium-sized enterprises (SMEs) in developing economies given the resource limitations of SMEs, the weaknesses in institutional structures, and the rapidly changing business and marketing environment in those regions. It is increasingly evident, however, that to effectively manage coopetition, firms must treat coopetition as a foundational strategic asset. Drawing insights from the resource-based view and the dynamic capability perspective, this study develops a model to conceptualize coopetition capability and examine its drivers and outcomes. Findings from an empirical study of 224 SMEs in Zambia reveal that corporate support and ability are conducive to the deployment of a coopetition capability. Surprisingly, institutional support is doing more harm than good given the negative relationship uncovered with coopetition capability. Furthermore, we show that organizations with increased levels of coopetition capability are more confident and optimistic about their future financial results and anticipate higher earnings. Intriguingly, the positive financial outcomes of coopetition capability diminish in significance when managers possess stronger ties and networks within their respective industries.