Nuances in the Interplay of Competition and Cooperation: Towards a Theory of Coopetition

Rivalrous spirit

Rivalrous spirit refers to firms’ impetus to improve in order to sustain or augment their market positions (e.g., Baum & Korn, 1996; Chen, Smith, & Grimm, 1992; Smith, Grimm, & Gannon, 1992). Incompatible market positions lead to head-to-head contests between firms as they cannot both achieve the same superiority (cf. Porter, 1985). Rivalrous spirit emerges as both firms are motivated to consistently improve in “an incessant race to get or to keep ahead of one another” (Kirzner, 1973: 20).

Rivalrous spirit between firms has several potential advantages. It encourages efficiency because superiority is bestowed on those who can maximize the productive value of their resources. Therefore, pursuing superiority creates a force “through which resources ‘gravitate’ toward their most productive uses” (Lado, Boyd, & Hanlon, 1997: 119) as firms are motivated to minimize slack and optimally allocate their resources. Rivalrous spirit also accelerates innovation because innovating at a more rapid pace than competitors helps firms to achieve a competitive edge (Hamel, Doz, & Prahalad, 1989). Innovation requires proactive opportunity-seeking behavior and a steady pipeline of new ideas. Competing firms are propelled to identify novel connections between means and ends (e.g., Kirzner, 1997) and pursue such ideas to achieve superior positions.

There are also downsides associated with rivalrous spirit. In order to gain a competitive edge, competitors are motivated to behave in a self-interested manner that could potentially be hurtful to both sides (e.g., Chen & Miller, 1994; Hamel, 1991). Incompatible positions and striving to outcompete each other may engender distrust between competitors because firms can each benefit from dislodging one another. Thus, hostile intents and self-interested focus make competing firms rather suspicious and cautious of each other.

Resource relevance

Resource relevance refers to the relative value of firms’ resources to one other. Insights from population ecology (Hannan & Freeman, 1977), specifically niche overlap theory (Baum & Mezias, 1992), suggest that competitors face many of the same opportunities and challenges. Therefore, resources developed to address them are likely to be useful to one other (Ingram & Qingyuan, 2008).

Resource relevance means that resources developed to pursue incompatible positions are likely of high relative value between competitors (Bengtsson & Kock, 2000; Dussauge, Garrette, & Mitchell, 2000; Gnyawali & Park, 2009; Ingram & Qingyuan, 2008). Such preexisting specialization of competitors’ resources facilitates immediate use by another competitor with little additional investment. In addition, resource relevance leads competitors to develop overlapping dominant logics and deep understanding of each other’s competitive behavior and priorities (Boeker, Goodstein, Stephan, & Murmann, 1997; Dussauge et al., 2000; Gnyawali & Park, 2011; Stephan & Boeker, 2001). When opportunities arise, competitors are more likely to learn from each other and learn quickly.

The flip side of resource relevance is that competitors are capable of capitalizing on any leakage of resources. Overlapping dominant logics enhance absorptive capacity (Cohen & Levinthal, 1990; Lane & Lubatkin, 1998; Song, Gnyawali, Srivastava, & Asgari, 2018), which makes firms disproportionately well equipped to identify, assimilate, and apply each other’s new and valuable knowledge (Dussauge et al., 2000; Gnyawali & Park, 2009). This may lead to fear of sharing resources between competitors because capability to misappropriate and associated rewards are greater.

Mutuality

Mutuality refers to a reciprocal cooperative intent between partners. As firms cooperate over time, relational governance emerges through trust, shared norms, and social relations (Cao & Lumineau, 2015; Carson, Madhok, & Wu, 2006). Relational governance facilitates mutual communication and augments stability within the cooperative relationship (Bolton & Dewatripont, 2005; Dyer & Singh, 1998; Macneil, 1980).

Mutuality has several advantages. Shared norms generate common understanding, compatible goals, and “a commitment to joint action” (Poppo & Zenger, 2002: 710). Such norms serve as mutual heuristics (Mellewigt, Thomas, Weller, & Zajac, 2017) that can establish joint understanding of types of behaviors that are appropriate versus those that are not (Poppo & Zenger, 2002). Mutuality also establishes self-enforcing safeguards to deter opportunism (Cao & Lumineau, 2015; Mellewigt et al., 2017; Poppo, Zhou, & Ryu, 2008). Self-enforcing safeguards arise through informal, nonlegal barriers that curb opportunism (Macaulay, 1963), such as potential reductions in commitment or cessation of unsolicited efforts. They facilitate rapid informal redress and holistic protection and are less costly than third-party safeguards (Dyer & Singh, 1998).

However, mutuality may reduce flexibility because firms must invest time and resources to establish trust and shared norms (Wang, Yeung, & Zhang, 2011). These investments represent a form of mutual hostage (e.g., Telser, 1980) that locks firms into particular relationships and limits availability of resources to cooperate with others. Mutuality also generates relational inertia, whereby partners may become “content” within a relationship and may cease to evaluate each other against external standards (Dyer, Singh, & Hesterly, in press; Stevens, MacDuffie, & Helper, 2015). Reduced flexibility and relational inertia may limit diversity of resources accessible to firms (Burt, 1992), and in combination, these factors might make firms less likely to achieve innovation or efficiency (Dyer et al., in press; Lado et al., 1997).

Resource commitments

Resource commitments refer to the volume of sharing that occurs between firms in terms of knowledge, skills, capabilities, and assets. Cooperative relationships provide access to resources as well as some mechanisms for resources to flow between firms (Cassiman, di Guardo, & Valentini, 2009; Dyer & Singh, 1998; Gnyawali & Madhavan, 2001). The extent of commitments would be higher when cooperation is strong (e.g., pursuit of R&D alliances and joint ventures) and lower when cooperation is weak (e.g., simple contractual agreements; Contractor & Lorange, 1988).

Resource commitments enable firms to jointly pursue large-scale opportunities by sharing and combining resources (Barringer & Harrison, 2000; Gnyawali & Park, 2011). For instance, pursuit of radical technological breakthroughs and similar complex goals require a high volume of resource sharing. Resource commitments increase expectations of joint positive outcomes, which encourages partners to maintain allegiance to the cooperative relationship (Arslan, in press; Bhattacharya, Devinney, & Pillutla, 1998).

Resource commitments may also generate several downsides. High levels of resource sharing may lead to suboptimal allocation of valuable resources that could be deployed more productively elsewhere (Lado et al., 1997). In addition, resource commitments may drain firms’ internal resource stocks and ensnare firms within particular relationships. This constrains the resources available for pursuit of individual firm superiority, makes firms vulnerable to opportunistic partners (e.g., Hamel, 1991), and limits differentiation potential in output markets.

Mutual pursuits

Mutual pursuits refers to the interweaving of sustained impetus to improve and reciprocal cooperative intent. It manifests through the interplay of rivalrous pursuit (competition) and mutuality (cooperation) as represented by the leftmost vertical arrow (labeled “a”) in the Simultaneity box of Figure 1. When two firms share rivalrous spirit and mutuality, they are driven to pursue individual superiority while being simultaneously dependent on each other as a result of the cooperative relationship.

We suggest that there are three key consequences of mutual pursuits. First, the spur to achieve superiority (rivalrous spirit) may be augmented by common understanding (mutuality); thus, the implications of rivalrous spirit and mutuality may be complementary. This creates a unique situation where the relentless efforts of each firm to improve are coupled with the joint focus of cooperating firms. Where common focus occurs alongside a constant push for novel ideas and new opportunities, partners can maximize mutual outcomes through joint innovation and efficiency.

Second, the advantages of one aspect may offset the downsides of the other. Innovation and efficiency stemming from rivalrous spirit can offset potential relational inertia caused by mutuality, whereas self-enforcing safeguards (mutuality) can address possible self-interested focus (rivalrous spirit). On one hand, the push for superiority through innovation is particularly important where mutuality leads to relational inertia (Dyer et al., in press). By motivating firms to innovate at a faster rate than competitors, rivalrous spirit can erode potential contentedness or complacency within the relationship. On the other hand, self-enforcing safeguards arising from mutuality may constrain the self-interested focus emerging from rivalrous spirit. Opportunistic efforts are incentivized when firms are pursuing incompatible positions, but self-enforcing safeguards provide cues regarding behaviors that are acceptable. Mutuality “provides a framework of references to guide firms to act in expected ways” (Cao & Lumineau, 2015: 17), which can establish informal penalties against self-interest when it threatens common interests.

Third, in contrast to the positive consequences discussed above, the simultaneous occurrence of rivalrous spirit and mutuality may also generate risks. As mutuality establishes common understanding through trust and shared norms, partners become more comfortable exchanging knowledge and resources with one another. A self-interested partner willing to behave opportunistically may exploit this opportunity to misappropriate the other partner’s assets in greater quantities and possibly with less likelihood of detection. As Granovetter noted, “The more complete the trust, the greater the potential gain from malfeasance” (1985: 491). Thus, while mutual pursuits generate promising opportunities to optimize joint outcomes and address the downsides associated with rivalrous spirit and mutuality, they may also enable more potent opportunistic behaviors.

Resource leverage

Resource leverage refers to the interweaving of sustained impetus to improve and resource sharing between firms. It emerges from the interplay of rivalrous spirit and resource commitments and is captured by the diagonal arrow labeled “b.” Resource leverage means that two firms in coopetition are motivated to strive for individual superiority while having access to each other’s resource commitments at the same time.

Resource leverage has three important consequences. First, resource commitments could facilitate resource sharing between firms while rivalrous spirit encourages these resources to be applied to optimal means. Resource commitments provide necessary access to knowledge and resources to realize benefits while, at the same time, rivalrous spirit motivates firms to proactively seek out new opportunities so that resources are applied innovatively and efficiently.

Second, advantages of rivalrous spirit may address downsides of resource commitments and vice versa. Motivation for efficiency engendered by rivalrous spirit can allay concerns of resource slack that are often associated with resource commitments. Rivalrous spirit spurs firms to apply resources to their most productive uses, which drives firms to redistribute resources that are accruing suboptimal returns within the relationship. At the same time, self-interested focus may be addressed by large-scale opportunities arising from resource commitments. Future expectancy of joint positive outcomes that could not be achieved alone establishes compatible goals that reduce the likelihood of self-interest (Arslan, in press).

Third, resource leverage could also increase risks of opportunistic “holdup” (Goldberg, 1976). Investments in resource sharing may lock partners into particular relationships and, thus, increase vulnerability. Partners sharing resources will earn no rewards from their investments if the cooperative agreement does not proceed. An opportunistic firm may exploit this type of situation to its benefit by threatening to terminate unless the partner agrees to offer additional concessions. Resource commitments increase investments in resource sharing, and rivalrous spirit increases firms’ self-interested focus, so the risk is particularly significant when both are present simultaneously.

Safeguarded resources

Safeguarded resources refers to the interweaving of reciprocal cooperative intent and valuable resources. It arises with the interplay between resource relevance and mutuality captured by the diagonal arrow labeled “c.” It means that partners may hold resources that are highly valuable to one another while the relationship is also supported by stability, informal norms, and tacit safeguards.

We explicate three important consequences of safeguarded resources. First, mutuality may cultivate a joint focus that helps maximize resource relevance. Through a common understanding in the dyad, mutuality establishes conditions that are conducive to joint development of valuable resources for the partners. Partners with resource relevance would have preexisting specialization in their resource sets because they rely on similar foundational resources. This specialization is augmented by compatible goals and stability arising from mutuality, which facilitate constructive and enduring joint development of resources.

Second, the advantages of one aspect may offset the downsides of the other. On one hand, lack of flexibility associated with mutuality is less damaging when resource relevance facilitates access to valuable resources. On the other hand, though firms with resource relevance are capable of capitalizing on each other’s resource leakage, they are less likely to do so when self-enforcing safeguards are present. Through relational governance, mutuality establishes clear distinctions between acceptable and unacceptable behaviors, thereby lessening risks associated with firms’ capability to absorb each other’s resources. Where mutuality exists, perceived benefits of internalizing each other’s valuable resources must be weighed against informal penalties available through trust, shared norms, and social relations.

Third, safeguarded resources may also generate risks because partners may become highly dependent on one another. Dependence can emerge when resources of high relative value are present within concrete and enduring relationships (e.g., Burgelman, 2002). A self-reinforcing cycle of interdependence may arise, whereby preexisting specialization generates relational inertia and relational inertia makes partners less likely to search beyond the dyad for new sources of specialization. Thus, while resource leverage can maximize resource relevance and potentially offset lack of flexibility, it also increases risks of dependence.

Relevant commitments

Relevant commitments refers to the interweaving of the relative value of resources and volume of resource sharing between firms. It emerges through the interplay between resource relevance and resource commitments as indicated by the vertical arrow labeled “d” in Figure 1. Relevant commitments mean that resources of significant value to partners are committed in volume to the relationship.

We suggest that three key consequences arise when resource relevance and resource commitments occur simultaneously. First, resource relevance establishes complementarities between resource sets while resource commitments augment the volume with which such complementary resources are committed to the relationship. Thus, relevant commitments generate potential for partners to achieve enhanced access to high quality resources. This satisfies a critical requirement of interfirm relationships by granting partners access to resources that they perceive as valuable (Das & Teng, 2000; Dyer et al., in press; Gulati, Lavie, & Madhavan 2011).

Second, advantages of resource relevance can address downsides of resource commitments and vice versa. Resource relevance generates preexisting specialization, which may offset the potential drain on internal resource stocks arising from resource commitments. Preexisting specialization offers superior opportunities for complementarities, which increases the potential to grow the size of the overall pie. Thus, the firm’s slice is bigger (Brandenburger & Nalebuff, 1996), which remedies some challenges of resource commitments. Similarly, pursuit of large-scale opportunities enabled by resource commitments may help firms to overcome fear of sharing resources induced by resource relevance. Where joint opportunities are high, self-interested behavior is less likely because it jeopardizes potential joint rewards (Arslan, in press).

Third, relevant commitments may also lead to risks. High volumes of relevant resource sharing may make it difficult for partners to differentiate their individual offerings because such offerings rely on the same jointly developed resources and remaining resources for internal development may be limited. As a result, partners may be ill equipped to add value to their individual outputs when consumers have the option of a closely related substitute. Consequently, despite potential to generate enhanced access to high quality resources and offset downsides of resource commitments, relevant commitments introduces risks because firms may be constrained by a lack of valuable resources to develop individual offerings.

In summary, each coopetition mechanism arises from the interplay of a specific aspect of competition and a specific aspect of cooperation and has positive and negative consequences. The four mechanisms collectively illuminate how coopetition manifests in unique ways and provide new insights about how coopetition affects outcomes.

Intensity

Intensity refers to the magnitude of competition and cooperation (Luo et al., 2016; B. J. Park et al., 2014). In Figure 2, intensities of competition and cooperation are captured by the x-axis and y-axis, respectively. Where intensities of competition and cooperation are moderate, the implications of each constituent element are sufficiently strong to derive potential benefits but not so strong that they suppress the implications of the other element. If competition or cooperation are overly strong, the implications of the other element may be suppressed because they are inherently conflicting (Bengtsson & Kock, 2000). For example, if competition is overly strong, the level of self-interest makes it difficult to foster mutuality, but if competition is overly weak, it may be insufficient to spur efficiency and innovation. If cooperation is overly strong, relational inertia may smother innovation, but weak cooperation may not generate relational norms and self-enforcing safeguards within the relationship. Consequently, moderately strong competition and cooperation are more likely to generate positive consequences from the coopetition mechanisms and thereby positively influence value creation.

Balance

Balance refers to evenness between competition and cooperation (Luo et al., 2016), as indicated by the darkly shaded diagonal area splitting the axes in Figure 2. If either competition or cooperation is much stronger than the other, the engagement is unbalanced. A perfect balance between competition and cooperation is rarely achievable, so the broken line in Figure 2 illustrate how competition and cooperation may oscillate around an ideal balance. Balance creates stability by offsetting potential challenges and keeping opposing forces in check (Das & Teng, 2000; Lado et al., 1997; B. J. Park et al., 2014). When competition and cooperation are balanced, there is similar emphasis on each element, which enables partners to generate positive consequences from coopetition. Where rivalrous spirit and mutuality are even, for example, the push for efficiency and innovation (rivalrous spirit) can be matched by common understanding (mutuality) to derive jointly positive consequences. Balance between competition and cooperation may also allow the benefits of one element to address the costs of the other. Similar levels of rivalrous spirit and mutuality can increase the likelihood that self-interest is offset by self-enforcing safeguards or that relational inertia is offset by innovation and efficiency. Therefore, we suggest that positive consequences from the coopetition mechanisms are more likely when competition and cooperation are balanced.

Navigating simultaneity involves being aware of the dimensions of simultaneity and how they may be achieved and being prepared to act when opportunities arise to make necessary adjustments in intensity and balance. For example, a firm may have an opportunity to modify an existing cooperative agreement or enter into a new agreement with an existing partner. Such an opportunity could be considered in terms of adjusting intensity and balance with the partner. This type of adjustment could also be evaluated in the context of the firm’s portfolio of coopetition relationships. At the portfolio level, firms could navigate simultaneity by divesting relationships that may be weak or unbalanced, attempting to build new relationships that are moderately intense and balanced, or adjusting intensity or balance in existing partnerships where possible.

Both intensity and balance generate intricate trade-offs that influence how simultaneity may manifest through the coopetition mechanisms. Depending on how they are navigated, consequences of the coopetition mechanisms can range from severely positive to acutely negative. Where competition and cooperation are moderately strong and balanced, positive consequences that may be emphasized include relentless improvement at the dyad level, efficient and innovative application of resources, enhanced access to valuable resources, and superior governance through self-enforcing safeguards. Negative consequences we have outlined (increased opportunities for misappropriation, exposure to holdup, potential high dependencies, and difficulties in achieving individual differentiation) are likely to arise where appropriate intensity and balance are not achieved.

In summary, as depicted in Figure 2, coopetition intensity is high when the intensities of competition and cooperation are high. Balance is maintained when a rise in the intensity of competition is matched by a corresponding rise in the intensity of cooperation and vice versa. We suggest that positive consequences of the coopetition mechanisms will increase in line with intensity and balance to a point and that a moderately intense and balanced relationship is likely to generate the most beneficial consequences. Our analysis thus underscores that simultaneity in coopetition research should not be viewed in simplistic terms. Simultaneity can range from a mere existence of a temporal overlap with low competition and low cooperation (bottom left of Figure 2) to highly intense and balanced (top right of Figure 2). Navigation of such simultaneity is critical in order to maximize positive consequences from coopetition. We next discuss the range of potential outcomes from coopetition and explain how the impact on outcomes is determined by how value creation intent, the second fundamental element of coopetition, is navigated.

Joint value creation

Joint value creation refers to the total pie generated by all partners from their mutual efforts. We suggest two key sources of joint value creation in coopetition: motivation to tackle the same ambitious problems and high-volume commitments of complementary resources.

Coopetition partners facing the same opportunities and challenges (Gnyawali & Park, 2011; Ingram & Qingyuan, 2008) may generate joint value because they are motivated to tackle the same ambitious problems. This is a key positive consequence of mutual pursuits whereby impetus to improve driven by competition is balanced with common understanding arising from cooperation. Mutual pursuits may mean that partners share a desire to jointly pursue difficult yet potentially highly rewarding opportunities. Consider the example of the S-LCD joint venture between Sony and Samsung Electronics (Gnyawali & Park, 2011). The venture was initiated because both firms were motivated to develop and commercialize liquid crystal display (LCD) technology for televisions. Strong global competition and R&D opportunities motivated the partners to pursue this ambitious goal, while strong cooperation through the joint venture arrangement established and sustained a shared understanding. Sony and Samsung’s efforts led to joint value creation in the form of panel technology for LCD televisions and established LCD as the dominant standard for flat screen televisions at that time.

Joint value creation can also occur through high-volume commitments of complementary resources. This is a key positive consequence of relevant commitments, where resource relevance is balanced with voluminous resource commitments. Commitments of prespecialized, relevant resources can be combined in novel ways to create a greater level of joint value than the sum of the individual parts. This occurs through partners working together on a common problem while bringing and combining their own unique technologies and expertize. For example, joint value creation from the S-LCD venture was enabled by synergies between Sony and Samsung’s capabilities. Sony was globally renowned for its television capabilities, while Samsung had strong expertise in LCD technology. These capabilities were leveraged to generate significant joint value (Gnyawali & Park, 2011).

Firm value creation

Firm value creation refers to additional benefits generated by individual firms in the relationship. While some have referred to these benefits as “value capture,” we use “firm value creation” for two reasons. One, our focus is how and where additional benefits are generated rather than who captures them. By using “firm value creation,” we emphasize the creation of additional value rather than appropriation of value. Two, value creation intent is fundamental to coopetition (Gnyawali & Park, 2011; Rai, 2016) and underscores the need to analyze how such value creation occurs. We discuss two key sources of firm value creation: further development of the firm’s portion of the joint value through combination with the firm’s internal resources and capabilities (Gnyawali & Park, 2011) and the application of knowledge and skills accessed through coopetition in other areas of the firm (Hamel, 1991; Madhok & Tallman, 1998; Rai, 2016).

Firms can generate their own additional value by combining their portion of the joint value with their own internal resources and capabilities. Resource relevance establishes prespecialization that may enable resource commitments to be transitioned between the firm and the dyad without loss of productive value. Consequently, it is less challenging to combine the firm’s portion of the joint value with its own resources for firm value creation. In addition, because two direct competitors access the same joint value, each has a powerful incentive to maximize firm value to drive their individual superiority. For example, in the S-LCD venture, the success of Sony and Samsung was spurred by their need to develop competing television sets using the same jointly developed technology. Both firms combined the newly developed technology with their own marketing and engineering expertise to develop and market their individual Bravia and Bordeaux LCD television ranges (Gnyawali & Park, 2011).

Partners may also achieve firm value creation by applying knowledge and skills accessed through the partnership in other areas. Hamel (1991) highlighted how internalization of partners’ valuable resources may be a primary objective of many competitor collaborations. Competitors have resources that are highly useful to one another, including those that are not intended for sharing. One possible consequence of mutual pursuits is the opportunity to appropriate the partner’s resources in greater quantities and possibly with less likelihood of detection. At the same time, the flip side of resource relevance is absorptive capacity (Dussauge et al., 2000; Gnyawali & Park, 2009), which helps coopetition partners to access each other’s private resources and employ them to generate value in other areas. For example, Sony and Samsung used knowledge and skills accessed through S-LCD to benefit their other R&D projects (e.g., light-emitting diode (LED) televisions and 3-D televisions).

A firm can derive greater or lesser value than its partners depending on its internal abilities and expertise (Gnyawali & Park, 2011). Superior value can be generated if a firm controls more valuable and/or complementary resources, if it is better equipped for learning (Hamel, 1991), or if it has access to a wider network of external resources (Gnyawali & Madhavan, 2001; Lavie, 2006) than its partners. Superior firm value may include both increased augmentation of joint value and greater internalization of the partner’s knowledge and resources. In contrast, a firm with weaker resources and capabilities, or access to a less valuable network, may create less, if any, firm value. The potential for differential firm value creation is a source of instability in coopetition relationships that could compromise overall value creation unless value creation intent is navigated appropriately.

Value destruction

Value destruction refers to a net loss, whereby costs from the relationship outweigh benefits. We identify two situations where value destruction might occur: joint value destruction (net loss for the relationship) and firm value destruction (net loss for a firm).

Joint value destruction may occur through the negative consequence of the coopetition mechanisms. Where mutual pursuits lead to increased opportunities for self-interested partners to misappropriate each other’s resources, it can cause distrust in the relationship and make partners less likely to invest in shared resources. This type of opportunistic misappropriation can also lead to tit-for-tat retaliation and overprotection of valuable resources (Arslan, in press). In extreme cases, it may even cause termination of the cooperative relationship (S. H. Park & Russo, 1996; S. H. Park & Ungson, 2001). Consequently, joint value destruction may arise from loss of investments in shared resources, additional costs of termination (negotiation, litigation, etc.), retaliation, or safeguarding.

Firm value destruction can occur when resource leverage exposes a firm’s valuable resources to potentially self-interested partners. Where self-interested partners have superior abilities to appropriate resources, a firm’s loss of valuable resources may exceed its gain from the relationship. In addition, safeguarded resources may lead to relational inertia when relevant resources are present within concrete and enduring relationships (e.g., Burgelman, 2002; Dyer et al., in press). Relational inertia causes firms to become “content” with what they have, making them less efficient and less proactive in their own internal pursuit of new and better solutions. It may also constrain adaptivity to environmental changes, reduce the diversity of firm knowledge, and thus increase vulnerability to more aggressive competitors (Dyer et al., in press). At the same time, enduring interdependencies and embeddedness mean that exiting this type of value destructing situation can be extremely costly (e.g., Burgelman, 2002; Hamel, 1991).

Managing trade-offs between joint value creation and firm value creation

Although joint and firm value creation are not mutually exclusive, trade-offs between them are important to recognize and manage. To a point, we expect that joint value creation and firm value creation may be mutually reinforcing. Firm value creation relies on the growth of the overall pie, which is fueled by joint value creation (Rai, 2016), whereas joint value creation depends on complementary resources and capabilities, which are developed internally from firm value creation (Hamel et al., 1989). In the S-LCD venture, for example, both firms’ LCD television ranges relied on the jointly developed LCD panel technology, while firm breakthroughs in the LCD technology helped to accelerate their joint efforts. Therefore, coopetition partners must divide their intent between both dimensions of value creation in order to foster synergies and interdependencies between them.

Nonetheless, past a certain point, the finite nature of resources means that efforts to push joint value creation will occur at the expense of firm value creation and vice versa. When this happens, a firm with more intent for firm value creation may prevent the joint pie from reaching its full potential, while pursuit of joint value creation may similarly hinder firm benefits (Khanna et al., 1998; Lado et al., 1997). Consequently, awareness and appreciation of both aspects must be weighed against recognition that there may be situations where it is necessary to focus on one over the other in line with wider strategic priorities. Intent to create joint value may be more helpful for large-scale projects (e.g., major product development or market entry; e.g., Fernandez et al., 2014; Garrette, Castañer, & Dussauge, 2009; Gnyawali & Park, 2011) where the scale and complexity requires intensive focus and significant resource endowments. In contrast, intent to create firm value may be more important in relationships where the goal is to learn from one another or access partners’ relevant resources for internal pursuits (Dussauge et al., 2000; Hamel, 1991).

Aligning both dimensions for overall value creation

The second aspect of navigation is aligning both joint and firm value for overall value creation. It means maintaining awareness of the possible need to emphasize one dimension over the other in order to maintain adequate balance while avoiding overly high focus on either joint value or firm value. Where there is too much intent dedicated to either joint benefits or firm benefits, it is likely to lead to value destruction.

On one hand, very strong intent to create joint value may lead to value destruction by cultivating contentment and inertia (Hamel et al., 1989), or blunting firms’ internal capabilities in areas where they are dependent on a more capable partner. If firms become accustomed to relying on one another, such dependencies may limit the learning of new skills and erode existing knowledge (Hamel, 1991). Joint value creation intent also has high cognitive costs (e.g., Fernandez et al., 2014; Gnyawali et al., 2016) that limit the managerial attention for identifying and pursuing firm benefits. As superiority in output markets is most often determined at the firm level (e.g., Hamel et al., 1989), it is apparent that excessive attention to joint value can lead to value destruction.

On the other hand, an overly strong focus on firm value can also generate value destruction by jeopardizing the mutual pie from which both firms must draw. Strong intent to create firm value may generate self-interest, misappropriation, and other opportunistic efforts (e.g., Khanna et al., 1998; S. H. Park & Russo, 1996). This may lead to an unstable, hostile, and distrustful relationship where partners are reluctant to share valuable resources with one another. Firms may seek additional formal safeguards to protect their resources, thereby raising costs (e.g., Williamson, 1975) and limiting resources available for more productive purposes (Dyer & Singh, 1998). If information about self-interested behavior filters back to the wider coopetition network, it may also create barriers to attracting future partners (Gulati, 1998; Hill, 1990). Thus, overemphasis on firm value creation may damage joint value and future firm value. Although some prioritization of firm or joint value creation intent may be necessary as a situation demands, we argue that firms should not compromise overall value creation by overfocusing on one or the other.

Theoretical opportunities

Our paper developed constructs and theoretical insights that lead us towards a theory of coopetition, but much more theoretical development would be helpful in these areas. The four coopetition mechanisms we have identified are not exhaustive, and researchers could examine other important aspects of competition and cooperation in an attempt to identify and develop additional mechanisms. For example, drawing from the structural perspective of competition (e.g., Porter, 1980), researchers could examine the role of market commonality (Chen, 1996) and other structural factors to further explicate competition. Similarly, researchers could delve into additional structural and relational explanations of cooperative networks. We also encourage greater scrutiny of the two core elements of coopetition, simultaneity and value creation intent. Regarding simultaneity, it will be valuable to contrast different levels of intensity and balance laid out in Figure 2, analyze the types of positive and negative consequences that emerge, and explicate firm capabilities that can aid management of such complex relationships. In addition, complementarities and trade-offs between joint benefits and firm benefits should be further dissected, with particular focus on the implications for overall value creation or destruction.

Further theoretical development is also necessary to identify and articulate contingencies that affect value creation. There are potential contingencies at the context level (such as nature and rate of technological change), dyad level (such as congruence of interests and resources), and firm level (such as individual capabilities). Researchers may find it helpful to build from literatures on industry evolution, strategic alliances, and capabilities to develop deeper insights about conditions that may enhance or constrain value creation in coopetition. Some progress has been made in terms of examining firm-level contingencies such as coopetition mind set, experience (Gnyawali & Park, 2011), and capabilities (Gnyawali et al., 2016), so a logical next step would be to build on that conversation and explore additional contingencies and how they influence joint and firm value creation.

While our analysis is focused at the dyad level for theoretical precision, many insights will be relevant for multiparty engagements. We encourage researchers to develop a multilevel perspective in further theorizing of coopetition and its implications. This could include, for example, multiple coopetition engagements by the same firm (a firm’s ego network) and multiple competing firms cooperating together (a multifirm network). Insights concerning how simultaneity and value creation are navigated in a more complex network scenario, or across a portfolio of engagements, would be illuminating.

Empirical opportunities

We challenge empirical researchers to go beyond general illustrations of simultaneity and pursue finer-grained empirical studies by deeply scrutinizing intensity and balance as well as the coopetition mechanisms we have conceptualized. The framework of simultaneity in Figure 2 enables comparison of varying levels of intensity and balance and therefore provides a basis for more precise evaluation of different forms of coopetition. We also encourage empirical researchers to consider multiple perspectives and potential for multiple outcomes from coopetition and to examine key conditions that lead to variation in outcomes.

We call on researchers to identify appropriate operationalizations and measures to examine the core constructs in our framework. Building from our conceptual analysis, researchers could start with more straightforward measures before refining them to capture their intricacies. For example, rivalrous spirit could be measured through entries and exits in shared markets (Baum & Korn, 1999), while resource relevance may be observed through a combination of partners’ technological (Gomes-Casseres, Hagedoorn, & Jaffe, 2006) and strategic (Gimeno & Woo, 1996) similarity. In addition, analysis of patent filings (e.g., B. J. Park et al., 2014) or managerial perceptions from survey data (e.g., Ritala, 2012) can help begin the process of distinguishing between pursuit of firm value creation and joint value creation. While our paper provides a basic starting point, additional ideas are required for measuring intensity and balance, coopetition mechanisms, possible outcomes, and conditions where variation in outcomes might occur.

In conclusion, this paper tackled the twin problems that have inhibited theoretical understanding of the phenomenon of coopetition: superficial conceptualization of simultaneity and outcomes, and lack of theoretical insights about how coopetition manifests and affects outcomes. We have provided a nuanced analysis of simultaneity and value creation intent, identified and articulated four mechanisms that illuminate how coopetition manifests in unique ways and affects outcomes, and explained why outcomes may vary in coopetition. Collectively, the theoretical framework and insights contained in the paper offer a more systematic understanding of the phenomenon and advance the literature towards a theory of coopetition.