Coopetition (i.e. simultaneous competition and cooperation) has emerged as a new issue in both research and practice. After its initial introduction in research (Brandenburger and Nalebuff 1996), coopetition has been subject to increasing scientific interest (see, for example, a recent special issue on coopetition in International Studies of Management and Organisation, vol. 37, no. 2). After its introduction, coopetition has been studied as an interfirm phenomenon with only few exceptions (Tsai 2002; Luo 2004, 2005; Luo et al. 2006). In general, coopetition can be described as situation where cooperation and competition co-exist in the same relationship. It is evident that this kind of co-existence can take place in interfirm context, but also in many contexts inside an organization, such as interpersonal, intergroup, interunit and interdepartmental, for example. Thus, according to an extensive literature review on coopetition, Walley (2007) suggests that intrafirm coopetition could be an important avenue for further research. In the existing literature, intrafirm coopetition has been said to enhance customer and financial performance and innovativeness, which is mainly a result from knowledge sharing and the consequent learning between firm’s units (Luo et al., 2006, Luo 2004, 2005; Tsai 2002). However, it remains quite unclear how and by which processes coopetition inside a firm actually translates into increased performance and innovation. We suggest that our investigation on the knowledge creation processes in relation to the innovation process may provide further insights on the phenomena of coopetition in intrafirm context. Thus, we describe a situation where a firm’s competitive advantage is tied to its ability to innovate better and faster than other firms (see, for example, Teece et al. 1997). Indeed, both cooperation and competition have been recognized as sources of organizational innovativeness. The current literature on knowledge creation and innovation strongly emphasizes cooperation as an enabling mechanism (e.g. Nonaka and Takeuchi 1995; Inkpen 1996; Miles et al. 2000; Blomqvist and Levy 2006). In addition, the role of competition has also been recognized as a critical issue in organizational innovation (e.g. Birkinshaw 2001; Kusunoki 2004). Consequently, in order to create new knowledge and innovate, organizations need to utilize both
competition and cooperation in their innovation processes. However, extant literature has not yet addressed how the co-existence of cooperation and competition (coopetition) affects the innovation process of a firm. Consequently, our research question is: what role does intrafirm coopetition play in the different phases of the knowledge creation process for innovations? We focus on coopetition between innovation projects, which can be called “horizontal coopetition”. The focus is on knowledge creation processes aiming at innovations that are competing for their realization in the end markets and for the resources of the company, but also cooperate in order to benefit the firm and its overall innovativeness. Thus, we also contribute to the earlier literature by focusing on horizontal coopetition in intrafirm context, and not only on differentialized departments that compete for a firm’s resources (as in Luo 2005; Luo et al. 2006). In the following sections we first discuss the theoretical basis of this chapter. Thereafter we address the logics and differences between cooperation, competition and coopetition. The third section provides the description of a process model for intrafirm coopetition and this is followed by discussion and conclusions.