Coopetition is based on the assumption that a firm can create value by cooperating with another firm by complementing its products or activities with those brought in by the partner. Such a partner can be a supplier, or a group of suppliers, as pursued by Toyota’s strategy (Hill 1995), a customer like in the Sun MicroSystem’s example (Lado et al. 1997: 129), or a competitor as in the alliance between Ford and Mazda whose collaboration on design tasks made each firm a stronger player in the market (Heller and Orihashi 2003). In this chapter our analysis turns to coopetitive relationships between direct competitors, i.e. firms with similar markets and similar customers. To indicate the commonality of customers of firms in the chapter we employ the notion of “market commonality”. This notion turns out to be particularly suitable for analysis of firms which compete in multiple markets (Chen 1996). It is legitimate to expect that firms which compete in multiple markets, are subjected to multiple markets’ dynamics and are sensitive to different industries’ attributes compared to firms which serve one market and one class of customers (Porter 1980). Looking at multi-market competition through the lenses of coopetition, we notice that the benefits of coopeting with a rival in a certain market are particularly valuable for firms operating in multiple markets, as they can be transferred to improve performances in other markets. For instance, knowledge acquired in a market by a coopetitive agreement with a rival might be transferred to strengthen a position in another market, and, in turn, increase that firm’s market share. In general, the literature on multi-market competition can offer significant elements to support coopetitive strategies. In this chapter we focus on some factors that facilitate the prediction of competitive moves between rivals and we try to apply them in cooperativecompetitive settings. The goal is to provide a model to support the focal firm in the selection of a competitor as a partner so as to maximize the collective commitment in the agreement. An inadequate level of interest and commitment of the partner (for instance, low quality of resources devoted to the collaboration) would very likely imply that suboptimal goals will be achieved. This clarifies
why some companies, like Hewlett Packard, Xerox and Microsoft, have dedicated specialized resources to a “strategic alliance” function within their organization to build up knowledge on screening potential partners (Dyer and Singh 1998) so as to support the process of partner selections and management. In general, we do underline that a critical condition for a high performing coopetitive venture is that all the partners involved in the agreement should exhibit high levels of effort in relation to their own agreed upon coopetitionrelated tasks. Seminal contributions in the coopetition literature field (Lado et al. 1997) state that only firms that exhibit a dynamic balance (or syncretism) between competitive and cooperative strategies do achieve superior sustained performance relative to those that predominantly emphasize solely competitive, cooperative or monopolisitic behavior. In line with this argument, we assert that the focal firm needs to get the most accurate information about the likely coopetitor’s behavior. Simply stated, it takes two to engage in a syncretic rent-seeking behavior. Our contribution on the pre-agreement rival’s assessment process is based on a fundamental distinction between the level of strategic interest a rival might exhibit toward a coopetitive agreement and the subsequent commitment it will devote once the agreement has been signed. Rivals typically have strategic interests to build value by coopetitive ventures. For instance, one firm might have a strong interest is engaging in a coopetitive agreement with a rival for joint R&D activities. Similarly, head-on opponents join to reach those economies of scale which make feasible the launch of a new product in the market (see, for instance, the case of Fiat and Suzuki in the launch of a small SUV or the case of Toyota, Peugeot and Citroen in the launch of a small city car). Upstream cooperation for R&D is co-present with fierce competition at the downstream level, where each rival tries to capture the largest market share. In these examples of coopetition, rivals which consider each other as their main competitor have high levels of strategic interest in the coopetitive agreement, and therefore join forces to achieve an extra value that would be otherwise impossible to attain. Nonetheless, from a focal firm’s perspective, a rival’s strategic interest in a coopetitive agreement (before it is signed and implemented) does not convey enough information about that rival’s level of commitment. A number of factors may imply that, in spite of high strategic interest toward the goals underneath the coopetitive agreement, the rival might assume a “tepid” behavior and be reluctant to commit high levels of effort. For instance, the rival might decide to contribute to the coopetitive agreement with less experienced personnel, or devote a small amount of time. Conversely, a high level of commitment implies that the rival is keen to devote its best resources to the coopetitive agreement (for instance, it might create a coopetition-task force with its best experts, and devote much time and energy to work with the focal firm). It is of paramount importance for a focal firm screening among rivals, to select the best partner of a coopetitive venture so as to maximize the likelihood of syncretic rent-seeking behavior. Based on these premises, our contribution aims at shedding light on the following research questions: how should a focal firm approach a pre-agreement
potential partner’s assessment when such partner is a rival in the market? What are the main factors a focal firm should take into account when evaluating a rival’s level of interest and level of commitment in a coopetitive venture? In tackling these questions, our attention turns in particular to cognitive traps that negatively affect the focal firm’s judgement about a rival. Addressing these questions will shed new light on relevant issues that the existing literature on coopetition has not yet explored. The chapter is organized as follows. In the next section we introduce the literature on coopetition. We show how traditional approaches to competitor analysis tend to overlook competitive asymmetry which, in turn, make rivals’ evaluation opaque. The third section presents our two-step model to assess the rival’s interest and initial level of commitment. The chapter ends with a number of implications for theory and practice.